Feasibility of a Container-on-Barge Network Along the Texas Gulf Coast

Transcription

1 Transportation Research Record Paper No Feasibility of a Container-on-Barge Network Along the Texas Gulf Coast Michael S. Bomba and Robert Harrison Freight volumes in Texas and throughout the world have been increasing as a result of growing national economies and international trade. The use of intermodal containers to transport this freight presents the opportunity for a more efficient transportation system. Using barges to carry containers could diminish roadway congestion, reduce fuel consumption and emissions, increase shipper options, and expand the reach of smaller ports. Although a number of benefits could be realized from containeron-barge (COB) service, the feasibility of a COB network along the Texas Gulf Coast remains less clear. At present, the likelihood of a COB network is slight because the hindrances are daunting: the lack of infrastructure and equipment; inadequate distribution of population along the Texas Gulf Coast; only a few navigable inland waterways, with none serving a major population center outside Houston; transport times that are incompatible with many manufacturers needs; a history of failed attempts for COB companies; intense competition from railways; unclear costs for serving ports without container infrastructure; and a limited number of participants due to restrictions of the Jones Act. Opportunities may exist, however, for a COB operation to exploit the substantial amount of industrial activity along the Texas Gulf Coast and the inefficiencies in the existing supply chain. Growing U.S. trade with Mexico might also offer some possibilities for COB services, but the recent trend has been toward Texas receiving a diminishing share of the value and weight of containerized commodities being moved from Mexico. It is common knowledge that during the past two decades international trade has grown dramatically among the countries of the world and, as one of the world s largest economies, Texas plays an increasingly important role. When it comes to moving trade, a substantial amount of the world s goods are shipped using intermodal containers. Although Texas s container activity has grown at both maritime and inland ports, in general, containers are used for relatively few commodities transported within the state. However, there may be opportunities for increasing container use in Texas and taking advantage of its intermodal benefits. One opportunity for creating a more intermodal transportation system in Texas would be to use barges along the Texas Gulf Coast to move containerized freight. The development of a container-on-barge (COB) network is a worthwhile proposal because there are a number of benefits that could be realized from moving containers on barge versus moving them by truck or rail. First, the state s roadways are experiencing increasing levels of congestion that have been exacerbated by placing more trucks on the road to serve a growing population and economy. Although the exact number depends on a barge s size, an average single barge could remove 58 trucks from Texas roadways. Second, barges are more fuel efficient than truck or rail. A single Center for Transportation Research, University of Texas at Austin, 3208 Red River, Suite 200, Austin, TX gallon of fuel can move a ton of commodities 514 miles by barge, versus moving the same ton 59 miles by truck and 202 miles by rail. Third, because barges use less fuel than truck or rail, they introduce fewer pollutants into the atmosphere. For example, 10 million fewer tons of carbon dioxide were released into the atmosphere because commodities were transferred by barge instead of by rail (1). Thus, COB service could offer opportunities to lower exhaust emissions in air sheds that do not meet U.S. Environmental Protection Agency criteria for air quality. Fourth, railways have had great difficulty improving their service after the recent takeovers and mergers. COB service would offer shippers another choice for moving freight, and that could increase competition. Finally, COB service could expand the reach of smaller ports with poor landside access by connecting them to areas outside their regions. This paper seeks to answer the following question, Given the potential benefits of COB service for the Texas transportation system and for shippers, is the creation of a COB network along the Texas Gulf Coast a feasible option? The paper will discuss some of the hindrances to establishing a COB network along the Texas Gulf Coast and will also point out some of the potential opportunities. Funded by the Southwest Region University Transportation Center Program as a preliminary research project, this paper does not explore the issue from the perspective of a cost analysis, but rather in general, practical terms. A more detailed study at a later date will explore the feasibility of a COB network along the Texas Gulf Coast from the standpoint of costs to shippers. BACKGROUND At present, there are several locations around the world where COB operators are providing service. The most successful of these operations is in northern Europe, particularly in the Netherlands and in Germany along the Rhine River. In Rotterdam trucks now carry less than 50% of the containers to and from the port because of the growing share of containers that are transported by barge. In Antwerp approximately 1.52 million containers were moved by barge in 2000, and between the ports of Rotterdam and Antwerp, 850, ft equivalent units (TEUs) were shipped in In Germany, the Rhine River has become the primary route for containers, and barge operators provide scheduled, frequent service (2, p. 22). COB operations exist in the United States, as well, located along the Columbia and Snake Rivers in Washington and Idaho, along the middle Atlantic Coast, and in Texas. There are also plans to develop COB service in the northeastern United States. Along the Columbia and Snake Rivers, barges carried more than 50,000 containers in 2000 between the port of Portland and the ports of Lewiston, Pasco, Umatilla, and Morrow-Boardman. Almost all the cargoes carried in these containers were agricultural and forestry commodities (3).

