A Shipbuilder’s Assessment of America’s Marine Highways CCDOTT Concept AMH Vessel Prepared by General Dynamics NASSCO TOTE Vessel built by NASSCO - 2003 General Dynamics NASSCO 2798 East Harbor Drive San Diego, CA 92113

Executive Summary This report provides a shipbuilder’s assessment of America’s Marine Highways (AMH), based on the body of knowledge as represented in current literature related to AMH, dialogue and debate at AMH conferences, insights from potential operators, and insights as a key stakeholder with relevant experience. We find the SNAME O-36 definition of America’s Marine Highways to be the most precise and adopt it for this study: “Freight service operations carrying either containerized or trailerized cargoes (or empties) via the coastal waters and river systems of North and Central America,...

2035.3 The 2006 “Four Corridor Case Studies of Short-Sea Shipping Services” study conducted by Global Insight and Reeve and Associates evaluated opportunities on four potential domestic lanes: Gulf to/from Atlantic Coast Corridor, Atlantic Coast Corridor, Pacific Coast Corridor and Great Lakes Corridor. The study concluded that more than 78 million trailer loads of highway and rail intermodal freight moved along the US contiguous coasts in 2003 would have been eligible for consideration for Marine Highways transport. The Gulf Coast to the New York, New Jersey, Pennsylvania (NYNJPA) region had...

• o Provides much needed volume to U.S. shipbuilders, increases shipbuilding efficiency, maintains industrial capability, and reduces the cost of Navy vessels through reduced overhead o AMH series vessel production has the potential to create approximately 97,000 man-years of work with an economic output of $39B over a period of 10 years.5 Transportation System o Increased goods movement capacity and improved utilization of resources Despite the anticipated benefits, market potential, the conceptual potential of AMH as a complimentary mode within the existing domestic freight intermodal network,...

AMH has always existed as a form of transport in the U.S. Early American colonists stayed connected to other settlements to trade and barter goods using ships that moved up and down what is now the New England coast. The report, “America’s Deep Blue Highway,” by the Tufts Fletcher School in September 2008, talks extensively about how early coastal shipping had a binding influence within a young nation. Shipping goods between ports created towns that grew into cities. Maritime transportation was a critical element of the country’s prosperity and security well into the 20th century, as evidenced...

as illustrated in Figure 3. While economics have proven to be the most significant hurdle to moving AMH forward, the cost of the vessels (even the higher costs of U.S. built Jones Act vessels), was found to represent only 14% of the total cost per trailer. Series production and leveraging international experience could substantially reduce this cost. The most significant costs for AMH on a per trailer basis remain the landside costs including truck drayage to and from the terminals, port costs, and fuel costs. This serves as a reminder to evaluate AMH costs within the context of the total system....

assessing the commercial viability of AMH. These benefits include: maritime industrial base improvements, national defense, DoD freight movement, sealift benefits, homeland security benefits, increased national goods movement capacity, and significant economic stimulus. Opportunities to Influence Success: Reducing the Costs of AMH Vessels Contrary to expectations, the cost of labor in the U.S. is not a prohibitive factor in the overall cost of a U.S. built vessel. The U.S. ranks third or fourth in the hourly cost of labor compared to other key shipbuilding nations. When compared to world-class...

Figure 4: Benefits of International Partnerships Figure 5: Experience with International Partnerships A General Dynamics NASSCO Document 8

Figure 6: International Partnerships and Series Production Impact on Cost 70 70 60 85% Learning Curve Lack of historic volume results in steeper learning curves in U.S. Shipyards Manhours/CGT 50 50 40 40 30 30 20 Manhours/CGT 60 20 92% Learning Curve 10 10 0 0 1 1011 2021 30 31 40 41 50 Ship Number Korean Commodity Shipyard NASSCO (DSEC Model) Korean Specialty Shipyard NASSCO (Historic Practice) Series vessel production can also result in significant economic stimulus. The Shipbuilder’s Council of America estimates7 that the economic multiplier of the U.S. shipbuilding industry is 2.8; meaning...

awareness of AMH opportunities. However, AMH appears to suffer from a lack of clear, consistent messaging. Coalitions exist to support individual markets, however, no single coalition entity currently exists that can advocate on behalf of AMH as a whole. Therefore, message consistency and an organized process for securing a national strategy and funding in support of AMH goals have suffered. While the potential public benefits of AMH are significant, those benefits will not be realized if the business cannot be financially profitable. A concise message and a targeted, comprehensive informational...

Introduction The United States is a maritime nation. We have access to coastlines on both east and west boundaries of our country, as well as in the Gulf of Mexico. These coastlines have supported the growth of our nation’s financial and cultural prosperity. Despite our maritime heritage, the United States is no longer a global leader in maritime transport or shipbuilding. The value and quantity of goods imported into the U.S. drive the global economy, however only a small fraction of those goods move on U.S. Flag vessels. Of those, an even smaller percentage of vessels are Jones Act qualified....

The larger challenge for shipbuilding in the United States is the ability to secure series production. Ship owners, including the U.S. Government, have preferred to have highly specialized vessels in limited quantities. When producing any item in limited amounts, manufacturers struggle to reach maximum benefit through process learning and supply chain advantage. The cost of vessels will decrease as the volume of vessels built in US shipyards goes up. America’s Marine Highway offers a rare opportunity for U.S. shipbuilders because the market is well suited to series vessel production over many...