Ohio Maritime Study (ODOT PID: )

Ohio (ODOT PID: 102166) Working Paper 5 Options for Enhancing Use of Ohio s Maritime Transportation System Prepared for: Ohio Department of Transportation Prepared by: CPCS Transcom Inc. In association with: W.R. Coles and Associates Dr. Peter Lindquist, University of Toledo CPCS Ref: 15612 Revised November 30, 2017

Ohio Working Paper 5 Options for Enhancing Use of Ohio s MTS 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 Economy Working Paper 4 on MTS Demand and Associated Requirements Working Paper 5 on Options for Expanding MTS Use Working Paper 6 on Best Practices and Related Options for ODOT Working Paper 7 on ODOT Role Ohio Report Ohio The overarching objective of the Ohio is to inform the Ohio Department of Transportation (ODOT) as it develops an Ohio Maritime Strategy that will best leverage Ohio s maritime transportation system (MTS) to enable Ohio s economic competitiveness and growth. Working Paper This Working Paper is the fifth of seven that together inform the Ohio. It identifies key considerations and specific opportunities for enhancing the use of Ohio s MTS. Acknowledgments / Confidentiality The CPCS Team acknowledges and is thankful for the input of those consulted in the development of this Working Paper, as well as the guidance and input of representatives from ODOT. Opinions Unless otherwise indicated, the opinions herein are those of the authors and do not necessarily reflect the views of ODOT, the Ohio Steering Committee, or the State of Ohio. Contact Questions and comments on this Working Paper can be directed to: Marc-André Roy Project Manager T: +1.613.237.2500 x 306 mroy@cpcstrans.com Cover image source: Toledo Lucas County Port Authority

Ohio Working Paper 5 Options for Enhancing Use of Ohio s MTS Acronyms / Abbreviations... 1 Executive Summary... 2 1 Key Considerations in Enhancing Use of MTS... 3 Why the Maritime System is Used... 3 Enhancing Maritime System Use... 6 1.2.1 A Larger Pie... 6 1.2.2 An Increased Share of the Pie... 7 ODOT Considerations... 10 2 Opportunities for Increasing Activity on Lake Erie... 11 Reduce the Cost of Using the System... 11 2.1.1 ODOT Considerations... 12 Proactive Planning and Development Adjacent to the Maritime System... 12 2.2.1 Specific Examples of the Need for Proactive Planning and Development... 12 2.2.2 ODOT Considerations... 13 Provide Multimodal Transportation Options Connecting to Maritime Facilities... 14 2.3.1 Specific Examples of the Need for Adequate Transportation Connectivity... 14 2.3.2 ODOT Considerations... 15 3 Opportunities for Increasing Activity on the Ohio River... 16 Form an Ohio River Users Group... 17 3.1.1 Examples of the Need for an Ohio River User Group... 17 3.1.2 ODOT Considerations... 18 Advocate for Maintenance of the Ohio River System... 19 3.2.1 ODOT Considerations... 19 Improve Ohio River Ports and Terminals Web Presence Individually and Collectively... 20 3.3.1 ODOT Considerations... 21 Designate a New Principal Port Statistical Area between Huntington and Pittsburgh... 21 3.4.1 Examples of the Need for a Statistical Port Area between Huntington and Pittsburgh 23 3.4.2 ODOT Considerations... 23 Improve Landside Connectivity to Ohio River Ports and Terminals... 24 3.5.1 Examples of the Need for Better Landside Connectivity... 24 3.5.2 ODOT Considerations... 25

Ohio Working Paper 5 Options for Enhancing Use of Ohio s MTS Reduce Capital Funding / Financing Barriers for River Terminal Improvements... 25 3.6.1 Examples of Capital Funding / Financing Barriers for River Terminal Improvements... 26 3.6.2 ODOT Considerations... 26 Maintain ODOT Maritime Position... 27 3.7.1 Examples of Benefits Provided by the ODOT Maritime Position... 27 3.7.2 ODOT Considerations for an ODOT Maritime Position... 27 4 Conclusion and Next Step... 28 Conclusion... 28 Next Steps... 28 4.2.1 Progress to Work Plan and Next Tasks... 30

