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Web site seeks to save Mare Island Shipbuilding

Petition seeks support on re-establishing shipbuilding at Vallejo

California wants to crack down on ship emissions

Petition seeks rules on pollutants at state ports
Margot Roosevelt
LA Times 10/3/07

Short Sea's Potential to Address U.S. Congestion, Energy and Climate Issues
AAPA Shallow Draft Conference at Memphis, Tennessee


By Stas Margaronis

At the outset of World War II, the U.S. Maritime Commission teamed with shipbuilders as well as road and dam builders such as Henry Kaiser to mass-produce liberty ships. This resulted in 2,700 ships which acted as a maritime conveyor belt for war supplies to Asia and Europe that helped win the war. The mass-production of ships integrated lessons from dam building and helped build new ship yards in record time. The ships were built using modular ship construction and by the introduction of welding. Shipbuilding and other war industries ended the depression by providing high-paying jobs, integrated women and minorities into the workforce and initiated company healthcare services such as the Kaiser system. Unfortunately, these new shipyards were shut down after the war and the innovations and technology outsourced to Japan. As a result, Japan became a global shipbuilding power, then Korea followed Japan's lead and now China is following theirs.

Today, this lost shipbuilding opportunity may be regained by the United States, if the growing crisis of pollution, congestion and foreign oil dependency inspires americans to shift truckloads off the roads and on to ships.

As background, AAPA's SEAPORTS magazine recently warned:
Congestion and freight bottlenecks may cost the nation as much as $200 billion per year.
The cost to taxpayers of maintaining the current transportation system could rise from $235 billion in 2006 to $304 billion in 2015.

In addition, the U.S. Energy Department warns:
The global warming threat is worsened by U.S. carbon dioxide emissions rising from 5,900 million metric tons in 2004 to a projected 7,587 million metric tons in 2025. Transportation and petroleum are leading carbon dioxide contributors. U.S. dependence on foreign oil will rise from 58% of us consumption in 2005 to a projected 68% of us consumption in 2025.

Finally, in 2005, the United States trade deficit stood at $782 billion: the U.S. deficit in petroleum accounted for $229 billion or 29% .

An investment of several billion dollars can build a new American short sea shipping network that can transform the way the united states transports freight. Ships can relieve congestion along coastal corridors, diminish our reliance on petroleum and roads, reduce pollution and save shippers money.

In so doing a national short sea shipping network can:

1) Empower U.S. ports and harbor workers to become the foundation of a new containerized transportation system that eliminates thousands of daily truck trips at numerous congestion points around the country.

2) Create a new generation of U.S.-manned coastal feeder ships that can cut the need for truck fuel by 50% and by so doing also cut truck emissions that contribute to global warming.

3) Re-establish the United States as a competitive shipbuilder and create thousands of new family wage jobs in shipbuilding communities.

4) Save shippers and carriers money and reduce traffic congestion at major ports such as LA/Long Beach, Norfolk and New York.

5) Spur the development of a new generation of us-built marine engines powered by non-petroleum fuels to advance the goal of zero petroleum imports.

6) Increase education and training of mariners to meet short sea requirements at us maritime academies along with new research partnerships in marine engine development, terminal handling and vessel safety.

7) Develop new partnerships with trucking companies to deliver short sea containers.

8) Develop new, automated cargo handling systems, on - dock rail and alternative power for ships that reduce emissions and fuel consumption.

9) Use main port assessments to finance new ships and terminal upgrades backed by ocean carrier contracts.

10) Revitalize the U.S. Maritime Administration (MARAD) so as to provide research and develolpment grants for: new marine engines, new terminal handling technology, better port security, safety and emergency services.

11) Earmark $1 billion for short sea shipping as part of the MARAD Title XI program. This will finance $20 billion in loan guarantees for ships, shipyards and should add terminal modernization.

