Chapter 5 Domestic Water Carriers Brief History l

Chapter 5 Domestic Water Carriers

Brief History l l l Natural Highway Play an important role in human history for transport, war, colony From canoe to battleship

Significance of Water Transport l l l 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 l l 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 l 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 l l l 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 l l 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 l l l 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 l l Lowest transportation cost mode for the shipment of non-liquid products. Volume loads

Speed of Service l l 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 l l l Subject to disruption during winter months – Ice conditions Lowered water levels – weather or seasonal Such disruption increases the inventory costs.

Other Characteristics l l Poor accessibility The freight is subject to inclement weather, rough waters and high-cost packaging(but not really an issue).

Type of Vehicles l l l 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 l l l 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 l l l 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 waterways navigable

Labor l Not labor-intensive (1997 for example) – – l 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 l 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 l l 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 largescale operations are not great.

Current Issues l 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 l Need extra fund to extend the port for the accelerated developments in global trade.