OHIO MARITIME STRATEGY

Transcription

1 APRIL 2018

2 Table of Contents Acronyms / Abbreviations Executive Summary ii iii 1 Ohio s Maritime Transportation System What Assets and Services Comprise Ohio s Maritime Transportation System? Ohio MTS Facilities, Connections and Capabilities Governance of Ohio s MTS What Traffic Moves on Ohio s Maritime Transportation System? Lake Erie Traffic Ohio River Traffic Ohio Maritime Transportation System Traffic Trends and Outlook Why the Maritime System is Used 12 2 Economic Importance of Ohio s MTS Overview of Major Economic Sectors that Use Ohio s MTS Importance of Maritime Transportation to the Economic Sectors that Use Ohio s MTS Economic Impacts of Maritime Sector Activity 16 3 Ohio MTS Challenges and Opportunities Ohio MTS Physical Constraints Institutional Barriers to System Competitiveness Opportunities to Increasing the Competitiveness of Ohio s MTS Lake Erie and Great Lakes-St. Lawrence Seaway System Ohio River 20 4 Ohio Maritime Strategy 21 i

3 ACRONYMS / ABBREVIATIONS GDP Gross Domestic Product MTS Maritime Transportation System ODOT Ohio Department of Transportation USACE United States Army Corps of Engineers USDOT United States Department of Transportation ii

4 Executive Summary This Ohio Maritime Strategy seeks to best leverage Ohio s maritime transportation system (MTS) to enable Ohio s economic competitiveness and growth. This Strategy was informed by seven technical working papers that together inform the underlying Ohio Maritime Study. Working Paper 1 and Supporting GIS Maps of Ohio s MTS Working Paper 2 on Ohio MTS Governance Working Paper 3 on Role of MTS in Ohio s Econnomy Working Paper 4 on MTS Demand and Association Requirements Working Paper 5 on Options for Expanding MTS Use Working Paper 6 on Best Practices and Related Options for Ohio Working Paper 7 on Ohio s Role Ohio Maritime Study Ohio Maritime Strategy The following contextual factors are material to the State of Ohio s Maritime Strategy: Billions of dollars in economic activity, and hundreds of thousands of jobs rely on Ohio s MTS. Maritime transportation is critical to the competitiveness of many of Ohio s most important key economic sectors - by keeping transportation costs low. Several JobsOhio Target Industries also rely on Ohio s MTS for parts of their supply chains to be competitive. Use of the MTS continues to evolve. Economically important opportunities are emerging and driving new or growing traffic to Ohio s MTS. Chemicals, plastics, and petroleum products, which are supportive of state strategic economic development objectives, are trending upward even as waterborne iron ore and coal volumes traditionally the largest commodity flows on Ohio s MTS by volume - decline. Few capacity issues within Ohio s MTS: Most maritime ports and terminals in Ohio are operating well below their physical capacity limits and can accommodate greater traffic levels. There are nevertheless capability limits to handling different types of cargo at specific ports and terminals and a range of other physical and operating constraints. Many of the constraints to competitiveness of the MTS are institutional. Policy, planning, regulatory and other institutional issues include limited recognition and integration of maritime transportation in federal, state and regional transportation and economic development plans, a host of MTS fees and charges on the Great Lakes, institutional barriers to modal connectivity, and evolving and, at times, inconsistent regulations. Limited State role in governance of Ohio s MTS: Governance of the marine highway system falls under federal jurisdiction. Ports and terminals, the on/off ramps providing access to the marine highway system, are governed locally (port authorities, economic development authorities, cities, counties) or by the private sector. The vast majority of docks and terminals in Ohio are privately owned (save for a few publicly owned general purpose terminals), and all are privately operated on a commercial basis. The State of Ohio s span of influence over the performance of Ohio s MTS is largely limited to the landside components of the system and economic development initiatives. Federal government and State of Ohio have many programs and agencies that can support investment in Ohio s MTS: These existing programs and agencies can possibly be utilized to leverage the advantages of Ohio s MTS and thereby to enable Ohio s economic competitiveness and growth. iii