2 24 Paper No Transportation Research Record 1782 There is now one COB operation in Texas; it ships mainly containers of foreign aid for a major foreign-owned shipping line and repositions empty containers. This firm has projected that it would move 50,000 containers in Finally, the port of New York and New Jersey is planning for a regional network of container ports in the area to relieve congestion at the port. Current plans call for scheduled container barge service to operate between the port of New York and New Jersey and the port of Bridgeport in Connecticut (4, p. 36). Several attempts have been made to develop COB service along the Mississippi River, but none of these attempts has been sustainable. The last COB service to operate along the Mississippi River carried refrigerator compressors that were unloaded from Brazil at the port of New Orleans and shipped upstream to Illinois, where they were then transported to a factory in Indiana. This particular COB service ended in the mid-1990s (5, p. 31). Because there has been relatively little COB activity in the United States, it is not surprising that there is a dearth of research literature on the topic. During a literature search, only a few academic studies were found that examined the feasibility of COB service in the United States. A study by researchers at Louisiana State University (LSU), after conducting many interviews and a cost analysis, identified a number of problems with the prospects of a COB service along the Mississippi River (6). In particular, researchers found that COB service would not be appropriate for the transport of time-sensitive goods. In addition to not meeting the needs of many shippers, the longer transit times of COB increased a commodity s inventory costs. Researchers also pointed out that providing COB service was a risky venture and that entrepreneurs needed to have secure commitments before starting their operations. Finally, the LSU researchers warned that any COB operation must provide door-to-door service and not simply port-to-port service if it is to be competitive with truck or rail. A second study by researchers at the University of Arkansas conducted a cost analysis to determine at what mileage transporting containers on barge was more cost-effective than transporting them by rail or truck. Their study found that barges were a more cost-efficient mode for carrying containers when the distance was more than 1,341 miles (7). Among the previously mentioned examples of successful COB operations, typically, there are conditions that contribute to their success, and often they are specific to their environment. In Europe these conditions include population and employment densities, smaller travel distances, existing congestion, high costs of competing modes, and maturity of the intermodal industry. Europe s geographic size means that barges take a shorter amount of time to travel between ports, and the continent s high population and employment densities mean that large amounts of commodities are demanded within these short distances. Additionally, European countries tend to make more use of intermodal containers; therefore, the infrastructure to handle them is more widely available than in most other areas of the world. Although truck and rail modes are competitors with barge, they are less effective because they face much higher operating costs than costs that exist in the United States. Finally, the congestion that exists at Rotterdam and at other ports in Europe provides a strong incentive for these port authorities to promote other modes of transport in addition to truck and rail. The port of New York and New Jersey s COB proposal is an attempt to relieve congestion and is strengthened by the port s ability to make significant financial commitments. The Columbia Snake River COB operations have likely succeeded because they have been able to tap into a market using a waterway already developed for barge operations, with strong financial support from the port of Portland to the smaller river ports. Finally, Texas s COB operation has benefited from its ability to fulfill a niche market for a large shipping line, which is able to provide it with a steady stream of very specialized movements and one that a competitor would find difficult to replicate. DEFINING A COB NETWORK For the purpose of this discussion, COB service is defined as the use of barges to transport containers between water ports as part of the overall movement of a container of freight. The transport of containers by barge would also likely require that a container be moved by at least one other mode of transport for one or more segments of its journey. For example, a container of manufactured goods is transported from the factory to a port on a truck chassis and then transferred onto a barge. The barge carries the container to its destination port, where the container is unloaded and placed onto another trailer chassis and trucked to its final destination. If serving a stackedcontainer barge, a port must have the necessary infrastructure to move containers from ship, truck, or rail to the barge and vice versa. At a minimum, this would require a crane for moving the container onto the barge