12) Implement partnerships between MARAD, U.S. Coast Guard, U.S. Customs, Army Corps of Engineers and the maritime unions. Offer the new commercial fleet to the U.S. Navy as a new military sealift reserve.

AAPA members can make a major contribution to this effort by acting as the support group for the short sea shipping initiative. A system that can streamline transport along the east, west, and gulf coasts as well as the great lakes, and inland waterways such as the mississippi river.

Feedership service can relieve congestion at main ports, save shippers money and won't need taxpayer subsidy

The obvious starting point is to relieve congestion at major ports such as LA/Long Beach, New York/New Jersey and Norfolk without huge investments in roads, bridges and tunnels. A short sea service can take containers delivered at ocean carrier terminals and move them directly on to vessels for distribution at nearby feeder ports. This transfer can be done by direct crane to feeder vessel move or an adjacent ground to crane move. The result will be a substantial increase in port productivity.

As a result, a container ship carrying 150 forty-foot containers on a seventy-five mile voyage from Oakland to Stockton or Los Angeles to San Diego, can save shippers 10% on their trucking costs. If ocean carriers contract for the vessel service, no taxpayer subsidy is required.

New U.S. shipbuilding needed:

A critical issue is developing a domestic shipbuilding capability to build small and medium size feederships in the United States. The ships need to meet demanding fuel and air emission requirements. Operating in U.S. domestic trades, ships must be built in the United States, owned by us citizens and operated by U.S. citizens under the Jones Act. This mandate is critical in an increasingly dangerous national security environment. New maritime jobs will pay family wage incomes, generate new tax revenue and provide our children with an economic future.

Establishment of a short sea fund through the U.S. Maritime Administration's Title XI loan guarantee should be a top legislative priority in 2007. A $1 billion allocation for short sea shipping can provide $20 billion in loan guarantees for ships, shipbuilding and, potentially, port modernization. Long-term contracts with carriers or shippers are needed to guarantee the loans.

Container ships have the best hydrodynamics to carry time sensitive cargoes in a cost efficient manner, although, there will also be a need for tug/barges and roll on/roll offs.

Ports with industrial land, zoned for industrial use, should hold on to these properties. They are vital for port expansion, shipbuilding and repair. Legislative protection may also be needed to prevent real estate developments obstructing the nation's sea lanes and maritime commerce .

Military sealift implications:

New short sea ships can provide a reserve of modern, fuel-efficient, shallow-draft container ships that the U.S. Navy's military sealift command can deploy in a war time emergency or for a natural disaster.

Advantages to trucking:

Short sea's development of shorter distance trucking creates a new growth opportunity for truckers, a critical supply chain link. Satellite feeder terminals will allow trucking companies more turn times over shorter distances which improves productivity, and alleviates the driver shortage problem.

Reduced emissions:

By consolidating hundreds of truckloads onto one ship, the introduction of low sulfur diesel fuel for fuel efficient marine engines can far more quickly reduce harmful emissions than the phased in replacement of new clean truck engines.

Also, the possibility exists that coastal ships might be able to eliminate petroleum use altogether by going to a cleaner alternative power source, such as natural gas or electricity. This could be a major breakthrough in the effort to cut carbon dioxide emissions and the threat of global warming.

Southern California: a regional scenario

Short sea shipping has the potential to diminish Southern California's air quality problem. Truck-generated road congestion is a key factor. Ships can shift containers from la/long beach to nearby Port Hueneme and San Diego not only reducing congestion but making deliveries directly to end users. This eliminates the additional truck trips to and from distant distribution centers. The solution begins with the cooperation of carriers and shippers to stow containers from asia on vessels so that they are ready for transfer to feeder ships on arrival. Currently california is looking at plans to expand the long beach freeway at a cost of $5.5 Billion to accommodate port generated trucking. Short sea shipping reduces this need. Initially, six 300 TEU vessels offer the potential to eliminate 1,800 trucks from the two ports at a total cost of about $150 million. Currently, ocean carrier container demands require 14,000 trucks per day to serve the la/long beach ports. So $150 million buys a 13% reduction in truck congestion. It is estimated that shippers will realize a 10% reduction on delivery charges compared to road transport.