5 What should be the State of Ohio s role in the maritime transportation system? Six strategies are recommended, informed by the above contextual factors and the broader research and findings of the Ohio Maritime Study. 1. Leverage and build on the Ohio Maritime Study in policy and planning. ODOT can leverage the Ohio Maritime Study as it seeks to better integrate Ohio s MTS in state multimodal transportation policy development and planning. It can also leverage this Study and the resulting Ohio Maritime Strategy as a platform for deeper and sustained engagement with Ohio MTS stakeholders. 2. Provide leadership and coordination. ODOT should continue to be a key point of contact for Ohio s maritime sector stakeholders, and provide leadership and coordination in bringing the maritime community together. In addition, ODOT can disseminate information, advocate for the MTS sector within the State of Ohio, and also coordinate engagement with industry through forums or user groups. 3. Engage with federal stakeholders to remove institutional barriers to MTS performance. For the Lake Erie component of Ohio s MTS, this could potentially be done through the Council of the Great Lakes Governors and Premiers, which already has a Maritime Strategy that includes federal engagement on the many key institutional issues identified in the Ohio Maritime Study (e.g. Seaway season optimization, reducing the cost of pilotage, funding for dredging, etc.). Federal engagement relating to the Ohio River component of the MTS should focus on stable funding for locks and dams, interaction with US Army Corps of Engineers and US Department of Transportation Maritime Administration programs and initiatives, and participation in key national and regional industry trade groups. 4. Promote the Marine Transportation System. ODOT should work closely with JobsOhio and other economic development agencies in the State (including those at the local level) to promote Ohio s MTS as a key component of Ohio s broader multimodal transportation System. 5. Improve access to existing funding programs and agencies. The State of Ohio should promote and leverage the full range of existing State and federal funding programs and agencies that can bolster the performance and use of Ohio s MTS. In addition to other ongoing programs, the State should continue to be reactive and flexible when it comes to making funding and other incentives available to secure large private sector investments by companies that need Ohio MTS access. 6. Prioritize State investment in Ohio s MTS in accordance to clear principles. Although there are few physical capacity issues within Ohio s MTS, State investments in the MTS could help increase the capabilities of ports and terminals. These investments should be prioritized based on a set of principles that align with this Ohio Maritime Strategy. Specific prioritization principles could include: a) investment in public ports/general purpose terminals (as distinct from single use private facilities), b) investments that address or are driven by realistic long term/future market needs, c) prioritization of State investments in projects that have a strong private sector/local government matching contribution, d) projects that encourage concentration of critical mass of traffic in key MTS facilities, and e) investments that are in line with strategic state economic development objectives. BOTTOM LINE: The maritime option in Ohio needs to be protected and made as competitive as possible, given its economic importance to the State. Near term focus should be on enabling better connectivity where maritime provides a competitive advantage and is in line with market needs. Implementation of these six strategies will enhance the use of Ohio s MTS in supporting state economic development objectives. Further information from the Ohio Maritime Study, including related Working Papers, can be accessed from: iv

6 1 OHIO S MARITIME TRANSPORTATION SYSTEM 21

7 1.1 What Assets and Services Comprise Ohio s Maritime Transportation System? Ohio s Maritime Transportation System (MTS) is a key component of the state s multimodal freight transportation system. It comprises: 2 MAJOR WATERWAYS: Lake Erie Ohio River NAVIGABLE MILES OF WATERWAY, including coastal miles along Lake Erie, 11 navigable miles along the Maumee River, 9 navigable miles along the Cuyahoga River, and river miles along Ohio s portion of the Ohio River. PRINCIPAL PORTS 1 on Lake Erie, including the Ports of Cleveland and Toledo, and dozens and docks 736 MILES 162 and terminals COMMERCIAL DOCKS 2, the majority of which are along the Ohio River 162 DOCKS 9 LOCKS AND DAMS on the Ohio portion of the Ohio River 9 LOCKS AND DAMS The Lake Erie and Ohio River components of Ohio s MTS generally operate as two distinct maritime systems. 1 Principal ports, as defined by the US Army Corps of Engineers, are statistical areas 2 US Army Corps of Engineers, Ohio Profile,

8 Figure 1-1: Ohio s MTS is a Key Component of the State s Multimodal Freight Transportation System Source: CPCS, US Army Corp of Engineers, Consultations Connectivity to International Markets Ohio s Lake Erie MTS is connected to the Atlantic Ocean to the east, via the locks of the St. Lawrence Seaway (operated by Canadian and US Seaway corporations), and to Lake Superior to the west, via the locks at Sault St. Marie (Soo Locks) (operated by the US Army Corps of Engineers, or USACE). The north-south Ohio River System is part of the larger Mississippi River System. It links the state of Ohio to global markets through the Port of New Orleans (via the Mississippi River) and the Port of Mobile (via the Tennessee River and the Tenn-Tom Waterway). Figure 1-2: Dimensional Capacity of Great Lakes and St. Lawrence Seaway Locks Dimensional Capacity of Soo Locks The Soo Locks have a capacity of 1,200 feet in length, 110 feet in width and 32 feet in depth (channel is maintained to 28.5 ft.). Ships transiting the Soo Locks can carry up to about 72,000 tons. Dimensional Capacity of Seaway Locks The locks along the Welland Canal and Montreal-Lake Ontario section of the Seaway have a capacity of 776 feet in length, 80 feet in width and 30 feet in depth over the sill. Ships transiting the Seaway can carry up to about 30,000 tons. Source: Soo Lock capacity USACE, Seaway lock capacity St. Lawrence Seaway Management Corporation. 3