Ohio Working Paper 5 Options for Enhancing Use of Ohio s MTS Acronyms / Abbreviations APEG ARC CBRT CCPA CEO CHB CORBA CORIS CPCS DC DERG FAF I&ORY IL KY LEDC MI MN MOU MPR MTS MTSNAC NS ODOT ORDC PA SMSA SR UPS US USACE USCG W&LE WI WV Appalachian Partnership for Economic Growth Appalachian Regional Commission Cincinnati Barge and Rail Terminal Columbiana County Port Authority Chief Executive Officer Cleveland Harbor Belt Railroad Central Ohio River Business Association Central Ohio River Information System CPCS Transcom Ltd. District of Columbia Diesel Engine Replacement Grant Freight Analysis Indiana & Ohio Railroad Illinois Kentucky Lawrence Economic Development Corporation Michigan Minnesota Memorandum of Understanding MPR Transloading and Energy Maritime Transportation System Marine Transportation System National Advisory Committee Norfolk Southern Ohio Department of Transportation Ohio Rail Development Commission Pennsylvania Standard Metropolitan Statistical Area State Route United Parcel Service United States U.S. Army Corps of Engineers U.S. Coast Guard Wheeling and Lake Erie Railroad Wisconsin West Virginia 1

Ohio Working Paper 5 Options for Enhancing Use of Ohio s MTS Executive Summary 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. 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. 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. This is equally important to both the Lake Erie and Ohio River components of Ohio s MTS, which generally operate as two distinct maritime systems, each with their unique characteristics. ODOT has limited jurisdiction over the water-side components of Ohio s MTS - 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, and 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, coordination, and economic development initiatives. With this context, this Working Paper presents potential options for ODOT to help sustain and enhance the use of Ohio s MTS. These include industry coordination and the set-up of MTS users groups, engaging with federal stakeholders, MTS promotion, providing support for a new Principal Port statistical area between Huntington and Pittsburgh, and targeted funding, as appropriate. The considerations and options above will inform, further to appropriate discussion, the forthcoming Ohio Maritime Strategy. 2

Ohio Working Paper 5 Options for Enhancing Use of Ohio s MTS 1Key Considerations in Enhancing Use of MTS Key Messages Shippers typically make transportation mode decisions on the basis of three 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 being shipped. 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. 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. Why the Maritime System is Used Articulating why the maritime transportation system (MTS) is used today will, in part, inform how the system may be used and enhanced in the future. While there are a variety of reasons why certain industrial sectors (e.g., agriculture, manufacturing, and others as described in previous Working Papers) choose to use the maritime system, in most cases the choice largely comes down to the lower cost offered by the maritime mode relative to alternative modes of transportation, notably rail and truck. Other service requirements related to the cargo being shipped (such as travel time to market) and modal options available are also considered. To illustrate this with an Ohio-specific example, Figure 1-1 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 the shipper aims to keep the transportation cost as low as possible to maximize profit. Transportation costs may account a significant share of total landed cost and bulk shippers are inclined to reduce this cost as much as possible. 3

Ohio Working Paper 5 Options for Enhancing Use of Ohio s MTS Figure 1-1: Average Transportation Cost of Coal by Mode ($ per ton) 25.00 20.00 15.00 10.00 5.00 0.00 2008 2009 2010 2011 2012 2013 2014 Source: US Energy Information Administration Railroad Waterway National Average Figure 1-2 provides a spectrum of freight transportation modal options as they relate to service and cargo characteristics. The figure highlights the waterways which provide the lowest cost service which 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. While these modes do complement each other, it is also true that in certain markets truck, rail and water modes may compete for cargo with each other. 4

Ohio Working Paper 5 Options for Enhancing Use of Ohio s MTS Figure 1-2: Freight Transportation Service and Cargo Characteristics Spectrum Source: CPCS adapted from Freight Transportation Service Spectrum, Hofstra University 1 As Figure 1-2 illustrates, the maritime system s traditional service characteristics include: Slower transit time compared to other modes Generally less reliable transit compared to other modes in terms of arrivals/departures Less expensive compared to other modes And, the cargo best suited to use the system as it is configured today has the following characteristics: Higher weight, bulk goods Lower value commodities Less time sensitive shipments Looking to the future, to sustain maritime system use, the key will be to acknowledge these service and cargo characteristics. To enhance maritime system use these characteristics may be considered as levers that, when adjusted, enable the system to function in a different manner and could serve non-traditional cargos. 1 Rodrigue, J-P et al. (2017) The Geography of Transport Systems, Hofstra University, Department of Global Studies & Geography, http://people.hofstra.edu/geotrans 5