Long-haul trucking by water:

If ships can be competitive with trucks at a distance of 75 miles, they can be competitive on longer haul trips along the I-95 corridor on the Atlantic Coast and the i-5 corridor on the Pacific Coast. Trucking companies, such as California-based Weststar Transport, are looking to develop long-haul transport of truckloads by ship.

Improved port security and emergency services:

Feeder ships create the ability to de-consolidate import volumes into smaller manageable volumes for screening at feeder ports. New terminal designs can build in improved cargo handling with automated container screening to ease hazards to longshoremen and reduce the screening overload at main ports.

Feeder ships provide a shallow draft alternative to move cargoes in and out of main ports in case of natural disasters or terrorist attack.

In the case of an emergency, rivers and coastal locations can be served by feeder ships when roads and bridges are down.


Short sea's advantages include: new container business for feeder ports, new terminals, new shipbuilding, new ships, numerous economic development opportunities, improved emergency services and port security. Other benefits are less global warming, lower shipping costs, less transportation spending, less delays and a giant step towards energy independence for the United States.

We have succeeded at much greater challenges in our past: we built a national railway system, we built a national highway system, we produced a war machine that helped win World War II. Our space exploration capability has taken us to the moon and beyond.

It is time for Americans to return to their maritime roots and go back to sea.

Shipping pitch aimed at cutting truck traffic
Steel firm proposes to ease cargo flow with Oakland-to-Stockton fleet


By Mike Martinez, staff writer, TRI-VALLEY HERALD
Inside Bay Area

STOCKTON - A Santa Rosa steel company wants to build a fleet of small container ships to move cargo from Oakland to the Central Valley in an effort to reduce truck traffic on the highways and make deliveries faster.

During a presentation Tuesday morning at the Port of Stockton, officials from Santa Maria Steel LLC said they want to lease the dry-docks shipyards on Mare Island near Vallejo and hope to launch their first $15 million vessel sometime in 2007.

Stas Margaronis said the containers would be loaded directly from the mega-cargo ships pulling into the Port of Oakland to the Santa Maria vessels, which would then take about eight hours transporting the cargo to Stockton.

He said distribution centers lose their driver for a day going to Oakland, and if he can make two trips a day, he said, he deserves the Congressional Medal of Honor.

If he goes from ... Lathrop to the Rough and Ready Terminal, he can make two or three trips a day, Margaronis said. The trucking company is going to get at least twice, maybe three times, the production out of their driver, and that would reduce their costs.

He said company officials are currently seeking commitments from big-box users to use their shipping method for two to three years before they begin to build the Dutch-designed ships.

The ship design is already afloat in Europe and Asia, he said. It has been slow coming to the United States because they have not had the ship-building capabilities, Margaronis said.

Santa Maria Steel also wants to team with local community colleges in San Joaquin and Contra Costa counties in search of qualified welders.

Dr. Isidore Margaronis, president of London-based Margaronis Navigation and Stas Margaronis cousin, said the domestic ship-building industry has historically been dominated by the U.S. Navy, and commercial yards are not designed for mass production.

Ships cost an enormous amount of money to build here, and thats been a real disincentive, Isidore Margaronis said. A man-hour in the states for shipyard work costs less than in Japan, but the shipbuilding price in Japan is about half of that in the United States.

He said ships would be smaller than the ships currently winding through the Stockton Deep Water Channel and would use up to 75 percent less fuel than the trucks the fleets would replace. Mike Locke, president and chief executive officer with San Joaquin Partnership, a Stockton-based nonprofit economic development corporation that assists business and industry in moving to the county, said the ships would provide a major benefit to the Port of Stockton.

He said removing the slow-moving trucks from the highways would immediately improve the quality of life and relieve traffic congestion.