9 Typical Marine Vessels Handling Freight on Ohio s MTS Lake Erie marine traffic is largely served by Laker and ocean going Salty bulk and break-bulk vessels, whereas on the Ohio River, marine traffic is predominantly handled by barges. A fleet of Lakers constitutes the backbone of marine carrying capacity in the Great Lakes and St. Lawrence Seaway System. Most were purpose built for domestic and transborder bulk trades within the Great Lakes and along the St. Lawrence River. Many vessels particularly Canadian flagged Lakers - were designed to maximize carrying capacity according to the physical dimensions of Seaway locks. Many US-flagged Lakers, built specifically for Great Lakes trades, were designed to fit through the larger Soo locks. These 1,000 footers remain within the Upper Lakes as they are too large to transit the Seaway locks to the east. Cargo on the inland river system of the United States typically moves in barges which are 35 feet wide and 195 feet long, known as a standard jumbo hopper barge. For dry cargo, the barge may have covers, or may be uncovered, depending on the requirements of the shipper and of the cargo. Covered hopper barges are used for products which are more weather sensitive such as corn, wheat, soybeans, fertilizers, dry chemicals, steel products, and aluminum products. A river tow is comprised of barges arranged in longitudinal rows called strings and positioned directly ahead of the towboat. On the Ohio River, barges typically move in 15-barge tows, as shown below, configured three wide by five long and pushed by a towboat. Typical Laker Typical 15-Barge Tow Source: Marinelink Source: US Army Corps of Engineers Ohio MTS Facilities, Connections and Capabilities Of the principal ports on Lake Erie in Ohio, the Port of Cleveland the Port of Toledo are the two most significant, together handling close to 60% of total tonnage moving through Lake Erie MTS facilities. Both ports include common user general cargo facilities equipped to handle most types of traffic (including containers at the Port of Cleveland), shipyards, and covered outdoor storage facilities able to accommodate twice the current levels of traffic. In addition, there are dozens of private docks throughout Lake Erie, including in and around the ports of Cleveland and Toledo. There are 118 terminals along the Ohio River in the State of Ohio, providing access to the marine highway system and connectivity to global markets via the Gulf Coast ports of New Orleans, Louisiana, and Mobile, Alabama. Terminals are primarily privately owned. Many private terminals also have general cargo capabilities. The two publicly owned terminals on the Ohio River in Ohio are integral to economic development efforts in Columbiana County and Lawrence County. 4

10 1.1.2 Governance of Ohio s MTS Ohio MTS stakeholders are numerous. Consequently, governance of Ohio s MTS is complex. Federal agencies, particularly the US Army Corps of Engineers, the US and Canadian Coast Guards, and the US and Canadian Corporations of the St. Lawrence Seaway, have primary responsibility for the governance and management of waterways. There are more than 50 port authorities in Ohio all created under State of Ohio Law, but only a fraction of these own/ manage MTS facilities (those that don t are largely focused on economic development unrelated to the Ohio MTS). The vast majority of docks and terminals in Ohio are privately owned (save for a few publicly owned general purpose terminals), and all are privately operated, on a commercial basis. The shippers that ultimately generate Ohio MTS traffic, the barge operators as well as domestic and international marine carriers that provide them with maritime transportation services, are privately operated and driven by commercial interests. Railroads, truck and pipeline operators that provide services to/from MTS facilities are also private and commercially oriented. The role of the State of Ohio in the governance of Ohio s MTS is at present largely limited to broader transportation policy and planning efforts, though it has in the past provided funding on a relatively ad hoc basis for MTS-related investments (connectors, cranes, docks, conveyors, buildings, etc.). The State of Ohio s span of influence over the performance of Ohio s MTS is largely limited to the landside components of the system and economic development initiatives. Figure 1-3: Simplified Representation of Ohio MTS Stakeholders and their Role in System Governance, Management Source: CPCS 5