Ohio Working Paper 5 Options for Enhancing Use of Ohio s MTS Enhancing Maritime System Use Freight transportation is a derived demand that is, it is derived from consumer and producer demand for goods. Supply chain decisions, including transportation routing and mode selection decisions, are oriented to serving this demand most competitively and are driven by shippers and receivers (for simplicity, shippers ). And as described in the previous section, the decision to use Ohio s MTS is often based on cost, but can also be related to other service and cargo requirements and the overall value proposition provided by one mode over another. Given this context, there are primarily two ways that enhance maritime system use can be described and measured: A larger pie: this relates to increasing the overall market for goods that currently move on the freight system in Ohio, and the absolute market for maritime. An increased share of the pie: this relates to increasing the relative size of maritime transportation s market share (i.e., shifting freight from another mode to maritime) Each of these expansion options is described more fully below. This Working Paper also provides indication of where opportunities may exist to maintain existing traffic and/or simply make the system work better given the current environment. 1.2.1 A Larger Pie A Larger Pie relates to increasing overall market for goods that currently move on the freight system in Ohio, and the absolute market for maritime. This is shown in Figure 1-3, a hypothetical example where each mode retains its market share, but the overall market for freight services increases 25%. The factors that drive increasing the overall demand for goods currently moving on the freight system in Ohio (i.e., increasing the size of the overall pie ) are largely tied to Ohio s economy, as well as global, continental and regional factors, including environmental regulations, commodities prices, and exchange rates. These factors were discussed at length in previous Working Papers. 2 For the most part, these factors are outside the control of Ohio Department of Transportation (ODOT), though some can be influenced by the State of Ohio more broadly (e.g., JobsOhio), and are generally not explored further as part of this paper. It should be noted that year over year the economy does grow, but history has shown that with that growth and increased freight activity trucks and rail continue to slowly increase their share of the pie. Therefore it is more prudent for ODOT to consider ways for the maritime system to retain or grow their share as the economy grows, too. 2 Specifically, Working Paper 2 and 3 on the role on Ohio s MTS in the Ohio economy, and on MTS demand and associated requirements, respectively. 6

Ohio Working Paper 5 Options for Enhancing Use of Ohio s MTS Figure 1-3: Distribution of Freight Tons in Hypothetical A Larger Pie Growth Context where Modes Retain Market Share Source: CPCS analysis of Freight Analysis Framework (FAF) data 1.2.2 An Increased Share of the Pie An Increased Share of the Pie relates to increasing the relative size of maritime transportation s market share. This necessitates increased maritime transportation competitiveness. This is shown in Figure 1-4, a hypothetical example where the overall market for freight services remains the same, but the market share of maritime transportation doubles (the stretch goal of the Council of the Great Lakes Governors and Premiers Maritime Strategy). Any increase in marine transportation s market share of freight flows would need to be underpinned by an increase in maritime transportation competitiveness. Figure 1-4: Distribution of Freight Tons in Hypothetical An Increased Share of the Pie Growth Context where Maritime Increases Market Share Source: CPCS analysis of FAF data 7

Cost Ohio Working Paper 5 Options for Enhancing Use of Ohio s MTS Related to the Freight Transportation Service and Cargo Characteristics Spectrum shown in Figure 1-2, adjusting the service and cargo characteristic levers may influence the competitiveness of the maritime mode and potentially shift goods from another mode to the water to increase maritime transportation s share of the overall freight market. Modal Choice Considerations Mode choice is typically driven by distance and cost. This first assumption basically states that each modes cost structure provides it with its own competitive advantage which is a function of distance. The result is that for an equal amount of cargo, and assuming there are no network constraints, truck (road transportation) is generally considered to be less expensive than rail when distance traveled is under about 500 miles. Above this distance, rail becomes more competitive. Maritime is usually most competitive for even longer distances. This is explained by modal differences in fixed and variable costs. Fixed costs of road transportation are relatively much lower than for other modes but variable costs increase at a higher rate by distance traveled. This results in total costs increasing at a higher rate per mile than they would for other modes. The fixed costs of marine transportation are generally much higher than for rail or road, but variable costs increase at a lower rate per mile. These assumptions are illustrated in Figure 1-5. Figure 1-5: Fixed, Variable and Total Costs of Transportation by Mode Slope of line illustrates variation of variable costs according to distance x y Marine Fixed costs Road Rail Marine Road Rail Distance Source: CPCS, adapted from Jean Paul Rodrigue, Hofstra University The second generally accepted assumption about mode choice concerns the availability of modes along the shipping route and transshipment costs. Because marine networks are much less extensive than road networks, the use of trucking is often unavoidable, at least for first- /last-mile of door-to-door solutions. As such, enhancing the use of the MTS will, in most cases, translate into intermodal solutions and transshipment costs will inevitably have an impact on modal choices. So even if adopting an intermodal solution can apparently reduce long range transportation costs, this will depend on where the transshipment operations will be done. To 8

