Albany Express Barge

The Port Authority of New York State and New Jersey (PANYNJ) continually searches for alternative routes to move containerized cargo to and from ports to avoid the increased amount of road, bridge and tunnel congestion in the region. The following case study explores the Albany Express Barge Service, which ran between 2003 and 2006, and discusses the policies, regulations and changing economic conditions behind recent plans to restart the service.

In 2003, PANYNJ, in cooperation with the Port of Albany and Columbia Costal Transport, a private containerized cargo feeder service firm, began offering the Albany Express Barge service (Port Authority of New York & New Jersey 2002). This container-on-barge (COB) service moved containers between Port Elizabeth in New Jersey up the Hudson River to the Port of Albany. The service received $5.3 million in Congestion Mitigation and Air Quality Improvement Program (CMAQ) funds, which jump-started the project. The CMAQ funding provided an up to 80 percent reimbursement of the operation’s net deficit. New York State also provided $2.4 million to purchase the harbor crane used to unload the barges (Franchini 2014). The CMAQ and state funding allowed the barge service to undercut the trucking rate by nearly 22 percent or more in transit cost per container (American Association of Port Authorities 2005).

The Albany Express barges carried containers containing less time-sensitive bulk commodities such as timber, scrap metal, paper and silicon upriver to Albany. The transit time for these trips took 18 hours, compared to 12 hours by truck. The New York State Department of Transportation estimated that the service would save about $1 million each year on highway maintenance and reconstruction costs (Franchini 2014).

The Albany Express Service was suspended in 2006, with reasons cited of a lack of the funding (that subsidized the transportation rates), a lack of interest from shippers, and higher than anticipated transportation costs. At the start of the project, the Albany Express Service offered trips twice a week, but shortly cut trips to once a week due to low demand. In 2003 and 2004, the Port of Albany handled 512 containers and 4,243 containers, respectively. In 2004, more than 6,000 containers were projected (Franchini 2014). However, by the time it ceased operation, the Albany Express Barge service had transported only 8,486 containers. This translated into fewer than 30 containers per trip on barges that could handle 240 containers (Times Union 2014). Unanticipated transportation costs also negatively affected the service. Existing contract terms required the service to pay stevedores overtime rates, which increased overall costs by 50 to 75 percent over planned rates (Franchini 2014).

In May 2014, planners at the Port of Albany revisited the Albany Express Barge concept in response to changing economic conditions and anticipated growth in traffic in the region (Times Union 2014). Recent events have created an environment where a new barge service might flourish. These events include new longshoremen contracts that reduced rates for barges, increased barge canal traffic, increased road congestion around the New York City port, and a recent shortage in truck drivers (Franchini 2014). The following section describes the history of these motivating factors in both the original and planned new service in more detail.

Figure 45

Project Policies, Programs and Motivations

This section explains the original and planned barge services.

Original Service (2003-2006)

During a presentation at the Port of Albany’s Industry Day in May 2014, Mr. Michael V. Franchini of the Capital District Transportation Committee (CDTC) stated that initial concept for the container barge feeder service began in the early 1980’s. Approximately 85 to 87 percent of all cargo arriving by ship at New York area ports was leaving by trucks (Franchini 2014). These trucks faced delays caused by long queues dockside, and congested New York metropolitan area highways and bridges. These added delays and tolls pushed transportation costs higher and reduced reliability.  A feasibility study was conducted to explore the option of a container-on-barge service to address these issues. The study concluded that the service was a viable development option that should be explored by the Albany Port District Commission. Subsequent studies identified the types of facilities, operations and potential costs for service. The Commission found that the service could be profitable if it moved between 16,000 and 24,400 twenty-foot equivalent units (TEU’s) annually over a period of three years (Franchini 2014). These plans laid the foundation for the Albany Express Service and facilitated the project’s planning, CMAQ and state funding and full implementation in 2003.

Planned New Service

In 2014, the Albany Port District Commission began an effort to restart the Albany Express Barge Service after receiving interest from shippers and carriers. The Albany Port District Commission is currently developing a 3-year business strategy that will establish milestones and monitor project progress. This work includes securing funding from the United States Maritime Administration (MARAD), New York State economic development agencies, ports, and state and federal air quality programs. Other planned activities include new marketing campaigns to develop interest and demand for shipping containers, establishment of an industry and public-sector working group to advise and assist with operational planning, and the development of a strategy to address the issues that halted the original service. This approach will help ensure that the new service addresses the concerns expressed during the original service’s operation regarding trip frequency, reliability and costs (Times Union 2014).

The motivations behind this planned new service include changing logistical conditions. For example, the completion of the enlarged Panama Canal in 2015 will increase the number of large container ships arriving on the eastern starboard, including at the Ports of New York and New Jersey. These ports already face limited container storage. As a result, the Ports will need to move the containers at faster rates to make room for arriving cargo.  In addition, longshoremen contracts in Ports of New York and New Jersey have changed.  The contracts include rates for container barges that did not exist in 2006. The rates are approximately one-half the costs of the rates for container ships (Franchini 2014).