It's a significant economic benefit to the community by getting the containers off the freeway, Locke said. From an industrial perspective, it gives them an alternative to moving cargo that currently doesnt exist. Everything has to be trucked in and out of the Port of Oakland.

Margaronis discusses struggles to build shipyard on Mare Island


By Rachel Raskin-Zrihen, TIMES-HERALD staff writer

The "gag order" was the last straw, so Stas Margaronis is taking his case directly to the people of Vallejo, he said at a forum Thursday night.

Most of the several dozen people who attended the forum in the John F. Kennedy Library about Margaronis' struggle to open a shipbuilding business on Mare Island, seemed to favor the idea.

Even Russ Barnes of Cooper Crane & Rigging, Inc., which now occupies the dry dock area Margaronis wants for his enterprise, likes the idea of shipbuilding at the former naval shipyard. He said he just doesn't want to be put out of business in the process, and he's not sure a viable compromise can be found, despite Margaronis' assurances.

Myrna Hayes, of The Public Trust Group, said Margaronis' idea seems worth the risk of failure.

"We're selling ourselves down the river not marketing our waterfront as a working concern," Hayes said. "It's 16 acres; it's worth the gamble even in the worst case scenario."

She said the revenues generated by a shipbuilding business like Margaronis proposes, would "dump money directly into the city's quality of life issues."

A deal stalemate exists after three years of talks between Lennar Mare Island, the island's main developer, and Margaronis' Santa Maria Shipowning & Trading, Inc. The impasse has come down to what Lennar spokesman Jason Keadjian calls a perfectly common confidentiality agreement - and what Margaronis calls a gag order.

Margaronis says Lennar hopes to stonewall him and prevent him from ever going public if a deal is struck.

Keadjian calls the charge ridiculous.

"If this were a real business with real funding and a real business plan, they'd be operating on Mare Island today," Keadjian said Thursday night by phone. He added that Margaronis has tried and failed to set up shop elsewhere along the West Coast.

Margaronis blames the other false starts on a lack of existing dry docks in those other places. It's the dry docks that make Mare Island perfect for his vision, he said.

In a related development, Washington D.C.-based Lake Research Partners conducted a poll last weekend of "300 likely Vallejo voters," Margaronis said. The results of the phone survey, which had a margin of error of 5.7 percent, showed 65 percent of respondents strongly or not-so-strongly supporting the building of small cargo ships on Mare Island. The survey also found 16 percent oppose the idea, with 13 percent undecided.

Jan Cox Golovich of Benicia said she attended the forum because Mare Island needs a shipyard.

"Both my grandfathers, my father and my husband all worked on Mare Island," said the former Benicia City Councilwoman. "The shipyard is languishing and something has to be done. It's sad."

Forum planned to discuss attempt to build shipyard


By Rachel Raskin-Zrihen, TIMES-HERALD staff writer

Stas Margaronis said he's only begun to fight the forces opposing his efforts to create a shipbuilding business on Mare Island's former Naval shipyard.

A longtime Santa Rosa-based shipping businessman, Margaronis and several supporters plan a forum today to explain their mission and recruit a "grass-roots army" to help fight City Hall. "We're going to ask for people's support to persuade the city to negotiate a lease agreement with Santa Maria (Shipowning and Trading Company)," Margaronis said. The forum will be held at 6:30 p.m. in the John F. Kennedy Library's Joseph Room.

Lennar Mare Island spokesman Jason Keadjian said the island's main developer has tried everything in its power to negotiate a deal with the shipbuilder - going so far as to issue three signed letters of intent - and is baffled by Margaronis' refusal to sign them. "We support the idea of a responsible shipbuilding operation on Mare Island," Keadjian said. "We feel it's an appropriate land use and we are actively pursuing that opportunity."