Ohio Working Paper 5 Options for Enhancing Use of Ohio s MTS become competitive, the distance by which the marine mode is used needs to be long enough to offset transshipment cost. Figure 1-6 illustrates such a situation where the intermodal solution will only be competitive if the final transshipment takes place at point D, rather than at point C where there would be no savings, or point B where door-to-door costs would be more expensive. Figure 1-6: Potential Cost Advantage of Intermodal Solutions No savings Cost Savings Transshipment cost A B C D Distance Source: CPCS, adapted from Rasul (2014) The third assumption about mode choice concerns the relative payload of each mode and suggests that economies of scale become greater as the carriage capacity of the vehicle increases. It is evidently necessary to have demand for increased capacity, otherwise, potential productivity gains cannot be completely reached and this explains why smaller loads/lots are usually carried by smaller vehicles, and vice versa. For example, large shipments of low value materials can be economically transported by ship/barge on distances well below 500 miles for example, the movement of iron ore up the Cuyahoga River to the ArcelorMittal steel mill. But shipping 40 foot containers of consumer goods by ship only makes sense when this demand can be consolidated with other containers. Other factors, which could include transit time and the perishability of goods, will also be relevant for shippers. Because shippers (in particular manufacturers) cannot materialize the value of the goods they produce until ownership has been transferred to the buyer, they will aim to deliver their products as soon as practically possible. The higher the value of the goods, the more they will be impatient to deliver because more capital is immobilized in the goods themselves. Related to perishable goods, their value can be completely lost if they are not delivered on time. When considering transit times, administrative, transaction, transshipment and customs procedures also need to be accounted and, just as costs, the competitiveness of a modal option in terms of delays is defined from door-to-door. 9

Ohio Working Paper 5 Options for Enhancing Use of Ohio s MTS ODOT Considerations In addition to outlining potential opportunities for enhancing the use of the maritime system for cargo, this Working Paper begins to assess ODOT s role related to those opportunities. These could include: Facilitation and coordination ODOT could 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. Planning ODOT can leverage the Ohio as it seeks to better integrate Ohio s MTS in state multimodal transportation policy development and planning. Engaging with federal stakeholders to remove institutional barriers to MTS performance. Study/research and development Related activities are active and require ODOT to initiate and lead study/research on behalf of themselves and others. Funding infrastructure Related activities are active and require ODOT to make investments in infrastructure. Funding/incent development Related activities are active and require ODOT to establish policy or make investments that spur development (not infrastructure). Promoting the Marine Transportation System. ODOT could 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. Working Paper 7 and the forthcoming Ohio Maritime Strategy will more fully explore ODOT s future role with respect to increasing the competitiveness of Ohio s MTS. 10

Ohio Working Paper 5 Options for Enhancing Use of Ohio s MTS 2Opportunities for Increasing Activity on Lake Erie Key Chapter Takeaway Reducing the cost of the system for users, proactively planning and developing land adjacent to the MTS, and providing multimodal transportation options at maritime facilities are among the means of increasing the competitiveness of Ohio s MTS. For each of these opportunities ODOT does have a role, though this role is largely limited to planning, coordination, and landside connections to port facilities. Opportunities to increase cargo-related activity on Lake Erie can be examined through a supply chain lens which considers service requirements (e.g., cost, travel time, reliability, etc.) and physical cargo characteristics (e.g., value, volume, etc.) all which impact the total supply chain costs. This perspective is defined by the product itself, as well as by the constraints individual shippers face in terms of modal accessibility, market size and distance to markets, and production capacity. The following provides general examples of future opportunities in Ohio, but for implementation there are no general solutions, only applications that must be customized to individual supply chains. Reduce the Cost of Using the System Pilotage fees 3, Seaway tolls, stevedoring costs (which are determined by collective bargaining and agreements), U.S. Department of Agriculture fees, Harbor Maintenance Tax and others fees and charges have the impact of increasing the cost of doing business on the Lake Erie component of Ohio s MTS. The increasing pilotage fees have been remarked on as the biggest concern from a carrier perspective. These fees and charges fall outside ODOT s jurisdiction. 3 In 2016 the USCG proposed to increase pilotage costs 14% for the 2017 shipping season, in addition to the 24% and 20% increases implemented in the 2016 and 2015 seasons, respectively. 11