New regulations and policies are also driving the renewed interest in the barge service. The Energy Independence and Security Act of 2007 directed MARAD to identify waterways that can serve as short sea shipping routes. The National Defense Authorization Act of 2009 allocated federal funding for financially viable shipping routes that cover up to 80 percent of the total project cost. In 2010, MARAD implemented this program, and began supporting the development of a marine highway network nationwide. These policies formalize support for COB services and prioritize funding for these projects (Franchini 2014).

While economic and transport cost conditions have changed since 2006, the New York City metropolitan area remains a non-attainment area for air quality. The region is still pushing to reduce air emissions and traffic congestion. The CDTC estimates that a barge carrying only 100 containers once a week would eliminate 100 tractor/trailer trips. This would translate into a reduction of nearly 800,800 truck miles annually (Franchini 2014).

Lessons Learned

The motivations for the Albany Express Barge encompass a variety of goals for which mode shift represents an overall proxy. These goals include reductions in fuel use and emissions, easing of congestion, improvements in safety, increases in carrier efficiencies and concurrent reductions in shipper costs, and positive contributions to economic development. Three distinct areas of lessons learned include:

  • How and why did mode shift occur?
  • How did public policy influence this outcome?
  • How can this policy or program be transferred or adapted to other situations or locations?

The express purpose of the Albany Express Barge service was to cause mode shift. PANYNJ determined that 85 to 87 percent of all cargo arriving by ship at New York area ports left by truck. This trend created dockside truck congestion and contributed to congestion on the region’s bridges, tunnels and streets.  The State also contributed to this congestion as a major factor in the State’s air quality nonattainment.

The emergence of the Albany Express Barge service is a direct result of several public policies enacted at the State and Federal level. To reduce the heavy reliance of port customers on trucks to move cargo and to improve air quality, the PANYNJ and New York State DOT secured the CMAQ funding needed to make the barge service competitive with existing trucking service costs. The State also allocated state funds to purchase the infrastructure.

The transferability of the Albany Express Service concept as a project is applicable in areas where major ports have direct waterways to smaller feeder ports. An analysis of this case study identified the following key elements of a viable container-on-barge service:

  • Barge transportation costs must compete with truck alternatives. Planners must carefully factor potential added costs such as harbor maintenance taxes, and labor and lift costs into the overall transportation rate cost (Congressional Research Service 2011).
  • Niche markets for goods, particularly shippers of less time-sensitive products, must be identified and marketed to in advance. Understanding and addressing these shippers’ needs and concerns will ensure a consistent level of service demand.
  • Communication of benefits for all actors. Each actor involved in the project, from agencies at every level of government to shippers, carriers, and the intermodal operator, must understand the wide range of benefits of the service.  Planners must document and communicate the collective impacts of the project. For example, Federal and State agencies will experience benefits in air quality; reduced fuel consumption, emissions, congestion; and economic development. Carriers, shippers and truckers benefit from improved efficiency, lower costs and more reliability. Hub and feeder port benefits include improved throughput of cargo, additional revenue and potential subsidies for infrastructure expansion. Communicating these benefits will help build partnerships and maintain support for the project.

While the initial project failed, the lessons learned from the experience are shaping the planned restart of the Albany Express Barge service. Additionally, the Port of Richmond, Virginia on the James River (upriver from Hampton Roads ports – Norfolk, Portsmouth, and Newport News) is an example of a medium-size inland port that has maintained a container service for several decades. These lessons, coupled with the public and private partnership model, may offer promise for other mode shift projects.

Epilogue: Recent Developments

The plans to restart the Albany Express Barge Service that began in 2014 have yet to reach fruition four years later. The Port of Albany is known for its ability to handle oversized heavy pieces of equipment, in addition to grain and other commodities, making it a so-called “major heavy lift project cargo port.” The Albany Port District Commission undertook a strategic assessment and growth strategy in 2016 to understand market opportunities and potential growth patterns. Positioning the Port to support the container-on-barge service with the Port of New York & New Jersey was a Commission goal. Investment in the port looked to bolster the port’s reputation as the northernmost inland port in North America in operation year-round and ice-free.

In its 2016 regional freight and goods movement plan report, in the analysis of Strengths, Weaknesses, Opportunities and Threats (SWOT Analysis), the Capital District Transportation Committee (CDTC) characterized container-on-barge service from the Port Authority of New York & New Jersey to the Port of Albany as an “opportunity.” CDTC recognized that the expansion of the Panama Canal was one factor that could spur an increase in port traffic. The expansion could be used to justify facility development that would enable the port to handle this increased traffic. That much of this new cargo would not be time-sensitive added credence to the feasibility of the undertaking.[1] In addition, congestion around the New York City Port and a shortage of truck drivers continued to lend credibility to the new barge service.[2] The barge service was included in CDTC long term plans, though it was recognized that additional investments in facilities and operations would be required to make the service viable. The CDTC plan did not specify the costs of the improvements.