Lennar is discussing leasing the dry dock area for shipbuilding with interested firms, Keadjian said. City officials, too, say they are eager to see shipbuilding resume on the island and blame the holdup on Margaronis. Lennar has expressed concerns over Santa Maria's economic viability and noise, light, security and regulatory issues, but those issues were resolved and still there's no lease, said community development director, Craig Whittom. "Stas wanted a lease signed within 90 days, and Lennar wouldn't agree to that," said Whittom, who said he was invited to today's forum but can't attend due to prior commitments. "Once a letter of intent is signed, lease negotiations start, and those take varying amounts of time."

Margaronis said he wants to build small cargo ships to transport containers along the coast to satellite ports for delivery. He said "trucking by water" will eliminate thousands of truck trips daily along California's highways, create hundreds of local jobs and generate millions of dollars in income and revenues for the city and its workers.

For three years, Margaronis, whose family's been in the shipping business for about a century, said he has met a steady stream of demands from Lennar, which has temporary title to the dry dock area.

"Lennar was never going to agree to a lease with Santa Maria," he said. "I went through the process at the behest of the City Council, but at the end of three years, when I asked them for a timetable, they refused. They never negotiated in good faith."

Keadjian said Margaronis is the hold-up. The most recent letter of intent, for instance, was declared reasonable by the city, he said.

"We regret that Santa Maria Shipping has chosen not to execute the three signed letters of intent we provided them," he said. Keadjian added that negotiations have taken many man-hours, and are beginning to feel like a waste of the community's time.

"(Margaronis) has no intention of ratifying any agreement," Keadjian said.

Margaronis said he's given up on Lennar and is turning to the city. He said Lennar's last offer demanded he not speak to the press or the city council for 90 days. He was willing to comply in exchange for a lease within 90 days, he said, adding 180 days also would have sufficed. But Lennar declined.

The area Margaronis wants for his shipyard is subject to a 2002 agreement between the state and Vallejo which mandates it for park and maritime use. The state would be the landlord and the city, its representative.

Vallejo granted Lennar temporary title to the area so it could supervise the former Navy site's cleanup. Once this is complete, probably this summer, the property would transfer to the state. But there are complications. City officials have said any deal must be made with Lennar.

Lennar accused of attempting to block shipbuilding business on M.I.


By Rachel Raskin-Zrihen, TIMES-HERALD staff writer

After more than a year trying to launch a shipbuilding business on Mare Island, Stas Margaronis on Friday accused his potential landlord of trying to block it with "poison pill" contractual language.

A Lennar Mare Island spokesman said the firm welcomes the shipwright idea but must protect its own, and the city's interests.

"All we want is a dialogue about how these areas will be used, how they'll be secured, access and other general, common facility design issues," said Lennar Mare Island, LLC spokesman Jason Keadjian. "We have, in fact, bent over backwards for Santa Maria Shipowning & Trading, Inc., to make this deal happen, but there are certain standards that must be met."

A Santa Rosa shipping business owner, Margaronis said his plan to build primarily coastal container ships to reduce freeway truck traffic along the West Coast will create hundreds of local jobs and generate millions of dollars in revenue for Vallejo. He said that Lennar has followed each obstacle he's overcome with a new one, and he doesn't understand why. He said he's also confused by what he said appears to be a lack of interest by city officials.

"I don't understand economic development in this city," Margaronis said.

City Councilwoman Stephanie Gomes said that on the face of it, a shipbuilder in the former shipyard "conceptually is a good idea - a good re-use of an area built to do just that."

Among the issues raised in an April 4 letter of intent from Lennar to Margaronis are several requirements Margaronis says are unreasonable. Lennar calls them "standard" - items Margaronis said Lennar had previously agreed to remove, but added again.

"After 13 months of negotiations, the thrust of the Lennar changes is to make it impossible to operate the shipyard," Margaronis said. His objections include restrictions on light, noise, air and water views that are beyond normal legal requirements, Margaronis said. A prohibition against outside storage of shipbuilding materials without written permission and language requiring Santa Maria to secure $2 million down payments from potential customers before Lennar will agree to lease it the shipyard, are essentially "non-starters," he added.

