Short-Sea Shipping a Viable Alternative for USMCA Capacity Storm

Shippers in the US and Mexico are facing significant supply chain challenges, including a trade imbalance, increased customer demands, cost pressures and tight cross-border capacity, which show no sign of improving soon. With truck-to-load ratios at an astonishing 50 to 60 available shipments per truck, shippers are constantly competing for available equipment, including dry van and intermodal containers and drivers.

Driver availability has been greatly impacted by the COVID-19 pandemic, taking many experienced drivers off the roads with new and potential drivers hesitant to take over the empty driver’s seat, despite the attractive hiring packages and bonuses offered by the carrier community.

Trucks dominate how products move between the US and Mexico, with more than 70 percent of goods transported over the road. Rail and intermodal come second and have grown over the last two decades in response to the privatization of Mexican railroads. However, rail and intermodal face their own challenges as there are not enough containers in the intermodal network to meet shipper demand. Rail providers are encouraging shippers to expedite container use and reduce idle time as containers are sitting empty or loaded at yards and plants. This, in combination with strong US domestic demand, makes it more difficult to send empty trains into Mexico and meet Mexican exporter equipment needs.

In this volatile environment it is vital to investigate new alternatives. Short-sea shipping through inland and coastal waterways can be a solution for capacity shortage problems, as one barge can take as many as 1,000 trucks off the road and move freight more effectively. There are about 25,000 miles of navigable US waterways, including canals, rivers, and coastal routes. There are 360 commercial ports and 237 lock and dam chambers that are underutilized, creating much opportunity to tap into. 

For shippers with sustainability and fuel emission objectives, incorporating short-sea shipping helps reduce their carbon footprint. Barge transport is second to pipelines as the most environmentally friendly mode of transport, as an average tow can carry one ton and run 514 miles on a gallon of diesel fuel versus 202 miles via rail or only 59 miles via truck.

Short-sea services connect Gulf of Mexico ports, such as Tampico and Altamira in Tamaulipas, Tuxpan and Veracruz in Veracruz state, and Puerto Progreso in Yucatan with Texas and Florida ports. In the Mexico-Florida ocean highway corridor there are several services with weekly departures and barges with capacity ranging from 800 to 1,000 TEUs (twenty-foot equivalent units) with reliable departures and arrival times, typically departing on Thursdays or Fridays and arriving in Florida early the following week, often with competitive port-to-port transits of three days. That’s as fast as the time a truck would take driving from Laredo, Texas, to Florida, without waiting a week or more at the border to find an available driver.

These services offer 20’, 40’ and even 53’ containers and a cargo weight capacity of up to 25 metric tons (compared to the traditional 20 metric tons by truck) providing additional benefits and savings to shippers. Specialized equipment, such as reefer, flat racks and open-top containers are also available.

Additionally, short-sea shipping is cost-effective. Barge rates can provide significant savings as they can be up to 35 percent less than truck and rail rates for Mexican loads delivered to Florida. Savings per shipment can range anywhere from US$500 up to US$2,000 depending on the route. Shippers can also consider transloading their cargo at Florida ports like Tampa Bay or Manatee to take advantage of the available truck and intermodal container capacity to serve the Southeast and Northeast regions.

Even in today’s challenging truck capacity market, competitive and reliable modes of cross-border transportation are available. It is imperative for supply chain leaders to navigate capacity challenges and consider shipping alternatives to maintain a best-in-class cross-border strategy.

Sources: www.iowa.gov; www.freightwaves.com