Ohio Working Paper 5 Options for Enhancing Use of Ohio s MTS 2.1.1 ODOT Considerations While ODOT does not have a role in establishing fees, it does have any interest in ensuring the multimodal transportation system is fully utilized. As such, ODOT should consider how these fees impact 1) Ohio businesses that use the transportation system and 2) trade, overall. A pooled fund research project with other Great Lake states, or Conference of Great Lakes Governors Premiers could be a feasible alternative by representing the entire Great Lakes system. Proactive Planning and Development Adjacent to the Maritime System Data analysis related to traffic on the maritime system today, complemented by extensive stakeholder consultations, has confirmed that industries using the maritime system have evolved over the past decade. To remain viable, to sustain or perhaps even grow shipping activity in the future, the system will need to evolve in-kind. This evolution is most clearly shown through examination of the steel industry. 2.2.1 Specific Examples of the Need for Proactive Planning and Development Two areas that can have the largest impact and improve the system while acknowledging the changing nature of how the system is used, relate to proactive land use planning and planning for development adjacent to the water. Examples of why this is important to the continued viability of the maritime system are provided below. Example 1: Maintaining Compatible and Appropriate Land Uses Adjacent to the System The community of Lorain provides a good example of the importance of examining land use and establishing plans that are 1) at an appropriate scale and 2) consider the future of the system. Lorain has acknowledged that the community has changed, and economic activity has shifted, in some part, away from the maritime system. Lorain is conducting a 23-mile long economic development study focused on the Lake Erie Shoreline (from Vermilion, OH to the east). This study will ensure future development is focused on the assets that are already in place, and making the best use of them. This is an important, proactive first step in fully understanding maritime related opportunities within the broader region. This includes targeted development and re-development in portions of the community that have historically served commerce along the Black River. Waterside facilities that once handled freight, but are vacant today, are being marketed as a new commerce park. It is unlikely that the greater 23-mile study will identify locations other than those already/previously serving maritime freight users as candidates for future cargo-oriented development. What is most important is that there is interest in preserving this land along the Black River for maritime and cargo related activity so that future opportunities are not lost. 4, 5 Conversely, Fairport Harbor ports on the Grand River have no developable land adjacent to current operations, limiting future growth potential. While Lake County Ohio Port and Economic 4 Lorain Port Authority consultation 5 Lorain County Community Development Department consultation 12

Ohio Working Paper 5 Options for Enhancing Use of Ohio s MTS Development Authority s Annual Report notes that emphasis will be placed on recreational and other community amenities along the water, the lack of adjacent land around existing facilities will limit future maritime/cargo development opportunities. And in Sandusky, a newer condo community was developed immediately adjacent/across the water from the Norfolk Southern (NS) coal facility because the community did not have a comprehensive land use plan in place. During consultations, the city of Sandusky noted that this will likely remain an isolated residential community. 6 Example 2: Port Consolidation/Rationalization As documented in Working Paper 4, there is a continuing movement for carrier, port and terminal operators to rationalize their operations in order to remain profitable/viable. This includes consolidating operations such as NS consolidating Lake Erie coal dock operations in Sandusky. Other examples of system rationalization relate to the niche role some ports serve for certain commodity types Cleveland serving as a transshipment point for the ArcelorMittal inputs, Toledo serving as the only grain handling port in Ohio on Lake Erie, and ports that have suitable on-dock handling equipment (such as Cleveland and Toledo) which serve increasing quantities of project cargo. During consultations one carrier noted that further consolidation is likely as manufacturing facilities become more specialized in producing unique products for niche markets. The associated supply chain flows will likely necessitate fewer, but more specialized maritime facilities. At the same time, these niche industries will likely require smaller ships to economically handle smaller quantities of goods. Because of this there is also the risk that as cargos become more specialized and are produced in smaller quantities that the maritime mode may not be a cost effective component of future supply chains. 2.2.2 ODOT Considerations Port-related development has experienced several challenges in recent years: Lack of adjacent developable land to expand existing port facilities, Natural consolidation/rationalization of the ports in Ohio. While ODOT does not have a role in establishing local land use or development regulations or guidelines, it does have a role in working with regional and local planning and economic development agencies, including cities, MPOs, ports as well as others in ensuring planning is coordinated and that the maritime system is considered an integral part of Ohio s multimodal transportation system. As such, an appropriate role for ODOT in the future is continuing to have a seat at the table to ensure interests of broader state, regional and international commerce are considered in local and regional development plans. 6 City of Sandusky consultation 13

Ohio Working Paper 5 Options for Enhancing Use of Ohio s MTS With respect to maritime activity consolidation/rationalization, ODOT should continue to track industry trends and continue to assess implications for broader land-side transportation planning and investment. Provide Multimodal Transportation Options Connecting to Maritime Facilities Landside access and the availability of connections can be the determining factor if cargo travels via the maritime system or not. While consultations have indicated there are not many significant connectivity issues today, in the future if the use of the maritime system is to grow multimodal infrastructure that provides first-/last-mile connectivity to the maritime system will need to be addressed. 2.3.1 Specific Examples of the Need for Adequate Transportation Connectivity Examples of why multimodal connections are critical to the continued viability of the maritime system are provided below. Example 1: Rail Access There is a physical issue that impacts rail service to the Port of Cleveland. The Cleveland Harbor Belt Railroad (CHB) serves the port as a terminal switch carrier connecting to both NS and CSX. CHB s interchange with CSX is very poor because the CSX E. 26 th Street Yard has access from only one end of the yard. Providing track would rectify this issue and could enhance the ability of CHB and CSX to work together for movements at the port. 7 In some other specific locations rail service is not currently available at all: In Lorain, Commerce Park, while under development, has rail access; however the rail line is not serviced. While the community is adjacent to an NS mainline, it is to-bedetermined if service would be provided to this development in the future. 8 In Cleveland, Ontario Stone notes that rail access to the facility could make them more competitive with aggregate moves that are today entirely on rail. While the Port of Cleveland has rail service, the site where this company is located does not. Ontario Stone knows that the cost to build a rail yard at their facility is not cost effective for them to pursue on their own at this time. 9 Example 2: Road and Rail Connections for Future Maritime System Needs It is important for port facilities to have access via both truck and rail to attract businesses that desire transportation service options, but these modal options must also have proper vertical and horizontal clearance so all cargo types may utilize the system. 7 Information provided by Ohio Rail Development Commission. It is estimated the track could cost $2 million. 8 Lorain County Community Development Department consultation 9 Ontario Stone consultation 14

