Ocean vessel feeder services - arrangements under which small ships and barges ferry cargo from large ports to smaller facilities - have long been popular in Europe and Asia, but they continue to play a limited role here. That may be changing soon, say maritime industry observers.

Increasing road congestion could lead shippers to seek alternative transportation options for moving freight between ports. "Until now, we've always been able to rely on trucks for timely and cost-effective transport from our major ports," says Asaf Ashar, director of the National Ports and Waterways Institute in Arlington, Va. "But with the current congestion on our major highways, the supply chain is getting bogged down and becoming more costly. Vessel feeder operations represent a win-win [proposition] for all concerned."

Prompted by these same concerns about congestion, a group of maritime industry stakeholders recently formed the Coastwise Coalition to urge shippers and carriers to ease the problem by shifting more freight from land transport to coastal shipping. As international trade increases, the need for fast, reliable, cost-effective, and ecologically sound regional transportation will grow, says Executive Director Rolf Marshall. He adds that coalition members believe that small, efficient container vessels in coastwise trades could help alleviate the pressure on ports, highways, and railroads.

In fact, ocean carriers may have no choice but to rely on feeder services in the future. As ships carrying in excess of 8,000 TEUs (twenty-foot equivalent units) come into service - and there's talk of 10,000-TEU vessels - the number of ports that can accommodate these behemoths will dwindle. Rather than deepen their channels to accommodate the new generation of ships, Ashar maintains, ports should be devising a strategy that would make the best use of ships of various sizes. He foresees 'round-the-world services using a handful of huge mother ships that would feed cargo to smaller vessels, which then would fan out to other nearby ports.

Though conditions appear to encourage further development of coastal feeder services, a couple of barriers to growth remain, observes Jill Simpson, marketing manager for the Port of San Francisco. Prominent among them is the Jones Act, which reserves domestic water transportation for U.S.-registered and -crewed ships for national security and defense purposes. Because the high cost of U.S. labor makes it expensive to operate ships in domestic service, domestic investors have shown very little interest in this business. "We'd love to develop a feeder network here, but the Jones Act really hurts us," Simpson says. Rex Sherman, director of research and information services for the American Association of Port Authorities (AAPA) in Alexandria, Va., concurs: "Of all the regulatory obstacles [to coastal shipping's success]," he says, "this appears to be the biggest."

Opponents of the law, who believe that high costs are hastening coastal shipping's demise, have filed legislation that would allow carriers to use lower-cost foreign-built ships in domestic trades and provide limited access for foreign carriers in U.S. coastwise transportation. That legislation, the Coastal Shipping Competition Act (H.R. 2406), was filed in May by Rep. Nick Smith (R-Mich.).

But the Jones Act has its defenders, and some say that wider participation by U.S.-flag players in this burgeoning area is indeed achievable. "This country can develop a comprehensive transportation policy without compromising our national security," says John Graykowski, partner in the Washington, D.C., law firm of Dyer Ellis & Joseph and a former acting administrator of the U.S. Maritime Administration. "There is enough capacity in the existing U.S.-flag fleet to support a very good feeder network," he insists. "We just don't have enough carriers with the courage or imagination to make that kind of commitment."

Another barrier to the expansion of feeder service is the Harbor Maintenance Tax (HMT), which applies to domestic as well as foreign inbound shipments, reports the Port of San Francisco's Simpson. The HMT, she says, puts undue pricing pressure on feeder services. "When you are penalized for every inbound move, the whole idea loses its appeal."

Regulations aren't the only factor affecting the viability of feeder services in North America. There are practical considerations as well. Douglass Coates, a partner with Manalytics International , a San Francisco-based transportation consulting firm, says that all-water feeders have a place in transportation, but only for low-end goods that are not time-sensitive. "You are not going to see a J.C. Penney or a Wal-Mart settle for feeder service," he says, "unless they're given a big savings incentive."

Coates, in fact, believes that the domestic truck and rail network in the United States is so efficient that it makes all-water feeders uncompetitive. "It's not like the situation in Europe or Asia, where roads and rail systems are relatively undeveloped for high-volume container movements," he says. "Here, we have a marvelous infrastructure that is really a model for the rest of the world." A case in point, he notes, is Matson Navigation Inc. , which launched a weekly U.S. West Coast water service more than six years ago but abandoned it last fall in favor of a twice-weekly intermodal link between Southern California and the Pacific Northwest.

Although Matson was unable to turn a profit on its West Coast water service - and Ashar, for one, believes that the service would have succeeded if it had focused on smaller ports and deployed smaller vessels - there are many examples of successful and profitable feeder services nationwide. Some focus on bulk commodities, while others have found their niche in moving containers between ports.

The Port of Portland, Ore., for example, has profited by its long relationship with bulk specialist Sause Bros. Ocean Towing Co. Sause has become the leading transporter of both oil and chemical products and Pacific Northwest forest products by barge on the West Coast.

According to Aaron Ellis, the port's maritime public affairs manager, Sause Bros. has been around since the mid-1960s, when it initiated a scheduled barge service to the Hawaiian Islands. Today, the company transports specialized commodities such as wood and paper products, construction materials, modular homes, petroleum products, liquid chemicals, and salt along the Pacific Coast and among the Hawaiian Islands. Much of this cargo moves in and out of Portland and Longview, Wash.

Another successful coastwise service is Totem Ocean Trailer Express (TOTE), which carries both containers and roll-on/roll-off (ro/ro) cargoes between the ports of Anchorage, Alaska, and Tacoma, Wash. TOTE operates three fast U.S.-flag ships two or three times weekly and is the largest provider of ocean shipping services to Alaska. The Port of Everett, Wash., meanwhile, operates scheduled barge services that deliver containers between Everett and the ports of Seattle and Tacoma . Everett, although smaller than its neighbors, represents a significant market, operating eight berths on 100 acres of land and handling approximately one million tons of cargo per year.

On the East Coast, the Port of Boston had to make strategic decisions regarding feeder services last year after losing direct calls by Maersk Sealand. "Though we are actively soliciting other carriers to make a direct call here, our feeder services have all increased their businesses," says spokeswoman Georgeanne Tacelli. Most of that feeder business is moving via Halifax, N.S., and the Port of New York/New Jersey , she notes.

Columbia Coastal Transport is one of the feeder operators serving the Port of Boston. The company's business has grown so much that it recently moved to new, larger quarters in Clark, N.J., to accommodate demand, says President Bruce Fenimore. Columbia Coastal Transport, which has been providing regularly scheduled container feeder services for more than 10 years, deploys 16 U.S.-flag container barges in regularly scheduled operations to and from the ports of New York/New Jersey, Boston, and Portland, Maine, in the Northeast; New York, Philadelphia, and Baltimore in the Mid-Atlantic; Wilmington, Del., Charleston, S.C., Savannah, Ga., and Jacksonville, Port Everglades, and Miami, Fla., in the Southeast; Houston and New Orleans in the Gulf; and Freeport, Bahamas, in the West Indies. In addition, there are four sailings each week in the Chesapeake service that links Baltimore; Norfolk, Va.; and Philadelphia.

Lauren Kotas, director of marketing and trade development for the Canaveral (Fla.) Port Authority and chair of AAPA's planning and research committee, says her group's members want to encourage even more carriers to operate coastal feeders. "An expansion of nationwide feeder services is something that remains high on our agenda," she says.

That's a goal that many in the industry believe is eminently achievable. Though cost and regulatory factors have constrained growth in the past, oversized ships, growing road congestion, higher fuel costs, and a continual shortage of truck drivers will likely tip the balance in feeder service's favor before too long.