"This will make it impossible for us to solicit business from ship owners," Margaronis said. "Nobody is going to pay us money until we have a lease for the property. I don't tell Lennar how much to ask for down payments on houses, do I?"

Keadjian called Margaronis' description of Lennar's requirements "not accurate," and what Lennar is asking, "not unreasonable." "Basic planning requires making sure all these things are taken into account. The city expects us to coordinate issues like this, and what this document and proposed lease proposes is a dialogue about storage," Keadjian said.

He added that as a start-up business, Margaronis' shipbuilding enterprise needs to be thoroughly investigated to ensure neither Lennar nor Vallejo are stuck with half-finished ships littering dry docks No. 3 and No. 4 in case the business goes under.

Margaronis, whose family has been in the shipping business for about 100 years, concedes the proposed Mare Island shipbuilding operation is new, but in the same sense, Lennar Mare Island was also a start-up.

What Lennar is asking is not common in the industry, insists Brian Smith, a 40-plus year shipbuilding industry expert who has consulted with Margaronis during this process. He points particularly to the issue of outside storage as an apparently intentional roadblock. If Lennar is concerned about safety, it needn't be, since maritime law requires such facilities be fenced and have a security plan in place, Smith said.

"This is very unusual, what Stas is encountering. I'm doing some similar work in Philadelphia where the landlord is only too happy to have a business come in and do things," Smith said. "It seems to me Lennar doesn't want to do business with a shipbuilding company. I think they want to build more condos or something."

Vallejo community development director Craig Whittom said he believes Lennar is bargaining in good faith. He said city officials welcome the jobs and revenues the shipbuilding business would generate and that he believes Lennar does, too. The last part of this year will see a quantum leap in light industrial and commercial use in the parts of Mare Island designated for those purposes, Whittom said. He recognizes, though, that the process has taken longer than expected.

"Do we want it to move faster? Yes, absolutely," Whittom said.

Shipbuilding business to Mare Island? Man wants to lease dry-docks, but runs into many roadblocks


By Rachel Raskin-Zrihen, TIMES-HERALD staff writer

Vallejo Times Herald Stas Margaronis of Santa Rosa thought that with more than a hundred years as a shipyard, a new shipbuilding business on Mare Island would seem a logical fit. The owner of Santa Maria Shipowning & Trading said he therefore can't understand why the Island's main developer won't sign a lease agreement with him for a startup shipbuilding business. Margaronis hopes to build small- and mid-size container ships for moving freight along the coast.

A spokesman for Lennar Mare Island, LLC said the firm is considering leasing dry-docks 3 and 4 to Margaronis as long as certain concerns are addressed.

But Margaronis says he first approached Lennar officials three years ago with his plan and has hit what he considers inexplicable roadblocks at every turn.

"We've been negotiating for three years and they won't sign a confidentiality agreement. I think they may be concerned about the possible impact to their commercial and residential development," Margaronis said. "But it's an industrial area and there are other industries already working there."

Margaronis said the confidentiality agreement would prevent Lennar from disclosing certain details about the shipbuilding business.

Lennar spokesman Jason Keadjian denies the firm is dragging its feet.

"We met with representatives of Santa Maria in April 2003, and at the time, they were looking at a start-up business focusing on shipbuilding, and they were also looking at possible locations in Washington and Oregon," Keadjian said. "To our knowledge, they concentrated their focus on Oregon, were unsuccessful in reaching an agreement there, and talks between us resumed about six months ago."

Margaronis said Lennar's rejection, implicit in its refusal to sign a nondisclosure agreement, sent him looking elsewhere, but that the Oregon locations didn't have the dry-docks his business concept requires. Mare Island does, and city officials agree with him that regulations require a marine use for that part of the island. Margaronis more recently re-contacted Lennar with a longer-term proposal he thinks is an obvious winner.