and probably would require other equipment for moving containers around the port s staging and storage areas. If containers were loaded onto the barge while on a trailer chassis, the equipment demands would be fewer, but the barge s capacity would be less and the cost per container would be higher. Additionally, ports must have the appropriate berths, channel, and dockside infrastructure to handle barges, tugs, and container-moving equipment. However, the equipment demands for moving containers by barge are not as great as moving containers by ship, because barge volumes are usually smaller and loading a barge does not create the same height and width issues for cranes. A COB network would be defined, in this discussion, as regularly scheduled COB services that move commodity- or good-filled containers by barge to, from, or between Texas ports with at least some routes having two or more competitive COB carriers. A COB network, in this discussion, also means that COB operators are able to effectively compete with truck and rail modes. HINDRANCES TO A COB NETWORK A number of factors could hinder the establishment of a COB network along the Texas Gulf Coast. Some of these factors are specific to the characteristics of Texas and its ports, but other limitations are the result of some basic principles of economics. The following sections will discuss these hindrances. Lack of Container Equipment and Infrastructure One of the most important hindrances to a COB network along the Texas Gulf Coast is a lack of container infrastructure. In fact, at present only three Texas ports have the necessary equipment and infrastructure to move containers efficiently: Houston, Galveston, and Freeport (see Figure 1). Among these ports, the port of Houston is the largest container port, processing more than 1 million TEUs in 2000 between its Barbour s Cut facility and, through a cooperative agreement, the port of Galveston. The port of Freeport operates a substantially smaller facility, handling approximately

3 Bomba and Harrison Paper No LOUISIANA TEXAS Port of Houston Port of Beaumont Port of Orange Port of Port Arthur Port of Bay City Port of Galveston Port of Victoria Port of Freeport Port of Port Lavaca - Point Comfort Port of Corpus Christi GULF OF MEXICO Port of Harlingen Port of Brownsville MEXICO FIGURE 1 Important ports in Texas. 60,000 TEUs in Many other Texas ports do handle some containers each year, but the numbers are relatively small and they have no regularly scheduled liner service. Additionally, these ports rely on ship-based or general-use cranes and have little dockside equipment for moving containers about the port. The current deficiency of Texas container facilities could be diminished if the ports of Corpus Christi and Texas City build their planned container facilities, but neither port has yet begun construction. The port of Brownsville acquired a container crane in 2002 but has no scheduled container service. of the economic activity in the state. However, among them, only Houston is located along the Gulf Intercoastal Waterway (GIWW). The remaining populace along the Texas Gulf Coast lives in secondary and tertiary population centers such as Corpus Christi, the Lower Rio Grande Valley, and Beaumont-Orange-Port Arthur. Although a substantial amount of trade flows from Houston to these smaller population centers, probably less trade flows back. Additionally, at present most of this trade is shipped in nonintermodal truck trailers or by rail; thus very few commodities could be easily moved by COB without shippers themselves moving toward the use of intermodal containers. Population Density and Distribution The density of population in Texas is very low in most areas of the state, especially as compared with other locations, such as Europe where COB service has been very successful. The largest population centers in Texas are Dallas-Fort Worth, Houston, San Antonio, and Austin (see Figures 2 and 3). These cities are responsible for most Texas s Inland Waterways Texas s inland waterway system consists primarily of the GIWW; there are only a few rivers in Texas in which any part of the waterway can be navigated by barge. However, for short distances the Guadalupe River (Victoria Barge Canal), Buffalo Bayou (Houston

4 26 Paper No Transportation Research Record 1782 FIGURE 2 Major Texas cities. ship channel), and the Sabine River (up to Orange) are navigable. The lack of navigable inland waterways in Texas means that none of the state s major cities could have access to barge operations, with the exception of Houston. The lack of waterways prevents any intercity barge service between the major Texas population centers, among which the bulk of the state s goods and commodities flow. It is unlikely that it would be financially feasible and almost certainly not environmentally permissible to dredge Texas s rivers so that barges could operate further inland. Typically, Texas rivers are narrow, shallow, and heavily vegetated, and often the channels are obstructed with trees and other debris. Most rivers have muddy bottoms, but in some areas there are shallow rock outcroppings that Persons Per Square Mile FIGURE 3 Population densities of Texas counties.