Ohio Working Paper 5 Options for Enhancing Use of Ohio s MTS Consultations have indicated that in the future that more over dimensional project cargo will be transported on the system. This cargo will be attracted to ports that have road and rail connections that can accommodate these large loads outside the gate, which means not only proper clearances immediately adjacent to the port, but also tying into over dimensional routes designated by DOT permit offices and to Class I rail corridors. The Port of Toledo highlighted challenges in moving over dimensional cargo along certain routes in/out of the Port (particularly along George Hardy Dr.), which has bridge weight restrictions and overhead line challenges. 10 Depending on where project cargo will be loaded/unloaded in the future, additional spot locations for improvements may exist beyond this Toledo example. 2.3.2 ODOT Considerations Of all the opportunities identified in this Working Paper, ensuring multimodal transportation options are available and suitable for use is most closely tied to ODOT s and the Ohio Rail Development Commission s (ORDC) current roles. Both agencies continually examine the system, identify infrastructure and policy needs, and make targeted investments however both agencies have limitations in how investments are made, and in what infrastructure components. This is a role that each agency should continue, but both should consciously seek ways to better integrate the maritime system in their efforts. While in the near term connectivity on the highway side does not pose as many concerns as on rail, ODOT should similarly consider the impact to Ohio businesses and trade of not having connectivity between truck and water modes that can accommodate over dimensional movements. ODOT should study the cost of not having this connectivity and proactively coordinate with ODOT s permits office as well as study the key ports and routing these cargoes may use in the future, and make targeted investments to ensure these routes are available. Linking the development opportunity described in Section 2.2, it is not expected that all ports will have the capabilities to handle project cargo, so routing and investments should only be made where it is required. 10 Port of Toledo consultation 15

Ohio Working Paper 5 Options for Enhancing Use of Ohio s MTS 3Opportunities for Increasing Activity on the Ohio River Key Chapter Takeaway 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: Ohio River Users Group for communication, collaboration, and advocacy Collaborative voice, including the state of Ohio, advocating for adequate annual federal O&M funding for the Ohio River 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. Based on discussions during Ohio River stakeholder meetings held in late 2016 and early 2017 and on consultations with shippers/receivers, ports/terminals, ODOT, economic development entities, and other users and potential users of the river, several options for making better use of the Ohio River MTS have been identified. Many opportunities require leadership by ODOT in time but little out-of-pocket funding. 16

Ohio Working Paper 5 Options for Enhancing Use of Ohio s MTS Form an Ohio River Users Group The stakeholder meetings during late 2016 and early 2017 were well attended by ports, terminals, carriers, shippers, and government officials who expressed the need for an Ohio River users group. ODOT and Jobs Ohio representatives also participated in these discussions. Waterway shippers, carriers, ports, and terminals share many common interests and need a forum for ongoing dialog. A users group would provide such a forum for identifying and discussing pertinent issues and providing consensus comments representing the collective opinions of the group when appropriate. ODOT and other regional/local organizations could help coordinate the group in its initial phases, but leadership and drive must come from ports, terminals, carriers, shippers, and third party logistics providers (3PLs). A users group would be an ideal venue for addressing all needs and concerns of waterway users expressed during stakeholder meetings: advocating for Ohio River maintenance, increased Web presence, improved landside connectivity, and maritime support programs. Improvements in education, communications, and awareness between potential river shippers and service providers could also be accomplished within the framework of a user group. Better networking communications between the economic development community and the river terminals groups is needed. Third-party logistics providers could be included to enhance opportunities for networking and to establish contacts so that resources are available and principal entities are known to each other when opportunities arise. An Ohio River user group would ultimately address the categories of concerns expressed by stakeholders: information, collaboration, and support. A user group would also be the forum to address individual issues expressed by the stakeholders, such as the need to fill in the gap on the river with a new port statistical area, create a Web presence both individually and collectively, address state regulations, and consider appropriate policy for capital investments. 3.1.1 Examples of the Need for an Ohio River User Group Better awareness, education, and communications between stakeholders and/or potential waterway users and third-party logistics providers could help enhance the use of Ohio s marine transportation system. Example 1: Educating Potential Waterways Users Shipping by barge is a multi-party transaction. Based on stakeholder comments and interviews with industries which are potential shippers, it can sometimes be difficult for a first-time waterway user, or potential user, to piece together the cost components for a water-based move. There are usually five major cost components for a waterborne shipment: Transportation of the cargo to a river terminal River terminal service charges for receiving from truck or rail, intermediate handling and/or storage, and loading cargo onto the vessel Barge transportation 17

