Marine Transportation System
National Advisory Council
Meeting Summary
May 4-5, 2005
Radisson Hotel
Sacramento, California

Attendance

Organization Member
American Great Lakes Ports Association Steve Pfeiffer
American Maritime Congress John Gaughan
American Trucking Associations Curtis Whalen
Boat Owners Association of the United States Bob Nelson
Coastwise Coalition Paul Bea
Gulf of Mexico States Partnership, Inc. Steve Tyndal
I-95 Corridor Coalition John Baniak
Intermodal Association of North America Ted Prince
International Longshore and Warehouse Union Peter Peyton
International Longshoreman's Association John Baker
Lake Carriers' Association Jim Weakley
Maritime Information Services of North America Lynn Korwatch
Maritime Security Council Ron Thomason
National Association of Counties Will Smith
National Association of Waterfront Employers Pat Hall
National Industrial Transportation League Peter Gatti
National Waterways Conference Worth Hager
Pacific Maritime Association Bob Dockendorff
Propeller Club of the United States Bart Goedhard
Shipbuilders Council of America Bruce Croushore
Society of Naval Architects and Marine Engineers Paul Mentz
The Waterfront Coalition Rick Gabrielson
U.S. Chamber of Commerce Sam Crane
U.S. Exporters Competitive Maritime Council Jim Cook
United States Maritime Alliance, Ltd. (USMX) Carol Lambos
World Shipping Council Don O'Hare

Day 1 — May 4, 2005

John Gaughan, Chair of MTSNAC convened the meeting at 2:05 p.m. on May 4, 2005, by welcoming those in attendance and invited the MTSNAC members to make self-introductions.

Approval of Minutes from November 2004 MTSNAC Meeting

The first item of business was the approval of the minutes of the November 18-19, 2004 MTSNAC meeting. After a motion, second, and call for discussion, the minutes were approved.

Unfinished business

There was a motion to make Rick Gabrielson the permanent Vice Chairman. There was no discussion on the motion and no objections, so the motion was seconded. The motion was carried by voice vote and approved.

Report on Previous Action Items

Richard Lolich, Executive Director of MTSNAC, reported on the Action Items from the last meeting. The action items were:

Action Item #1 — SEA-21 Recommendation to the Secretary

A MTSNAC resolution reiterating support for Secretary of Transportation Mineta's SEA-21 proposal had been sent to the Secretary. A copy of the resolution was provided for the members in their administrative packages.

Action Item #2 — Recommendation to the Secretary.

A MTSNAC resolution requesting that USDOT resources be made available to the State of California to assist in addressing congestion issues in Southern California had also been sent to Secretary Mineta. A copy of the resolution was also included in the member's administrative packages.

Remarks from the Chairman

John Gaughan spoke of the appropriateness and timeliness of the MTSNAC Meeting in Sacramento in light of the joint committee hearings on transportation and goods movement in the California State house today and the congestion issues in Southern California.

Remarks from the Sponsor

John Jamian, Acting Maritime Administrator, presented opening remarks to the Council members before heading to the State Capitol to testify on the Federal efforts to address port and freight congestion and the development of Secretary Mineta's SEA-21 initiative. In his remarks, Mr. Jamian thanked the committee members for all the hard work they put into preparing their presentations and cautioned members of the need to be patient. Although some progress has been made recently such as the tonnage tax enactment, it would not be possible for every recommended agenda item to receive immediate attention and resources in light of the current fiscal environment. The infrastructure improvements of the Nation will take time and will require private public partnerships to be successful.

Mr. Jamian advised that Secretary Mineta's top agenda items for this term would be: SAFETEA and SEA-21. He further stated that he has been asked to take SEA-21 to the next level by identifying issues that do not require funding as well as those that do require funding. Identifying these items will start the process of further evaluation and implementation.

Mr. Jamian applauded the efforts of the MTSNAC members and emphasized the need for him and the Secretary to hear from industry and industry users and the need for everyone to help educate the public. MTSNAC needs to play a vital role in educating the public, the legislators, and the highest levels of government at both the state and national level in order to focus people's attention on transportation issues.

Administrative matters

The minutes from three teams, Shipbuilding, Waterways and the combined Education/Intermodal Capacity and Operations, were approved.

Presentation on MTS and International Supply Chain

The consensus was that it was a worthwhile and informative presentation. A question and answer period followed the presentation.

A discussion ensued concerning the next steps for this presentation.

It was agreed that the presentation was a work in progress that would require frequent revisions and that it should be sub-divided into modules for publishing purposes and that a reformatted version would be distributed to council members for further discussion prior to a vote on adopting it as a council product. John Gaughan suggested that Council Members should take any suggested revisions directly to Ms. Lambos on behalf of the Team. It was also suggested that the presentation be edited into a version suitable for presentation at one of Under Secretary for Policy Jeff Shane's "Brown Bag Policy Salon Luncheons."

Will Smith remarked that he would like to have this presentation made to a meeting of the National Association of Counties (NACO). He chairs the NACO Infrastructure Committee and felt that his Committee would be very interested in the Team's presentation. The NACO Committee has made infrastructure development a top priority.

The Council also agreed that the presentation should be broken into smaller modules and used as educational materials for Capitol Hill staff, Departmental officials, and transportation planners.

The meeting adjourned at 5:00 p.m.

Day 2 — May 5, 2005

Breakfast was hosted by the Port of Oakland along with a presentation on the Port's capabilities, challenges, and plans for the future given by Wilson Lacy, Maritime Director for the Port of Oakland.

The meeting reconvened at 9:10 a.m. on May 5, 2005.

John Gaughan welcomed everyone and thanked all the Sponsors on behalf of the Council for the reception the previous night. He said that the meeting would follow the printed agenda and asked for Council comments — there were none. He then proceeded to the public comment period.