5 Bomba and Harrison Paper No could not be maneuvered without cutting into the subsurface. Additionally, many of Texas s rivers are dammed at least at one point for reservoirs and, because few of the rivers are presently navigable in any part, none of these dams have ship locks that would permit a bypass. Supply Chain Most shippers have come to expect relatively short transport times for their goods and commodities and all want some degree of certainty about when their product will arrive. Even when goods and commodities are not immediately needed, many shippers pay a premium to have them arrive within a designated time window when they ship them by truck. In some industries, such as the automotive industry, manufacturers and their suppliers tend to locate in relative proximity to one another and along major roadways, so that they can more efficiently serve their customers (8). To use a slower means of transport, such as barge, in effect adds significant distance between the sellers and buyers of a commodity or good, thus negating any of the positive benefits from clustering facilities. It has also been argued that a supply chain pipeline could be filled with multiple barges, so that barge shipments could arrive each day, just as truck deliveries often do. There are several potential problems with this proposition. First, because barges are capable of carrying a large number of containers, a fully loaded barge may carry more commodities than are required by the customer. That would create the need to warehouse these extra commodities, thereby eliminating one of the advantages of just-in-time manufacturing. Second, even if a barge is loaded only with the commodities needed before the next delivery, the barge operators may need to fill the remaining space. Given the previous difficulties of COB operations in the United States, it is questionable whether an operation would be able to acquire enough customers to arrange full barges. If not, the barge would move partially empty and this would increase the shipping costs per container. Third, many just-in-time manufacturers place orders a day ahead of time or even sooner. If it takes several days of barges to fill the pipeline, the flexibility of ordering is lost. Fourth, filling the pipeline creates an inventory cost that must be accounted for when the true cost of moving containers by barge is calculated. Given these problems, it is generally accepted that COB service is not capable now of meeting the needs of just-in-time manufacturing, although congestion and other conditions might make it feasible in certain limited situations. COB service may be feasible for containerized goods that are much less time sensitive. Typically, shipping less time-sensitive commodities and goods in containers means transporting goods that were once shipped as bulk cargo. As an example, agricultural products such as hay, potatoes, wheat, and pulp and paper products are being shipped in containers along the Snake and Columbia Rivers. Along the Texas Gulf Coast, there may be opportunities for agricultural products such as cotton and pulp and paper products as well as commodities produced by the petrochemical industry to be shipped by containers on barge, rather than as bulk goods via other modes. Historic Failures Although there are COB operators who have been able to provide their service and remain profitable, over the long term the success rate in the United States has not been very high. During the past two decades a number of U.S. COB operators have failed. As pointed out earlier, the Mississippi River has yet to see a sustainable COB service. The most relevant example of such a failure in Texas is a COB service that operated between Houston and Brownsville in The business failed because steamship agencies were not interested in moving containers by barge rather than by truck or rail (9, p. 3B). Rail Competition An intense ongoing rivalry exists between barge and rail operators to move bulk goods in the United States, particularly to transport agricultural commodities. There is no evidence that the situation is any different between these two modes when it comes to moving containers. In the past rail companies challenged COB operations along the Mississippi River through price-cutting strategies (5, p. 31). What often makes container competition different from bulk freight competition is the size of the COB operators. In many cases COB operators are small-scale firms, and it is questionable whether they would have the resources to survive a price war with a Class I or II railroad for an extended period of time. Admittedly, few, if any, rail yards exist outside Houston with intermodal