Vallejo Mayor Tony Intintoli, Jr. said Monday the idea of a shipbuilding business on Mare Island "is a good one" that "fits in with the vision of the reuse plan," though he noted that details of any specific proposal, are negotiated between the parties.

Intintoli was instrumental in developing Mare Island's reuse plan after the shipyard closed a decade ago. He said that he's not privy to the Santa Maria-Lennar negotiations.

Keadjian noted there are financial concerns even as he said a dialogue between the parties is ongoing. "It's a startup in a risky industry and Lennar Mare Island is in the process of conducting a thorough and comprehensive review of the proposal," Keadjian said. "As the city's main developer for Mare Island, responsible for leasing, we must go through a process."

Keadjian said there are environmental, insurance and regulatory issues that must be addressed before an agreement can be reached. He said he couldn't elaborate on the details of those issues.

Keadjian said the 50-acre area containing the dry-docks, known as Area A-3, is undergoing a review of a remedial action plan. That review must be completed before any reuse can begin there. Remediation could begin by this summer, he said. "We're supportive of the entrepreneurial spirit, but we have to protect the city's interests and make sure it's a good fit," Keadjian said.

Margaronis said all issues raised by Lennar have been addressed, and that he's had positive response on regulatory issues with state environmental officials and the Army Corps of Engineers.

"There are no environmental obstacles except for dredging outside the dry-docks, and we're working on that," Margaronis said. "There are no insurance obstacles, we have our insurance and are ready to go. I hear Lennar may have concerns with noise and lighting, but we'll obey all related city ordinances. No one has indicated any problem. The only problem we're having is with one company (Lennar)."

Additionally, the area in question - the island's eastern end - is only temporarily under Lennar's auspices. It eventually will belong to the city of Vallejo and the state. But "time is money," Margaronis said.

Keadjian said he is unaware if anyone else is interested in the dry-docks, and denied "Margaronis' characterization of our discussions and their status, and their claim that they've sufficiently addressed all issues."

Margaronis said the public benefits outweigh Lennar's concerns. Trucking by water would help relieve road congestion along the California coast, save fuel and create jobs, he said.

"It has the potential to take 300 truckloads off the roads every day," Margaronis said. "There's a huge need to take trucks off California's roads."

Margaronis' Santa Rosa shipping and steel business operations do not involve actually building ships. His Vallejo plan would.

Margaronis' Vallejo concept would have huge freighters unload cargo containers onto his smaller vessels. These vessels would take the containers to the state's smaller, satellite ports, thus relieving bottlenecks common at the larger ports of Oakland, Los Angeles and Long Beach. From there, they can be trucked inland.

His is not a new idea, he added.

"It used to be common in the U.S. before World War II, and it's used worldwide," he said.

The city of Vallejo and many of its residents would benefit from his project, Margaronis said. He said the business would create hundreds of jobs for welders, fitters and ships' crew members and generate about $12 million in direct income to workers annually. There also would be many millions more in annual spending by the shipyard and its employees, he said.

"Shipbuilding should be allowed to come back to Mare Island, and at the same time save fuel consumption, put people to work and improve the environment," said Margaronis, whose family has been in the shipbuilding and shipping business since 1865.

Margaronis said he's "a little shocked this wasn't immediately embraced. This should have been wrapped up in a couple months. It's a land lease and it's not like others are waiting in line to sign up for the place." City Councilwoman Stephanie Gomes said that without knowing all the details of Margaronis' proposal, the idea sounds like "exactly the kind of economic energy we need on Mare Island, on the face of it."

Three years ago, before her election to the council, Gomes was a leader in the fight against a liquified natural gas plant on Mare Island.

Gomes said Monday she will look into the shipbuilding plan, adding that she "would hate for us to lose a good opportunity on Mare Island."