11 1.2 What Traffic Moves on Ohio s Maritime Transportation System? The ports, terminals, and docks that provide connectivity to Ohio s MTS handle between 80 million and 100 million short tons of freight per year ( ), valued at over $12 billion (2015). Bulk commodities, notably coal, iron ore, limestone and other aggregates, grain and petroleum products are among the major commodities handled by Ohio MTS facilities. Inbound flows comprise the largest share of Ohio MTS freight flows on both Lake Erie and the Ohio River. According to US Army Corps of Engineers data, the largest shares of Ohio MTS freight flows by volume (58%) and by value (70%) are carried on the Ohio River. Figure 1-4 : Ohio Maritime Transportation System Commodities, Total (Tons, 2015) River 58% Lake 42% Source: CPCS analysis of WCSC data, flows having both an origin and a destination within Ohio are considered as being Internal Lake Erie Traffic Ohio s Lake Erie and related river facilities handled over 35 million short tons of traffic in 2015, 3 down from 40 million tons in The most significant Lake Erie port facilities, by volume, are Cleveland and Toledo, which handled close to 14 million tons and 8.5 million tons, respectively in By comparison, the port handling the most traffic in the Great Lakes, the Port of Duluth-Superior handled just over 33 million tons in USACE, Ohio Profile, Waterborne Commerce Statistics Center (2014) 5 USACE US Waterways Data (2015) 6 USACE US Waterways Data (2015) 6

12 Figure 1-5: Lake Erie Port Traffic (2015) Source: CPCS, US Army Corp of Engineers Lake Erie MTS facilities predominantly handle bulk and to a lesser extent breakbulk traffic. The major commodity groups handled at Lake Erie port facilities include: Limestone, sand and gravel for regional construction activity Non-metallic minerals, including coal, pet coke and other metal and non-metal commodities, tied largely to regional industrial activity, notably, the steel industry, and exports. A range of agricultural commodities, largely destined for export markets. Breakbulk cargo, tied to large regional projects such as wind turbine projects, also represents important business volumes for Lake Erie port facilities particularly in terms of revenue. The Port of Cleveland also handles container traffic, tied to the scheduled Cleveland-Europe Express container services operated by Spliethoff. The Port of Cleveland is the only port in the Great Lakes that handles containers. As noted in consultations with the Port of Cleveland, containerized traffic through the Port is largely comprised of industrial goods, rather than consumer packaged goods, as are more typical of container traffic at coastal ports. 7

13 Figure 1-6: Lake Erie Maritime Transportation System Traffic Tonnage Mix (2015) Source: CPCS analysis of WCSC Ohio River Traffic The inland river system is the primary artery for more than half of the nation s grain and oilseed exports and nearly a quarter of the nation s coal for utility plants. As with traffic moving on the Great Lakes system, waterborne commodity markets on the Ohio River are driven by the fundamental forces of supply and demand influenced by factors such as navigation circumstances, the price of oil, the value of the US dollar relative to foreign currencies, domestic and foreign consumption of agricultural and industrial products, crop production, trade policies, and global commodities prices. The inland waterway system is a primary transporter of dry bulk, liquid bulk and general dry break-bulk cargoes. Major commodity groups include: Coal for domestic utility companies, industrial and coke producers, and export markets Construction materials, such as cement, limestone, sand, and gravel Other dry bulk cargoes such as ores, salt, gypsum, fertilizers Grain and oilseeds, including corn and soybeans for export markets Liquid fertilizers 8

14 Petroleum products and other fuels such as ethanol and bio-diesel Liquid chemicals such as styrene, methanol, ethylene glycol, and caustic soda Vegetable oils, molasses and other food related liquids General break bulk cargoes such as steel, finished and partially finished steel products, aluminum, partially finished aluminum products, and other manufactured and/or fabricated items Oversized and/or overweight project cargoes Figure 1-7: Ohio River Maritime Transportation System Traffic Tonnage Mix (2015) Source: WRCA Analysis of Navigation Data Center Data The other category is significant from an economic development perspective, as it includes manufactured items which are directly related to jobs. Primary manufactured goods and manufactured equipment are important categories relative to jobs, tax base and economic development. 9

15 Figure 1-8: Ohio River Traffic by County (Ohio traffic only) Source: CPCS, US Army Corp of Engineers Figure 1-9: Ohio River Maritime Transportation System Traffic Mix by Lock (2015) Source: WRCA Analysis of Navigation Data Center Data 10