Ohio Working Paper 5 Options for Enhancing Use of Ohio s MTS River terminal service charges for receiving from barge, intermediate handling and/or storage, and loading cargo onto trucks or rail cars for final delivery Transportation of the cargo to its final destination The logistics involved in multimodal shipments of commerce can involve as many as five different private-sector service providers as described above. When the volume of the cargo is large enough and the shipments travel long distances, the total door-to-door cost of incorporating barge transportation is generally less expensive than rail and far more economical than truck. It is the shipper s responsibility to network the deal, acquiring service agreements and costs from each of these five participants in the cargo movement. Third-party logistics providers are available to simplify these logistical arrangements and often can help the shipper save costs in exchange for a fee, lessening the work for the shipper. Although it offers financial benefits, the process of putting together all components of the doorto-door move can be tedious and potentially discouraging to first-time users and/or potential customers. Networking through an Ohio River Users Group could help bring the parties together, and through education and awareness help potential shippers understand the waterways shipping option. Example 2: Central Ohio River Business Association (CORBA) One example of a successful regional organization in Ohio is CORBA, which was founded in 2011 by a group of business owners and operators who were concerned for the maritime industry along both banks of the Ohio River throughout Cincinnati and Northern Kentucky. These founding members saw a disconnection between businesses and industries along the Ohio River, and realized that in order to promote river commerce, there had to be an association which maintained the Ohio River as its primary focus. CORBA has been successful in creating strong connections with all crucial parties and maintaining open lines of communication with port authorities, private river terminals, municipalities, state government agencies, the U.S. Army Corps of Engineers (USACE) and other federal agencies. Additionally, CORBA maintains the following contacts: federal, state, and local representatives, state and local departments of transportation, chambers of commerce, as well as all other river stakeholders. 3.1.2 ODOT Considerations At the outreach meetings, stakeholders expressed interest in forming an Ohio River Users Group to identify and address common interests. ODOT and other regional/local organizations could help coordinate initially, but in the longer term, leadership and drive must come from ports, terminals, carriers, shippers, and third party logistics providers. A user group would provide a forum for two-way communications between the users and State of Ohio economic development and transportation representatives, and an opportunity for networking among service providers and shippers, as many potential shippers may not understand the details of how barge shipping could work for their product or raw materials. The Ohio River users group could be formed for the State of Ohio or for the river corridor including Ohio as well as states on the Ohio River which border Ohio. 18

Ohio Working Paper 5 Options for Enhancing Use of Ohio s MTS Advocate for Maintenance of the Ohio River System The protocol is set such that annual federal appropriations by Congress are needed to fund the following fiscal year operations and maintenance (O&M) for locks and dams on the inland waterway system. The issue of inadequate annual federal funding for lock maintenance and upgrades was the concern most frequently mentioned by stakeholders, as it impacts all who use the waterways system: shippers (manufacturers, agricultural producers and others), carriers (barge lines), ports and terminals. The U.S. inland waterway system is the envy of the world when it is maintained, but annual O&M is required to sustain its function and reliability. Keeping the marine highway open, reliable, and functioning at a high level of performance is vital to the Ohio economy. Stakeholders request the state of Ohio join in a collaborative effort to advocate for adequate federal funding for the Ohio River system. The stakeholder consensus is that the USACE makes good use of funds provided by Congress each year, but years of underfunding budget amounts requested for preventive maintenance are adversely affecting the performance and reliability of the waterway system. Securing sufficient annual federal funding for maintenance of the system is a top-priority concern. 3.2.1 ODOT Considerations It would be helpful for the state of Ohio to participate as a stakeholder in requesting annual federal O&M funding for the Ohio River. The USACE s budget requires an annual appropriation. Stakeholder groups need to maintain close contact with their representatives in Congress about the importance of increased maintenance funding for the Ohio River system, as well as reinvestments in its improvements. The state of Ohio receives many benefits from water transportation. These include more jobs and added tax base provided by industries that enjoy competitive barge rates, reduced road repair costs, and its attractiveness to both existing and prospective industries that have multimodal needs. The Ohio River and its system of locks and dams provide the state direct access to the most economical, environmentally friendly, and fuel-efficient mode of transportation available for moving large volumes of heavy cargoes. The river is the water highway to regional, national, and international commerce, and it is in the best interest of the state for the river to be consistently maintained and reliable and for shippers to have confidence that this physical concern is being addressed in order to avoid costly delays. 19