Though the Committee recognized the financial unviability of the earlier venture in container-on-barge service between New York City and Albany, it argued that current conditions could present additional opportunities.[3] The previous venture was thwarted primarily by a lack of backhaul volume, as almost all of the containers would return empty. In addition, shippers were unwilling to make commitments to the barge service, found the service unreliable, and the frequency of service did not meet the scheduled intervals. Mounting costs, including higher than anticipated rates for stevedores, also marred service. The new plan for barge service faced additional headwinds. In 2017, New York State passed a law restricting where oil barges could anchor in the Hudson River, despite the Coast Guard proposing ten new anchorages two years earlier.[4] The Coast Guard has deferred a final decision on the new Hudson River anchorages.[5] Global Partners, a firm that handles crude oil shipped by Hudson River barges and tanker trains, announced in 2018 that it would scale back operations at the Port of Albany after environmental groups and local residents opposed a planned expansion. However, Global planned to resubmit a scaled-back renewal application in 2018.[6]

Despite the hindrances, the press has reported some progress. Ardent Mills, a Denver-based flour and grain milling company, will be taking over the operations of a grain elevator at the Port of Albany formerly operated by Cargill, a major food conglomerate.[7] Though grain was one of the port’s top commodities, in 2017, Cargill shipped no grain out of the Albany port. The mill is capable of loading grain onto freighters but is not equipped to offload shipments. It will require modifications to accept grain shipments to Ardent Mills.[8] In addition, while exports declined in 2017, imports offset this reduction. Imports reached a 15-year high, while exports hit a 10-year low.[9] Port projects including warehouse construction and reconstruction of the wharf are moving forward.[10] A question mark in this expansion is General Electric, the port’s largest customer. The company was undergoing a major overhaul following a significant decline in its stock price.[11] Its use of the Port moving forward is uncertain. Another source of uncertainty for the Port of Albany, as at other ports, is the effect of new tariffs. The Trump administration’s tariffs on foreign goods are yet to be felt, but have administrators concerned.

Epilogue: Lessons Learned

The major lesson learned for this case study is mode shift from truck to container-on-barge is difficult to establish, and in many instances has yet to prove successful. The major challenge is the requirement of a large volume of containers for the shift to be economically viable. According to Scott Davies, director of the America’s Marine Highway Program, the freight community has to be onboard. They have to commit to freight.[12] Inconsistent freight has been a recurring problem for some services in the past.

Container-on-barge services face other challenges. Labor issues must be addressed. Rates for stevedores and other staff have proved problematic in some instances. Backhaul is another serious issue; the economics simply don’t work when barges lack sufficient cargo on the return trip or return empty.

Factors that promote container-on-barge programs are not going away. Congestion at New York and New Jersey facilities makes trucking cargo expensive and time consuming. A shortage of truck drivers may encourage alternative modes, including barge shipments. Containers-on-barge shipments are environmentally sustainable, making the programs attractive to governments and the public. Barge shipments can run 24 hours-a-day, seven- days-a-week. And international developments, like the expansion of the Panama Canal, can drive additional traffic to the ports.

[1] Anderson, Eric. Barges could bring new cargo traffic to Albany port. Times Union, May 3, 2014.

[2] Anderson, Eric. Port of Albany might help congestion at ports downstate. Times Union, May 1, 2014.

[3] Capital District Transportation Committee. Regional freight and goods movement plan. March 2016.

[4] Dendis, William. New law restricts oil tankers on Hudson. Hudson Valley One, October 28, 2017.

[5] Moore, Kirk. Coast Guard: No decision on new Hudson River anchorages. Workboat. March 15, 2018.

[6] Lucas, Dave. Global Partners withdraws application to build crude oil heating facility at Port of Albany. WAMC Northeast Public Radio, May 24, 2018.

[7] Staff Report. Ardent Mills finalizes agreement for Grain Elevator. Times Union, March 26, 2018.

[8] Nearing, Brian. Decades of grain exports end at Albany Port. Times Union, March 15, 2018.

[9] Center for Economic Growth. Albany Area Port imports climb to 15-year high.

[10] Buxbaum, Peter. Port of Albany: continued focus on heavy lift and project cargoes. American Journal of Transportation, Issue #667, April 09, 2018.

[11] The port of Albany: Giving GE a reason to stay. Jersen News. January 29, 2018.

[12] Moore, Kirk and Hocke, Ken. Boxed In: Container-on-barge services fight to fit into the transportation industry. Workboat. April 18, 2018.

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