16 1.3 Ohio Maritime Transportation System Traffic Trends and Outlook Many bulk commodities that have historically been the heaviest users of Ohio s MTS (e.g. coal, iron ore) are in structural decline, dragging down total MTS volumes. The economic recession in is also reflected in the data below, which impacted most freight sectors and transportation modes in the United States. Economically important opportunities are nevertheless emerging and driving new or growing traffic to Ohio s MTS. Chemicals, plastics, and petroleum products, which are supportive of state strategic economic development objectives, are trending upward and this is expected to continue. Notwithstanding the traffic trends noted above, the role of Ohio s MTS in providing low cost transportation to users of the MTS is critically important to their competitiveness. Without access to low cost maritime transportation, many of the industries that rely on Ohio s MTS and their related upstream and downstream supply chain partners, would be less competitive. The maritime option in Ohio needs to be protected and made more competitive, as possible. Focus should be on enabling better connectivity where maritime provides a competitive advantage and is in line with market needs and strategic economic development objectives. 11

17 1.4 Why the Maritime System is Used Maritime transportation provides the lowest cost service on a per ton basis over longer distances. This is attractive for high volume and high weight bulk commodity movements such as large volumes of taconite or coal. Nonetheless, waterways are also the slowest mode of transport (e.g., the average barge travels ~100 miles per day), meaning that time sensitive goods typically use other modes for transport. Truck and rail freight modes are generally more costly on a ton-mile basis and, for businesses that are not located on the water with door-to-door marine service, truck and rail each provide critical first-/last-mile connectivity for marine cargo. Most sectors that use Ohio s MTS are highly price sensitive and need to keep transportation costs low to remain competitive, particularly when trading in commodities that have prices set by world markets. Certain sectors, including steel production, have organized their supply chains around maritime access and their viability is likewise closely tied to maintaining low-cost maritime transportation. Transportation costs may account a significant share of total landed cost and bulk shippers are inclined to reduce this cost as much as possible to remain competitive and profitable. Figure 1-10 highlights the different prices to transport coal (the top commodity in terms of tonnage on Ohio s maritime system) on rail and water with water providing the lower price per ton shipping option. For many bulk commodities that use the maritime system such as coal, aggregates, grains and others, the sale price per ton of the product is very low (and very price sensitive) so shippers aims to keep the transportation cost as low as possible to remain competitive and to maximize profit. Figure 1-10: Average Transportation Cost of Coal by Mode ($ per ton) Source: US Energy Information Administration 12

18 2 ECONOMIC IMPORTANCE OF OHIO S MTS 2.1 Overview of Major Economic Sectors that Use Ohio s MTS Ohio s freight reliant industries defined for purposes of the Ohio Maritime Study as including the goods-producing sectors together with utilities, wholesale and retail trade, and transportation and warehousing produced $238 billion in Gross Domestic Product (GDP) in 2014, or about 40 percent of Ohio s total GDP. These freight reliant sectors also account for 1,914 million jobs (2015), or about 35 percent of total employment in Ohio. The top commodities in terms of tonnage are closely tied to Ohio s top industrial sectors (Figure 2-1). Note that the figure shows multiple commodities are tied to multiple industries. These commodities move in different ways for various purposes on the Ohio River and on Lake Erie. For example, coal is used as a major source of electricity generation (Ohio River), but it is also an input into the steel manufacturing (Lake Erie, Ohio River). 13

19 Figure 2-1: Crosswalk between Key Industrial Sectors and Top Commodities on Ohio s MTS Top Commodities Primary Sector Coal, Lignite, and Coal Coke Sand Gravel, Shells, Clay, Salt and Slag Iron Ore, Iron, and Steel Scrap Food and Food Products Primary Metals Petroleum Products Construction and Civil Works Utilities and Energy Manufacturing Petroleum and Chemicals Agriculture Source: CPCS Figure 2-2: Economic Importance of Key Industrial Sectors that are Dependent on Ohio s MTS Sectors Reliant on MTS Construction & Civil Works Utilities and Energy Primary Metals Heavy Manufacturing Petroleum, Chemical and Plastics Manufacturing Sector GDP / Jobs (% of Ohio freight reliant sectors) GDP: $24 billion (11%) Jobs: 238,000 (12%) GDP: $19 billion (7%) Jobs: 21,000 (1%) GDP: $5.6 billion (2%) Jobs: 40,000 (2%) GDP: $37 billion (16%) Jobs: 305,000 (16%) GDP: $33 billion (14%) Jobs: 100,000 (6%) Examples of Ohio MTS Traffic (not comprehensive) Limestone, other construction rocks and minerals, cement, asphalt, steel and rebar Coal, oil, frac sand, barite, pipe, drilling supplies Metal ore (e.g. iron ore), scrap metal, steel (coils, pig iron, slabs, blooms), aluminium Steel coils, coiled wire rod, steel plates and shapes, aluminum, chemicals, petroleum products, minerals and alloys Chemicals, plastics, petroleum and coal products, rubber products Source: CPCS analysis *GDP data is for 2014 (Bureau of Economic Analysis Regional Data), Jobs data is for 2015 (Bureau of Labor Statistics State Employment Data) 14

