Water Carriers

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Chapter 6

• Water Carriers

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(No Transcript)
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Water Transport Industry Overview p187

• Significance of Water Transport
• Water transportation remains a viable mode of
  transportation for the movement of products and
  especially basic raw materials.
• Domestic water carriers compete with railroads
  for the movement of bulk commodities (such as
  grains, coal, ores, and chemicals) and with
  pipelines for the movement of bulk petroleum,
  petroleum products, and chemicals.

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• Types of Carriers
• Like motor carriers, the first major
  classification of the domestic water carrier
  industry is between for-hire and private
  carriers.
• A private carrier cannot be hired and only
  transports freight for the company that owns or
  leases the vessel. Private water carriers are
  permitted to transport, for a fee, exempt
  commodities (commodities not under government
  regulation) when they are hauling such exempt
  goods, they are technically exempt for-hire
  carriers.

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Types of Carriers cont

• Regulated water carriers are classified as either
  common or contract carriers.
• Carriers that operate over the inland navigable
  waterways are classified as internal water
  carriers.
• Internal water carriers use barges and towboats.
• Coastal carriers operate along the coasts
  serving.
• Intercoastal carriers transport freight between
  East Coast and West Coast ports via the Panama
  Canal.

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• Competition
• The major water carrier competition is with two
  other modes, namely rail and pipelines.
• Water carriers compete with railroads for the
  movement of dry bulk commodities such as grain,
  coal, and ores.
• Because the cost of the water-rail combination is
  lower than the all-rail route, shippers continue
  to request the combined water-rail service.

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Competition cont

• Water carriers and pipelines are vigorous
  competitors for the movement of bulk liquids
  (petroleum and petroleum products).
• To a very limited degree, water carriers compete
  with trucks.
• However, trucks are usually used to overcome the
  accessibility constraints of water carriers
  because trucks tie inland areas to the waterways
  for pickup and/or delivery.

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Operating and Service Characteristics p190

• COMMODITIES HAULED AND RELATED CHARACTERISTICS
• Water carriers are important for low-value, bulk
  movements of liquid and dry materials.
• The low rates of water carriers are attractive to
  the shippers of such commodities.
• Water carriers are considered to be
  medium-to-long-haul carriers.

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COMMODITIES HAULED AND RELATED CHARACTERISTICS
cont

• Their carrying capacity is relatively large,
  which makes short hauls with frequent stops
  uneconomical.
• A 1,500-ton load represents the typical carrying
  capacity of 15 railcars or about 50 trucks
• The low cost of the water carrier comes with some
  service disadvantages that need to be considered
  by shippers.
• Water carriers are relatively slow.

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COMMODITIES HAULED AND RELATED CHARACTERISTICS
cont

• The limited accessibility of the water carrier
  usually necessitates pickup or delivery by
  another mode of transportation to bridge the
  accessibility gap.
• The transfer between modes will obviously add to
  the total cost.

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COMMODITIES HAULED AND RELATED CHARACTERISTICS
cont

• Overall, water carriers are an attractive
  alternative for low-value traffic, where
  transportation rates are a significant part of
  the total delivered cost and price of the good.
• However, the poor service characteristics may add
  cost for the user, which has to be traded off
  against the low rate to calculate the true total
  cost.

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Equipment

• TYPES OF VEHICLES
• Because most domestic water carriers transport
  bulk materials, they use ships with very large
  hold openings to facilitate easy loading and
  unloading.
• Watertight walls dividing the holds allow a ship
  to carry more than one commodity at a time.
• However, most carriers will carry a limited
  variety of products at one time.

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TYPES OF VEHICLES cont

• The largest ship in the domestic water carriage
  industry is the tanker.
• A tanker can carry anywhere from 18,000 to
  500,000 tons of liquid, generally petroleum or
  petroleum products.
• Due to oil spill problems, the use of
  double-hulled tankers has become preferable to
  the use of the more conventional single-hulled
  tankers.

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TYPES OF VEHICLES cont

• Another type of vessel is the barge, a powerless
  vessel towed by a tugboat. Barges are most
  commonly used by internal waterway carriers.

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• TERMINALS
• Water carrier terminals are often provided by the
  public.
• Most ports are operated by local government
  agencies, and many ports have publicly operated
  storage facilities.
• Some volume users of transportation invest in and
  operate port facilities or shipper run terminals.

