Friday, June 14, 2013

M-580: California's Marine Highway

For the better part of the past decade, California’s major seaports have sought ways to deal with the ever-growing problem of highway traffic congestion and the resulting increase in air pollution caused partially by port growth. Some ports – those in Los Angeles, Long Beach and Oakland, among them – have instituted comprehensive programs designed to cut down emissions from the drayage trucks that haul goods to and from the docks.
Others, such as the Port of San Diego, focus more on environmental initiatives such as the conservation and restoration of plant and animal life in the surrounding areas.
But the Port of Stockton, an inland deepwater port about 75 miles northeast of Oakland and 50 miles south of the Port of West Sacramento, has launched a new venture that not only addresses truck traffic and air pollution, but also helps grow business and increase revenue: the M-580 Marine Highway.
“This is a goods movement program to alleviate congestion and parallel one very well used and over-used highway corridor. The M-580 is the Marine 580,” Port of Stockton Deputy Director Mark Tollini explained.
The $30 million M-580 Marine Highway project, a public/private partnership funded through a US Maritime Administration grant and the 2009 American Recovery & Reinvestment Act – better known as the federal stimulus bill – consists of a barge system conveying goods between the ports of Stockton and Oakland. The system, which has been in the planning for years, was finally launched in May.
It was devised as a solution to an increasing problem: the system of transferring containers to and from the Port of Oakland to the Central Valley by road has become increasingly problematic, with one of the main reasons being that full and empty containers carried by drayage trucks have been moving at a snail’s pace up and down the ever-crowded Interstate 580. Transportation studies have shown that the 75-mile freeway, which is where the M-580 gets its name, is one of the most congested thoroughfares in not only California, but the entire US.
An increased movement of freight by water could help to alleviate the situation. About 3.4 million tons of waterborne cargo, mainly bulk goods, reportedly moved through the Port of Stockton via the Stockton Deepwater Ship Channel and San Joaquin River in recent years, underscoring the potential capacity of this waterway system.
It’s estimated that about 1,600 containers per day now move between the Stockton and Oakland ports along I-580, which is one of California’s most congested freeways. The Port of Stockton says the barge service could potentially save shippers time as well as money in transport costs, since it would allow containers to be loaded in excess of California’s highway weight limit of 22 metric tons.
“Our barge application’s been around for years and years and years, but it started to make more sense in the last several years as highway congestion, particularly here between the San Joaquin Valley and the Port of Oakland and Sacramento got to a point where it was essentially heavy traffic, inefficient methods of delivery, long delays on the highway that were contributing to not only the inefficiencies but the logistics system, also air quality issues, safety issues, that sort of thing,” Tollini explained.
“It started making sense that there could be another way that was equally serviceable, affordable and would take advantage of underutilized transportation quarters, such as water. So when the concept was embraced by the federal government, it was at that time that we were able to seriously go about putting together a project and scoping it out and bringing it to reality,” Tollini said.
Of the project’s $30 million total price tag, $13 million of the grant money has gone toward the purchase of two 140-ton mobile harbor cranes and two barges, as well as dockside improvements such as a rail extension to complete an on-dock and off-dock rail loop system and a near-dock rail-served container yard.
Also, $8.5 million was used for the electrification of berths at the Port of Oakland, which allows ships to shut down their engines and help reduce air emissions.
The San Joaquin Valley Air Pollution Control District and the Bay Area Air Quality Management District also pledged about $1.5 million to support the project, seeing the potential environmental benefits.
When fully implemented, officials estimate, the M-580 could eliminate 180,000 truck trips from I-580, I-80, and I-205 freeways annually, saving about seven million gallons of fuel and reducing air emissions in the process.
In addition to potentially relieving congestion and reducing air pollution, the barge system is also expected to reduce transportation costs and free up working capital, ease scheduling and equipment shortages, create a “green” supply chain and bring jobs to the surrounding community and region.
“In addition to relieving highway congestion, it allows for a certain amount of elasticity,” Tollini said of the barge system. “We’re not going to get smaller, we’re only going to get bigger, so it allows us to accommodate anticipated future growth by utilizing the river system here as a corridor and a conduit to move goods.”
One of the other benefits is that it opens up a new goods transport corridor, he said.
“So if you’re located here within the port and you’re shipping to and from here and you have an operation here, then you can max out ... which allows us to lessen the amount of demand on the roads and lessen the oceanfront expenses associated with goods movement,” Tollini said.
But like any large-scale project, the M-580 has had its share of planning-stage hiccups. Although a groundbreaking was held in October 2010, it wasn’t until December 2011 that the Port of Stockton hired Savage Companies, a Salt Lake City-based supply chain solutions business, to provide various support functions, including management, logistics, marketing and operating services.
Stockton had hoped to launch the project in the fall of 2012, even going so far as to send out invitations for a planned inaugural event that would feature US Transportation Secretary Ray LaHood. The event was cancelled, however, due to labor issues, mostly revolving around the details of cargo handling.
In early 2013, Savage stepped down and the port took over the leadership role, a development that Tollini has said was “consensual,” but about which he has not given specifics. In March 2013, stevedoring and terminal operations company SSA Marine was chosen by Stockton to manage the barge service terminal.
Under its contract with the port, SSA Marine provides terminal management services, marketing and logistical support for the Marine Highway, while port officials provide management oversight. SSA already operates a terminal in Oakland.
Despite the hiccups, the barge system appears to now be on the right track.
“The port is the general contractor, so we own the barges, we’ve hired the tow boats, we’ve engaged a PMA (Pacific Maritime Association) company, SSA Marine, to do stock and operations here and we’ve entered into marine terminal operators agreements down in Oakland with Ports America in the outer harbor and with SSAT down at the Oakland International Container Terminal,” Tollini said.
But now that they’ve built it, will businesses come? That remains the question. When interviewed in the days leading up to the barge service’s launch, Tollini was reluctant to reveal which companies might literally be onboard.
“Right now, we’re still in the process of reaching out to the BCOs (beneficial cargo owners) and to the general industry, including steamship lines, trucking companies, what have you,” Tollini told Pacific Maritime in late April. “We have tenants here located at the port that are already moving containers down into Oakland; I’m a little hesitant to put out names until they actually ride the barge for the first time, but we are thinking we can probably support two rotations a week, starting off.”
Also reluctant to talk specifics was SSA Marine Northern California Regional Vice President Carlos De Jesus, the person overseeing SSA’s management of the barge terminal. SSA, he said was declining to comment for now.
“Once the operation is in full motion,” he said, “we would be happy to discuss it with you.”
The completion of the Stockton to Oakland stretch is actually just Phase 1 of a two-part plan; a second phase involving the Port of West Sacramento, located about 50 miles north of Stockton, is still in the planning stages.
$8.5 million is already designated for the building of a distribution and repackaging center, as well as for the purchase of a crane for operations at West Sacramento.
No timetable has been set for the launching of Phase 2 – it all depends on the success of the initial phase. But if the port of Stockton, Oakland and West Sacramento are right, however, their gamble on a barge service will be the rare industrial project that manages to grow business while reducing air pollution and road congestion at the same time.