20 Together, the above sectors generate close to half of Ohio s GDP relating specifically to freight reliant sectors and 36% of jobs relating specifically to freight reliant sectors (704,000 jobs). The agricultural, forestry, and mining sectors also included in freight reliant sectors - are among other important users of Ohio s MTS, though these sectors contribute relatively less to Ohio s economy in terms of GDP and jobs (despite the higher share of Ohio MTS traffic generated by these sectors). Maritime transportation is nevertheless critical to the competitiveness of many of these sectors, and in particular grain, which needs access to Ohio s MTS to competitively reach global markets. Other economic sectors including six out of nine JobsOhio Target Industries rely on Ohio s MTS for parts of their supply chains. 2.2 Importance of Maritime Transportation to the Economic Sectors that Use Ohio s MTS The supply chains of those sectors that use the Ohio MTS vary greatly from inbound thermal coal for coalfired power production, to steel coil shipments for heavy manufacturing, to outbound grain destined to global markets. But what is consistent is that these sectors use the MTS predominantly because of the low cost of maritime transportation relative to other transportation modes; particularly for high volume, low value per ton freight flows. The low transportation costs afforded by Ohio s MTS are not only important to the competitiveness of those sectors that are direct users of the MTS, for example, the primary metals sector.it also benefits indirect users of the MTS such as automotive parts producers that benefit from lower cost aluminum, plastics, and other products manufactured by direct users of the MTS. This in turn enables more competitive goods-producing sectors in Ohio relative to jurisdiction that don t have access to maritime transportation. One study on the economic importance of inland waterways (not strictly Ohio s Ohio River MTS) found that the reduction in shipping costs, measured as the difference between barge rates and those of the cheapest alternative mode, normally rail, exceed $3 billion annually. These substantial savings and the improved connectivity enabled by maritime transportation options enable shippers and producers to increase productivity and to be more competitive in the global economy. The total economic value of these savings to the U.S. economy was estimated by that study to be more than $17 billion each year. 8 The low-cost maritime transportation option provided by Ohio s MTS remains critical to enabling the competitiveness of many of Ohio s key economic sectors without which Ohio s economy would suffer. 15

21 2.3 Economic Impacts of Maritime Sector Activity Based on 2015 traffic figures, it is estimated that Ohio s Lake Erie MTS generated approximately 25 million jobs, of which 7 million direct jobs. There are no comparable economic impact figures for the Ohio River MTS. Direct Jobs 7 Milion Direct, Indirect and Induced Jobs 25 Milion 8 Dr. Larry Bray. Toward A Full Accounting of the Beneficiaries of Navigable Waterways. January,

22 3 OHIO MTS CHALLENGES AND OPPORTUNITIES 17

23 3.1 Ohio MTS Physical Constraints For the most part, MTS facilities in Ohio may have capability constraints but generally do not have capacity constraints. Physical constraints of the performance of Ohio s MTS (as distinct from regulatory, policy and funding constraints) include: Seasonality on Lake Erie and through the broader Great Lakes and St. Lawrence Seaway system, which restricts navigation and MTS access from late December to late March due largely to ice conditions Draft issues at certain Lake Erie facilities, resulting from a combination of silting, a dredging backlog, and varying water levels do to a range of environmental factors Aging locks and dams on the Ohio River, causing unplanned outages and creating risks to system resiliency. Congress has provided inadequate funding to USACE for several years. The lack of funding for proper maintenance, combined with aging infrastructure leads to this concern. Some individual terminals may have land side access issues which can be addressed by adding turn lanes, bypasses for congested traffic areas or rail grade crossing separation 3.2 Institutional Barriers to System Competitiveness The policy, planning and regulatory ( institutional ) impediments to the competitiveness of Ohio s MTS, and the MTS in the Great Lakes and inland waterways more generally, are well documented. They include limited recognition and integration of maritime transportation in federal, state and regional transportation and economic development plans, inadequate funding to address many MTS infrastructure needs, a host of MTS fees and charges (e.g. pilotage, Harbor Maintenance Tax, Canadian Seaway tolls, high terminal handling charges and conditions, among others), institutional barriers to modal connectivity, and evolving regulations. These institutional factors contribute directly or indirectly to higher costs for MTS users, and by extension, they are an impediment to the competitiveness of Ohio s MTS. Most of these institutional factors fall outside the jurisdiction of the State of Ohio, constraining what ODOT can do to reduce costs of using the MTS. 18