Public Comment Period

Berit Eriksson, Pacific Coast Maritime Consortium encouraged MTSNAC to give proper attention to the maritime workforce. Peter Peyton added that training is very important.

Ron Silva of Western Transport presented a proposal to the Council on a Short Sea Shipping business model he has been developing. Mr. Silva envisions door to door service integrating double stack, LNG trucks with short distance daily barge service which will remove as many as 4,000-6,000 trucks per day off the crowded California freeways. He provided insight into his plan for implementation and offered to share the particulars of his model with anyone who may be interested. There was discussion with Council members and a request to have communication with Mr. Silva in the future.

Mark Yonge of Maritime Transport and Logistics Advisors alerted the members to a recent Journal of Commerce article in which foreign carriers were warning of the congestion in U.S. ports and its effect on the entire supply chain. He also briefed the group on a recently completed short sea shipping study for the Port of Canaveral, FL.

Rajiv Khandpur of the U.S. Coast Guard pointed out that 535 copies of an MTS video had been distributed by the USCG to all members of Congress to assist in raising awareness; 300 more copies of the video were available to MTSNAC members on request.

Group presentations

Gill Hicks of California Marine and Intermodal Transportation System Advisory Council (CALMITSAC) gave a presentation highlighting California's problems, challenges, and solutions presently being implemented as well as recommendations for the future. During this presentation, it was pointed out that California Senator Alan Lowenthal (AB 2043) has requested CALMITSAC hold public meeting, compile data on projected port growth, pollution effects, and transportation system effects. CALMITSAC will then provide recommendations for state wide contingency plans and marine transportation policy in a report to be submitted to the State legislature by January 2006.

Considerable discussion took place following the presentation particularly with respect to inland ports, warehousing considerations, rail shuttle service challenges, and the fact that ports are often forced to make real estate utilization tradeoffs between on-dock capabilities and the need for temporary storage. It was pointed out that shippers are rarely consulted in determining system throughput needs and efficiencies. Since profit is the ultimate motivator, system-wide efficiency is often sacrificed for individual component maximum utility. Clearly, better communication is required between the interested parties, so CALMITSAC is attempting to facilitate those discussions.

Bruce Croushore conducted the Shipbuilding Team's presentation on U.S. Commercial Shipyard Capacities and Capabilities in which he highlighted the geographic locations of shipbuilding and repair yards as well as their capabilities, vessel types, vessel size and specialized skills possessed. Mr. Croushore posed the question as to whether or not U.S. shipyards can build and maintain the vessels needed for a vibrant coast-wise maritime transportation system. He believes we can by partnering with foreign shipyards, comprehensive government policies, and strong government backing.

A question and answer period followed the presentation in which the Maritime Administration's Title XI reinvigoration and makeover was addressed and discussed. The need for Jones Act support protection was discussed in view of its importance to the shipbuilding industry. The effect of U.S. standards for shipbuilding on shipyard competitiveness as compared to foreign building and the effect on cost was then discussed. The concept of series construction as a means to reduce overall shipyard construction costs was also discussed

Administrative Matters

Worth Hager made a motion that MTSNAC make a recommendation for the adoption of the Resource Development Act, Steve Tyndal seconded the motion.

Comments and discussion on the motion followed. During the discussion, it was noted that more than 50% of the locks and dams on the inland waterways are beyond their design life. It was also noted that the bill increases the elements to be consideration in the economic analysis for projects. It was noted by council members that they would need to confer with their principals before such an endorsement could be made. No vote was taken. The Council agreed that the full resolution will be disseminated to the Council within the next few weeks for review and a vote.

Lunch Break

Following lunch, Rick Gabrielson gave a presentation on goods movement strategies from the shipper's perspective. He highlighted significant problems and challenges, emerging trends, along with recommendations for improving goods movement.

A discussion was held on the "National Marine Container Transportation System White Paper" which had been distributed prior to commencement of the MTSNAC meeting to afford members the chance to read it in advance. Due to its length, only the key points were highlighted and discussed. Considerable discussion took place as to how the paper should be addressed procedurally. It was decided that comments were due back to the committee for inclusion within two weeks, and the revised version would be distributed to Council members for their review and concurrence.

Outstanding Action Item

MTSNAC has been asked to provide input to Secretary Mineta regarding the need for enhanced Loran C (e-LORAN) as a backup navigational system for Global Positioning System (GPS). Although GPS is a very reliable system, it could be compromised by terrorists and rendered ineffective. One possible back-up would be e-LORAN. During the discussion, Lynn Korwatch wanted to know whether or not the system ties in with the newly mandated Automated Information System (AIS) systems required on board ships. No one was able to answer the question definitively, and the group was split in half as to the necessity of the system. No recommendation was made. Captain Korwatch agreed to investigate her own question and report back on the results. It was noted that the Coast Guard's Navigational and Safety Advisory Committee should also be reviewing this matter.

MTS Regional Reports

David White of the South Atlantic Marine Transportation System Organization (SAMTSO) reported on SAMTSO's activities since the last MTSNAC meeting including a planned needs assessment for the South Atlantic area, the status of short sea shipping and environmental issues such as the Right Whale. Mr. White then requested that SAMTSO be given a permanent seat at the MTSNAC table to represent regional issues.

Steve Tyndal of the Gulf of Mexico States Accord (GOMSA) mentioned that the 11 states represented in GOMSA have an economy equivalent to the 19th largest national economy in the world and that a 25 year master plan study was presently being undertaken to better understand the future needs of the region.

After setting the timeframe as September 2005 and location in Memphis, TN for the next MTSNAC meeting, the session was formally adjourned at 4:47 p.m.