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TERMINALS cont

• Individual firms that handle such commodities as
  grain, coal, and oil commonly build docks,
  terminals, and commodity-handling facilities to
  meet their unique needs.
• The water carriers have the opportunity to use
  these private facilities owned by shippers.
• Over the past few decades, major port
  improvements have centred on the mechanization of
  materials-handling systems, especially for
  internal waterway ports.

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TERMINALS cont

• Efficient handling of larger volumes of bulk
  commodities has been a prerequisite for ports
  that desire to remain economically competitive
  with other ports along the waterway and for water
  carriers that seek to be competitive with other
  modes.
• The port facilitates ship loading and unloading,
  which means that the port must be equipped with
  cranes, forklifts, and other handling equipment.

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TERMINALS cont

• Certain commodities like oil, grain, and coal
  require more technically advanced loading
  equipment, such as pneumatic loaders and railcar
  dumping equipment.
• Such materials-handling equipment reduces
  unproductive port delays and enables water
  carriers and ports to remain economically viable.
• The port also facilitates the transfer of freight
  from one mode to another.
• The port is usually served by railroads and motor
  carriers.

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TERMINALS cont

• Terminals at the port will have railroad sidings
  to handle inbound and outbound rail freight as
  well as parking lots for motor carrier equipment.
  
• Ports play a key role in promoting the efficiency
  of intermodal transportation.
• Because barges and ships carry larger loads than
  rail or motor carrier vehicles, storage
  facilities are necessary at the port.

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TERMINALS cont

• The storage areas receive cargo from many trucks
  and railcars.
• This freight is held until sufficient volume is
  obtained to be handled effectively by barge or
  ship.
• Conversely, when a loaded vessel arrives at port,
  the freight is unloaded, stored, and then
  dispatched in hundreds of railcars or trucks at
  some later date.

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Cost Structure

• FIXED VERSUS VARIABLE COST COMPONENTS
• The basic cost structure of water carriers
  consists of relatively high variable costs and
  low fixed costs.
• Like motor carriers and air carriers, water
  carriers do not provide their own highways
  (rights-of-way).
• The waterways are provided by nature (except
  canals) and are maintained, improved, and
  controlled by the government.

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FIXED VERSUS VARIABLE COST COMPONENTS cont

• The carriers pay user chargeslock fees, dock
  fees, fuel taxesfor the use of government-
  provided facilities.
• These user charges are directly related to the
  volume of business, and therefore, are considered
  variable costs.
• The operating costs for water carriers are
  approximately 85 percent variable and 15 percent
  fixed.

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FIXED VERSUS VARIABLE COST COMPONENTS cont

• Fixed costs include depreciation and
  amortization, and general expenses.
• The major variable expenses are line-operating
  costs, operating rents, and maintenance.
• Line-operating costs are those expenses
  associated with renting operating equipment and
  facilities.

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• INFRASTRUCTURE
• As indicated above, the domestic water carriers
  low fixed costs can be attributed in part to
  public aid in the area of infrastructure.
• For water carriers, the major public aid is the
  construction and maintenance of waterways.

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• LABOUR
• Water transportation is not labour-intensive.
• Labour is required at the terminal to load and
  unload general commodities.
• The freight is moved from the dock onto the ship
  and into the appropriate hold for the voyage (and
  vice versa for unloading).
• In addition, labour is required to handle the
  loading of freight from connecting modes, such as
  truck and rail, and to store the freight waiting
  to be loaded onto the ship or connection
  carriers.

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CURRENT ISSUES

• DRUG AND ALCOHOL ABUSE
• PORT DEVELOPMENT
• Because of todays environmental concerns, ports
  are having trouble keeping pace with the
  accelerated developments in global trade.
• Ports are now having to balance competitive
  economic concerns with the concerns of the
  public, which, rightly or wrongly, often view
  ports as a main source of air, water, and noise
  pollution.

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PORT DEVELOPMENT cont

• Also, a current issue facing North American ports
  is the growth of multicarrier alliances, leading
  to the expansion of the already gigantic ships.
• An increase from 6,000 20-foot equivalent units
  (TEU) (refers to container size) to 8,000 TEUs
  has many ports worried for the future.

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PORT DEVELOPMENT cont

• The larger the ships are, the deeper they go,
  meaning that many of the smaller ports will need
  to begin the dredging process as soon as possible
  to be able to compete in the future.
• The dredging process would allow ports to make
  their waterways deeper and wider in order to
  accommodate these new, larger ships and allow
  them to stay competitive.
• END