facilities areas that could be served by a COB operation. But the reality is there is little containerized traffic flowing between Houston and these more remote and less economically diversified regions of the state. Costs The cost for a port that wishes to begin servicing container vessels is high if it seeks efficiency. Containers could be lifted with existing general-use cranes, but efficiency is likely to suffer. Often, container cranes are the most expensive component of servicing containers, with new cranes costing millions of dollars. Some ports have lowered this cost by using older cranes taken out of service at larger ports. For example, the port of Portland sold several of its older container cranes to the smaller ports of Lewiston and Pasco along the Snake and Columbia Rivers at a reduced rate, so that an inland barge service could be started (Fay Malloy, unpublished data). However, in addition to container cranes, there are other equipment and infrastructure costs that a port must bear to service the dockside movement of containers. Ports need container stackers and trailer chassis and, combined, the cost of these needs would be hundreds of thousands or even millions of dollars. Because the cost of servicing containers is so high, it is unclear whether a port could recoup this investment solely from user fees, particularly at smaller ports. Additionally, there is the question of the will and ability of Texas gulf ports to pay for new container infrastructure. In 1999 only three of seven Texas ports surveyed by the American Association of Port Authorities operated at a profit (10). On the other hand, smaller ports may decide to provide container-moving equipment and other infrastructure as a regional economic development tool, rather than as a profit-seeking enterprise. However, the history of build it and they will come projects does not bode well for the port industry. From the shippers standpoint, a COB service must be costeffective when compared with other modes of transport. One problem

6 28 Paper No Transportation Research Record 1782 with longer transit times is that higher inventory costs are produced (11). If COB shipping costs were fully charged, including the inventory costs and the costs for new infrastructure, it is questionable whether a COB service could operate as a successful alternative to truck or rail. In locations in which COB services have experienced the most success, such as in Europe, the fuel costs, roadway user fees, labor costs, and so on, are higher than in the United States. Higher costs in Europe significantly increase the cost of trucking and rail alternatives, making COB a viable alternative, even when the inventory and infrastructure costs are considered. The higher shipping prices of the truck and rail modes allow port operators or shipping companies to charge fees so that they recoup their investments in infrastructure and equipment. Given the relatively low cost of truck and rail transport in the United States, it becomes very difficult or even impossible for barge transport to effectively compete with truck and rail if infrastructure costs must be completely paid in the price of shipping. Jones Act The Merchant Marine Act of 1920, more commonly known as the Jones Act, prevents foreign-owned shipping companies and foreignbuilt vessels from operating between U.S. ports. Preventing foreign shippers from operating in domestic markets is nothing new. The French began doing so during the 16th century, and many countries in the world continue to do so today (12, p. 1A). The last major attempt to amend or repeal the Jones Act was in 1995, but the effort faced strong opposition from domestic shipping companies, maritime labor unions, U.S. shipbuilders, and national defense advocates. The U.S. Congress, the Clinton administration, and the U.S. Navy have all strongly supported the Jones Act, and it is unlikely that the Bush administration will pursue any major changes either (13, p. 12A; 14, p. 26). The prohibition of foreign-owned operators is important in the context of COB service because it prevents most of the world s major container shipping companies from serving U.S. markets. More specifically, these large carriers have the expertise and financial resources that would permit them to operate COB services that could effectively compete against railroads. Although a bill has been introduced in the 107th Congress to permit Jones Act carriers to purchase foreign-built vessels and permit limited access for foreign carriers, little support is likely for this effort (15). Shippers are now looking to address their differences with shipping operators outside the policy-making process