Sea carriers can reduce port traffic, reduce gridlock

Santa Maria Shipping, Santa Rosa CA 7/20/04

Imagine taking up to 1,200 container truckloads each day off of LA freeways and shifting that traffic instead onto coastal vessels -- reducing both traffic congestion and airborne pollution in the process. If that solution seems out of reach, think again.

If the Ports of Los Angeles and Long Beach were to support a waterborne solution to land-based gridlock, the benefits to businesses and to consumers would be significant.

It is no secret that container traffic from the two Ports is contributing to a growing transportation and airborne pollution problem in the LA Basin. Indeed, the situation is getting worse for everyone.

The truck drivers transporting containers in and out of the ports have been staging job actions due to higher fuel prices.

The Union Pacific Railroad, which carries many containers from the harbor by rail along the new $2.4 billion Alameda corridor, has had service problems resulting in containers going off their trains and on to trucks.

It is estimated that traffic speed in the LA Basin has been slowed by as much as 60 percent because of harbor-based container traffic.

Because of soon-to-arrive *mega container* ships, even more container truck traffic is on its way through the Ports of Los Angeles/Long Beach and along Southern California freeways.

While the Ports of Long Beach and Los Angles have done an excellent job of concentrating business from the Far East through these two ports, the increased traffic and congestion is an unfortunate side effect of this success.

Port officials say that of the nearly 6 million forty-foot containers that enter Los Angeles and Long Beach, about 50 percent - or about 3 million containers - are headed for Southern California destinations: That's about 8,000 truckloads per day. Many of these container truckloads depart from the Ports, destined for distribution centers in the desert, where they are repacked and sent back out onto freeways destined for area stores and outlets. Once emptied, the containers travel back to the harbor for loading onto ships and back to their ports of origin.

This traffic congestion is prompting the US Department of Transportation (DOT) to encourage Ports and Municipalities to look at shifting freight off of crowded roads onto coastal vessels.

In the LA Basin, a vessel service can shift up to 1,200 container loads off of LA/LGB highways, but the Ports must help make that shift happen by supporting a coastal shipping service linking the Ports of San Diego and Port Hueneme to LA/Long Beach.

The proposal will require the construction of six new American-built vessels, costing a total of about $60M. The vessels would carry 200 forty-foot containers and would operate daily services, taking containers off mega container vessels at LA/LGB for delivery to San Diego County and Northern Los Angeles and Ventura counties.

Remember: It costs about $30M to repair and expand one mile of freeway. By reducing up to 1,200 container truckloads per day, we can reduce demand for those repairs and make the air a lot cleaner in the LA Basin.

Issues that need to be addressed:

The containers need to be off-loaded for evening delivery to minimize daylight traffic at the two satellite ports. Containers need to be shipped directly from vessel to stores so as to reduce distribution center traffic and keep costs comparable to trucking.

Major importers such as Wal-Mart would need to support this re-routing of their deliveries from Asia so that containers can be dispatched through the coastal shipping system.

The International Longshoremen and Warehousemen's Union (ILWU), which loads and unloads ships, needs to support the initiative.

Some container handling infrastructure at San Diego and Port Hueneme will need to be built.

Ports, which have traditionally seen their role as landlords, may have to reinvent themselves as stewards of the greater transportation plan to reduce congestion.

Can we proceed today? How can this vision become a reality?

A US Department of Transportation (DOT) agency can provide loan guarantees for up to three quarters of the construction cost for the new vessels, protecting investors, so that risk to Ports would be limited.

This means the Ports of Los Angeles and Long Beach would need to make approximately a $12.5 M initial investment to finance the shipbuilding. Compare this to the $2.4billion spent for the Alameda Rail Corridor to relieve traffic or the $30M per mile required to repair freeways.

Finally, the Governor can play an important role by supporting the idea. He can also ask the Bush Administration for the necessary DOT loan guarantees because of the traffic, pollution, and, finally, because 2004 is an election year and innovative, do-able solutions actually get people elected and re-elected.

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