24 3.3 Opportunities to Increasing the Competitiveness of Ohio s MTS Shippers typically make transportation mode decisions on the basis of the following factors: total logistics cost, transit time, service level, and reliability. There is typically a trade-off among these factors, with the importance of each factor being a function of the characteristics of the products being shipped. For example, coal, as with most bulk and breakbulk products shipped on Ohio s MTS, are particularly price sensitive. Conversely, ipads are less price sensitive and more sensitive to transit time and service level (hence why these products are more often flown in aircraft). Figure 3-1: Transportation Performance Parameters Given the price sensitive nature of most of the industries that use Ohio s MTS, the key to making Ohio s MTS more competitive is taking costs out of the system Lake Erie and Great Lakes-St. Lawrence Seaway System Users of the Lake Erie component of Ohio s MTS are subject to a range of fees and charges, including but not limited to pilotage fees, tolls for passage through the Canadian Seaway locks, terminal handling charges and conditions, ice-breaking fees, as well as broader supply chain costs, such as having to stockpile product when the Seaway is closed or lightering vessels due to a dredging backlog in parts of the system. There may be opportunities to reduce these costs, though these largely fall outside of ODOT s jurisdiction. Today the largest role ODOT fills is through planning and making targeted investments primarily in landside connections to port facilities. This can also go some way in reducing transportation costs through better connectivity and transportation options for shippers. 19

25 3.3.2 Ohio River ODOT can play a role in helping the state of Ohio take advantage of the national marine highway at its southern border. Industry stakeholders, including river ports and terminals, shippers, and barge lines, all want a forum for ongoing communications with Ohio officials in JobsOhio and ODOT. Stakeholders listed eight items to improve their capabilities on the River. Overall, these items will generate a heightened optimal outcome for Ohio s maritime system, as well as the entire multimodal system, and will benefit economic development in the state of Ohio growth and jobs: Collaborative voice, including the state of Ohio, advocating for adequate annual federal operations and maintenance funding for the Ohio River Ohio River Users Group for communication, collaboration, and advocacy Stronger Web presence to provide information for existing and potential customers to benefit economic developers, shippers, and ODOT New Principal Port statistical area between Huntington and Pittsburgh to draw awareness to traffic and tonnage, attract attention of potential shippers, and help with marketing Improved road and rail access to ports to provide efficient multimodal options for Ohio industries Assistance in reducing capital funding/financing barriers for port improvements Use of other states maritime support programs as examples of what Ohio can do Ongoing ODOT maritime position to interface with other state agencies like JobsOhio, economic development entities, port authorities and private sector terminal owners/operators, shippers, carriers, and others Better communications, collaboration, and advocacy will strengthen the ability of Ohio to attract and retain high wage job providers who also need access to cost-efficient transportation. Keeping the Ohio River open, reliable, and functioning at a high level of performance is vital to Ohio s economy. 20

26 4 OHIO MARITIME STRATEGY What should be the State of Ohio s role in the Maritime Transportation System? 21