through direct negotiations (16, p. 1). Limitations of the Jones Act have not had completely negative consequences on the prospects of COB service in Texas. In fact, the only regularly operating COB service in Texas fills a niche market produced by the limitations of the Jones Act. The company moves containers between U.S. ports for a major shipping company that is prevented from doing so because it is foreign owned. OPPORTUNITIES FOR A TEXAS COB NETWORK Despite the many problems involved in creating a COB network, there may be some opportunities. The following sections briefly review some prospects for creating a COB network along the Texas Gulf Coast. Distribution of Economic Activity Although the distribution and density of population along the Texas Gulf Coast are not necessarily conducive to COB service, a substantial amount of economic activity is located there. Much of this activity consists of petrochemical manufacturers who could potentially move certain bulk commodities by COB. Major petrochemical facilities along the Texas Gulf Coast are located in Harris, Chambers, Jefferson, Orange, Brazoria, Calhoun, and San Patricio Counties. Manufacturers in Mexico A significant portion of the goods consumed in the United States are manufactured or assembled in Mexico. Although the physical distance between many of the manufacturers and the United States is relatively small, the cost of crossing the border, in terms of time, is very high. Most of the trade entering the United States does so by trucks, and a cumbersome transshipment process at the border is required. Additionally, the roadway infrastructure at the border is extremely congested and insufficiently operated for current roadway demand. Railways are also experiencing significant congestion at the border. COB service could offer firms the opportunity to reduce border bottlenecks. For example, the port of Brownsville is attempting to construct an international bridge that would give trucks from Mexico direct access to the port. The possibility of avoiding drayage delays using this option could counter the longer transport times using barge; and if the cost savings are significant, COB service could become a feasible or even more attractive option. However, although opportunities may exist for U.S. Mexico trade to be shipped by a Texas COB service, the value and weight of the freight moved in containers from Mexico to Texas have been declining during the past few years. According to data shown in Table 1 from the U.S. Bureau of Transportation Statistics, Texas s share of the total U.S. value of containerized commodities moved by truck or rail dropped from 46.2% in 1998 to 7.9% in This decline in the flow of containerized goods to Texas has occurred even though the total U.S. value and weight of containerized cargo has increased. The drop in containerized cargo to Texas by weight has been less dramatic, 28.6% of the U.S. total in 1998 to 18.8% in Most of the decline during this period occurred in a single two-digit sector, which itself accounted for approximately 80% of all containerized trade transported to Texas in A review of the data also showed that many of the two-digit category s values and weights tended to fluctuate from year to year. What might be assumed from this information is that shippers will use containers when it makes financial sense for their business, and when it does not, they will ship by whatever means is the most economical. Additionally, the demand for goods and commodities constantly fluctuates, and this fluctuation in turn affects the demand for containers. Finally, the idea of moving Mexican containers to Texas using a COB service is not new, and the one previous attempt to bring it to fruition in 1985 ended in failure. Inefficiencies in the Supply Chain Perhaps the best chance for the development of a COB network along the Texas Gulf Coast will come from entrepreneurs who iden-

7 Bomba and Harrison Paper No TABLE 1 Mexican Imports to the United States Transported in Containers VALUE (in U.S. dollars) WEIGHT (in kilograms) State of Texas Containers Carried by Truck $644,838,966 $279,750,147 $126,644,493 95,804,427 85,235,801 78,524,411 Containers Carried by Rail $10,161,879 $29,648,854 $20,884,473 9,100,065 33,277,783 30,375,296 Total $655,000,845 $309,399,001 $147,528, ,904, ,513, ,899,707 Percentage of U.S Total 46.19% 17.93% 7.87% 28.63% 22.19% 18.82% All Other U.S. States Containers Carried by Truck $687,419,279 $976,290,831 $1,585,447, ,391, ,179, ,673,714 Containers Carried by Rail $75,486,874 $439,652,156 $140,673,427 78,135, ,396, ,135,358 Total $762,906,153 $1,415,942,987 $1,726,121, ,526, ,575, ,809,072 All U.S. States