Transcript Chapter 5 Domestic Water Carriers

Chapter 5
Domestic Water Carriers
Brief History



Natural Highway
Play an important role in human history for
transport, war, colony
From canoe to battleship
Significance of Water Transport



In 1997, water carriers transported 508 billion
ton-miles of intercity freight in US.
Employ more than 30,000 persons and moves
almost 800 million tons of freight annually.
This type of transportation is not popular in
Taiwan because there are not many rivers are
suited for sailing and most of them are too
short.
Types of Carriers




For-hire & Private
A private carrier cannot be hired and only
transports freight for the company that owns or
leases the vessel.
The for-hire water carriers consist of regulated
and exempt carriers that charge a fee for their
services.
Coastal carriers operate along the coasts,
Intercoastal carriers transport freight between
East Coast & West Coast ports via the Panama
Canal.
Market Structure

Competition
– Because the number of carriers on a given
waterway is limited, there is little incentive
for the water carriers to compete with one
another.
– For domestic transportation, the major
competition is with two other modes, those
being rail and pipelines. For international
transportation, it competes with Air
transportation.
Competition



In essence, the railroads have overcome the water
carrier accessibility problem by moving coal from the
mines to Toledo, which suggests that the modes are
partners rather than competitors.
Water-rail combination is lower than the all-rail route.
To a very limited degree, water carriers compete with
trucks. In most cases, trucks are used to overcome the
accessibility constraints of water carriers because
trucks tie inland areas to the waterways for pickup
and/or delivery.
Commodities Hauled


Dry bulk – basic raw materials such as coal.
High-value manufactured products, such as
electrical equipment and photographic
instruments, account for a small portion of the
total tonnage transported by domestic water
carriers.
Load size



The cargo-carrying capacity of water carrier
vehicles is large.
Barges are capable of handling 3,000 tons,
with normal capacities of 1,000 to 1,500 tons.
Great Lakes carriers average approximately
20,000 tons of carrying capacity, with on ship.
Low-Cost Service


Lowest transportation cost mode for the
shipment of non-liquid products.
Volume loads
Speed of Service




Slowest
Show speed is a disadvantage for water
carriers and must be traded off against the low
cost.
Attractive for low-value products.
Some firm use water carriers as “in transit”
warehouses.
Service Disruption



Subject to disruption during winter months –
Ice conditions
Lowered water levels – weather or seasonal
Such disruption increases the inventory costs.
Other Characteristics


Poor accessibility
The freight is subject to inclement weather,
rough waters and high-cost packaging(but not
really an issue).
Type of Vehicles



A tanker can carry anywhere from 18,000 tons
to 500,000 tons of liquid, generally petroleum
or petroleum products.
Due to the spill problems, the use of doublehulled tankers has become preferable to the
use of the more conventional single-hulled
tankers.
Barge – powerless vessel towed by a tugboat.
Double-hulled tankers
Terminals



Often provided by the public, local government.
Facilitates the transfer of freight from one
mode to another(like use rail or motor-carrier).
Most ports operated storage facilities because
barges and ships carry larger loads than rail or
motor-carrier vehicles.
Cost Structure





High variable costs and low fixed costs.
Carriers pay user charges – dock fees, fuel
taxes
Low fixed costs can be attributed to public
aids – construction and maintenance of
waterways.
The construction of canals with public funds
opens new markets and sources of revenue for
water carriers
The construction of dams makes the
Labor

Not labor-intensive (1997 for example)
–
–
–
–

2.72 million ton-miles / water carrier employee
4.74 million ton-miles / rail employee
0.4 million ton-miles / motor carrier employee
39.3 million ton-miles / pipeline employee
Required at the terminal for load & unload
Fuel



Consume more fuel per mile, compared to the
other modes.
However, the total fuel consumption was less
than other modes because loaded more.
Therefore, it might be fair to conclude that
water transportation is a more fuel-efficient
mode in terms of fuel consumed per ton-mile.
Economies of Scale


Like the motor carrier, the water carrier does
not have significant economies of scale.
The large portion of variable costs
( approximately 90 percent), the small size of
the carriers in the industry and the ability to
add small increments of capacity(one barge,
for example) suggest that the economies of
large-scale operations are not great.
Current Issues

Drug and Alcohol Abuse
–
–
1989, Exxon tanker Valdez off the shores of Alaska
and spilled 10 million gallons of oil. The full impact
of this disaster will not be known for many years to
come. However, it resulted in the deaths of
hundreds of animals, including some endangered
species, and the loss of income and jobs for many
of Alaska’s citizens (such as fishermen, for
example).
This disaster need for strong measure against durg
and alcohol abuse.
Port Development

Need extra fund to extend the port for the
accelerated developments in global trade.