Ohio Working Paper 5 Options for Enhancing Use of Ohio s MTS Improve Ohio River Ports and Terminals Web Presence Individually and Collectively Stakeholders expressed the need for a stronger online presence for MTS users along the Ohio River, both individually and collectively. Customers, economic developers, and site selectors go to the Web first for information. We must build websites to market to industry sectors, says Bill Dingus of Lawrence Economic Development Corporation (LEDC). In today s world, potential customers get on the computer and chase [information] down. Site selectors for new industries start with a Web search. A potential waterway transportation user must be able to go online and quickly and easily obtain information helpful in assessing freight transportation options, as well as a sense of location, general capabilities, and phone and/or email for service providers. Those users not fully familiar with waterways shipping often do not know where to start, or whom to contact, as this is a networked deal either involving a freight forwarder or 3PL, or involving five service providers. A website could provide guidance here, making the shipping process simpler and thus increasing MTS usage. For individual ports/terminals, it is vital to present a credible website providing general information on location, capabilities, and contact information in a user-friendly format. Some states have developed a common template for use by individual ports/terminals, which ideally includes an aerial photo, location, description of facilities, a capability statement, and specific contact information. A collaborative effort of all the businesses along the river, linked and networked, would also be ideal. A statewide website would provide a valuable resource, with an interactive map showing terminal locations and with links to individual websites. Creation of a statewide online resource showing all river terminals and contact information, similar to the CORBA CORIS project, would provide opportunities for economic developers to obtain information in a timely manner and could help potential waterways users identify resources. Bill Kinzeler identifies the CORBA website as a good example of an interactive repository of information, with its map (CORIS) of a 19-county region and 143 identified sites such as marine services and river terminals, contact information, highway access, and storage. A central website location covering a designated area such as a statistical area for data collecting or a span of river miles managed by a voice for the river in conjunction with other agencies or organizations across the river with links to assets all along the river would provide an excellent marketing resource for potential customers and serve to promote the state, the river, and the region. 20

Ohio Working Paper 5 Options for Enhancing Use of Ohio s MTS Figure 3-1: Central Ohio River Information System (CORIS) Source: CORBA 3.3.1 ODOT Considerations State leadership in developing better Web presence is needed and will benefit economic developers, ODOT, shippers, and all parties. Ideally, each port or terminal would have its own website, linked to the website for its port statistical area, promoted individually and collectively. The ODOT website under its maritime section could provide links to each port statistical area. Designate a New Principal Port Statistical Area between Huntington and Pittsburgh Waterways stakeholders expressed concern regarding the gap between the Huntington statistical area and the Pittsburgh statistical area. Significant volumes of freight flow through numerous ports and terminals in this reach of the Ohio River. Waterborne commerce data is collected in this gap area and reported as part of total Ohio River tonnage statistics, but not attributed to any port. USACE collects data on tons of cargo moving through Ohio River locks, as well as data on cargo volumes by origin/destination, which is only reported in a collective manner to preserve confidentiality. The U.S. Congress and USACE make decisions and set priorities based on numbers. The USACE reports data by waterway, by river segment, and by port statistical area, known in USACE as Principal Ports. USACE responds to local requests to designate reasonable statistical areas as Principal Ports and reports annual cargo volumes for these Principal Port statistical areas. The designation of a Principal Port statistical area does not alter the sovereignty of any state or local jurisdiction or 21

Ohio Working Paper 5 Options for Enhancing Use of Ohio s MTS alter the powers, duties, and boundaries of any port authorities or port districts; it merely creates a statistical reporting area, much like the Standard Metropolitan Statistical Area (SMSA) is for population statistics. Figure 3-2: Ohio River Principal Port Statistical Areas Source: Ohio Department of Transportation Principal Port statistical reporting areas on the Ohio River may encompass multiple states and multiple port authorities. Principal Port statistical areas have been established for Pittsburgh (all rivers in western PA), for Huntington Tri-State (parts of WV, OH, KY), and most recently for Cincinnati and Northern KY. There is a significant gap of nearly 217 river miles between the Huntington Tri-State Principal Port statistical area and the Pittsburgh Principal Port statistical area, basically from the Belpre-Marietta-Parkersburg area to the Steubenville-East Liverpool- Weirton area. Redefining these statistical areas helps with enhancing awareness of the significant amount of river traffic in the region, marketing efforts, and attracting the attention of potential shippers, says Larry Heck, Pier 48, Wellsville, Ohio. 22