Containers Carried by Truck $1,332,258,245 $1,256,040,978 $1,712,092, ,195, ,415, ,198,125 Containers Carried by Rail $85,648,753 $469,301,010 $161,557,900 87,235, ,673, ,510,654 Total $1,417,906,998 $1,725,341,988 $1,873,650, ,431, ,089, ,708,779 SOURCE: U.S. Bureau of Transportation Statistics, tify and take advantage of niche markets created through inefficiencies in the supply chain. Throughout Texas s transportation network and beyond, there are bottlenecks that prevent the rapid movement and delivery of commodities. Many of these will likely arise from increasing roadway congestion and limited rail capacity. In some of these cases, circumstances will exist that would permit a COB operator to provide a service superior to truck or rail. It is primarily those individuals working in the shipping industry who know the precise location of these inefficiencies. Thus, whether or not these opportunities are exploited remains up to existing and potential entrepreneurs. CONCLUSIONS At present, the likelihood of a COB network forming along the Texas Gulf Coast is slight because the hindrances are daunting: the lack of infrastructure and equipment along with the high cost of its acquisition; inadequate distribution of population along the Texas Gulf Coast; only a few navigable inland waterways in Texas, with none serving a major population center outside Houston; transport times that are incompatible with many manufacturers needs; a history of failed attempts for COB companies; intense competition from railways; unclear costs for serving ports without existing container infrastructure; and a limited number of participants due to the restrictions of the Jones Act. However, there may be opportunities for a COB operation to exploit the substantial amount of industrial activity located along the Texas Gulf Coast and inefficiencies in the existing supply chain. Growing U.S. trade with Mexico might also offer some possibilities for COB services, but the recent trend has been toward Texas s receiving a diminishing share of the value and weight of containerized freight being moved from Mexico. It is unlikely that there will be any dramatic changes in the near term from lawmakers or policy makers that would support widescale COB operations. Specifically, lawmakers are unlikely to amend the Jones Act, so that foreign-owned shipping companies could operate COB services in the United States. Additionally, although there are many public goods that can be derived by the movement of containers by barge, state and federal governments have not provided any incentives to encourage these services. For example, despite stricter air quality standards in Houston, these federal restrictions do not provide any financial incentives for smaller ports to invest in the infrastructure that could be used to develop a COB service that would reduce the number of truck trips in Houston. The state of Texas also does not provide any funding to the state s ports for infrastructure improvements or port activities. In fact, any attempt by lawmakers to promote one mode of commodity transport over another would produce a flood of activity by industry special interest groups, and COB operators would likely be the weakest group. To plan for a COB network now would be difficult and perhaps premature. Any existing or new COB shipping companies will likely be relegated to operating in niche markets and exploiting inefficiencies in the supply chain. Thus, given the many hindrances to a COB network and assuming the unlikely intervention of government, port officials and entrepreneurs will need to take responsibility for beginning a COB network along the Texas Gulf Coast. Ports and entrepreneurs should continue assessing their markets to identify potential COB users, as well as identifying methods for repositioning transportation routes along supply chains. Transportation planners and researchers should continue to monitor the COB industry and reevaluate its viability, particularly if there are major changes in federal or state policies or changes to the strategies of Texas containerports that would be favorable to the development of a COB network. ACKNOWLEDGMENTS The authors of this paper would like to acknowledge the Southwest Region University Transportation Center Program for providing research funds to study this timely issue. The authors also wish to thank Colonel John Basilotto (ret.), director of the Center for Ports and Waterways at Texas A&M University at Galveston, and the students of his MARA 402 Inland Waterways class. Their work was thought provoking and influential in the development of this paper.

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