27 Six strategies are recommended: 1 LEVERAGE AND BUILD ON OHIO MARITIME TRANSPORTATION STRATEGY IN POLICY AND PLANNING. ODOT can leverage the Ohio Maritime study and underlying research and findings as it seeks to better integrate Ohio s MTS in state multimodal transportation policy development and planning. It can also leverage this study as a platform for deeper and sustained engagement with Ohio MTS stakeholders. Specific strategic actions could include: Proactively plan investments in landside accesses to ports and terminals, as well as to other parts of Ohio s multimodal transportation system, where supported by market needs, strategic economic development objectives, and an appropriate public benefits case. Leverage the Ohio Maritime Strategy to build greater awareness of Ohio s MTS assets, capabilities, and opportunities within JobsOhio and other State agencies. Maintain and periodically update the Ohio MTS asset inventory database developed as part of this study. Support a new principal port statistical area between Huntington and Pittsburgh. 2 PROVIDE LEADERSHIP AND COORDINATION. ODOT should continue to be a key point of contact for Ohio s maritime sector stakeholders, and provide leadership and coordination in bringing the maritime community together. In addition, ODOT can disseminate information, advocate for the MTS sector within the State of Ohio, and also coordinate engagement with industry through forums or user groups. Specific strategic actions could include: Sustain engagement with Ohio s MTS stakeholders after the release of this Strategy to identify evolving system priorities and to increase participation of the maritime community in broader freight planning activities in Ohio on an ongoing basis. This could potentially be done through MTS system users group(s) or similar forums, coordinated by ODOT on a regular basis. 3 ENGAGE WITH FEDERAL STAKEHOLDERS TO REMOVE INSTITUTIONAL BARRIERS TO MTS PERFORMANCE. State of Ohio leaders should maintain relationships with federal government agencies to address regulatory, policy/planning, funding and other institutional issues. For the Lake Erie component of Ohio s MTS, this could potentially be done through the Council of the Great Lakes Governors and Premiers, which already has a Maritime Strategy that includes federal engagement on the many key institutional issues identified in this Ohio Maritime Strategy (e.g. Seaway season optimization, reducing the cost of pilotage, funding for dredging, etc.). Federal engagement relating to the Ohio River component of the MTS should focus on stable funding for locks and dams, and interaction with US Army Corps of Engineers and USDOT Maritime Administration programs and initiatives, and participation in key national and regional industry trade groups. 9 Council of the Great Lakes and St. Lawrence Governors and Premiers, Strategy for the Great Lakes-St. Lawrence River Maritime Transportation System, 22

28 4 PROMOTE THE MARINE TRANSPORTATION SYSTEM. ODOT should work closely with JobsOhio and other economic development agencies in the State (including those at the local level) to promote Ohio s MTS as a valuable resource in certain economic development activities and as a key component of Ohio s broader multimodal transportation system. Specific related actions could include: Collaborating closely/systematically with JobsOhio in investment attraction initiatives where investment would benefit from the Ohio MTS transportation option (ODOT can provide input on transportation advantages/assets, funding programs, etc.). Providing a specific point of contact within ODOT for economic developers who need information regarding marine transportation options. Facilitate creation of a state-wide interactive web site for identifying locations, contact information and general capabilities for ports and terminals in Ohio. Facilitate creation of a template which could be used by individual ports and terminals to convey basic factual information in a consistent and communicative format. Facilitating, or otherwise providing seed funding for industry-led Ohio MTS promotion activities and related meetings, websites, and other outreach activities. 5 IMPROVE ACCESS TO EXISTING FUNDING PROGRAMS AND AGENCIES. The State of Ohio should promote and leverage the full range of existing state and federal funding programs and agencies that can bolster the performance and use of Ohio s MTS. Specific strategic actions could include: Develop, together with JobsOhio and other agencies, a comprehensive list of existing programs, agencies and related tools that can be accessed by Ohio MTS stakeholders and related eligibility criteria (Federal and State). This list should be managed, updated and promoted by ODOT to all relevant Ohio MTS stakeholders, including MTS asset owners/operators, MTS shippers, economic development agencies, including JobsOhio and local economic development agencies. ODOT can then help direct Ohio MTS stakeholders to the appropriate programs and agencies that can help them realize their projects. Continue to be reactive and flexible when large economic development opportunities arise in order to secure large private sector investments by companies that need Ohio MTS access. Facilitate assessment of existing state financial assistance programs and evaluate whether some adjustments in eligibility or priorities could broaden applicability appropriate for Ohio s ports and terminals. 6 PRIORITIZE STATE INVESTMENT IN OHIO S MTS IN ACCORDANCE WITH CLEAR PRINCIPLES. Although there are few physical capacity issues within Ohio s MTS, State investments in the MTS could help increase the capabilities of ports and terminals. These investments should be prioritized based on a set of principles that align with this Ohio Maritime Strategy. Specific prioritization principles could include: 23

29 a) investment in public ports/general purpose terminals (as distinct from single use private facilities), b) investments that address or are driven by realistic long term/future market needs, c) prioritization of State investments in projects that have a strong private sector/local government matching contribution (i.e. skin in the game ), d) projects that encourage concentration of critical mass of traffic in key MTS facilities, and e) investments that are in line with strategic state economic development objectives. Related types of investment in public /general purpose terminals could include investments in: Shoreside handling equipment such as mobile material handling equipment, cranes, pipelines or conveyor systems Storage facilities such as warehouses, transit sheds, silos, tanks, etc. Improved road and rail connections to port facilities, as was recently announced in Toledo in relation to the new Cliff s facility Docks, mooring structures and related fixed assets Support for priority economic development initiatives (incentives that will help attract shippers to Ohio that require maritime transportation). 24

30 Further information from the Ohio Maritime Study, including related Working Papers, can be accessed from: