Transportation Management - Water Carriers Industry PDF

Transportation Management Water Carriers Industry  Transportation Management TYPES OF CARRIERS  Transportation Management Like motor carriers, the first major classification of the domestic water carrier industry is between for-hire and private carriers. A private carrier canno...

Transportation Management Water Carriers Industry  Transportation Management TYPES OF CARRIERS  Transportation Management 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. Transportation Management 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. Transportation Management 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. Transportation Management Coastal carriers operate along the coasts serving. Intercoastal carriers transport freight between East Coast and West Coast ports via the Panama Canal. Transportation Management NUMBER OF CARRIERS Transportation Management The water carriers industry generally consists of a small number of large carriers (businesses) based on the huge amount of capital needed to purchase ships. This large capital outlay acts as a constraint to entry. Transportation Management TERMINALS Transportation Management 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. Transportation Management 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. Transportation Management Over the past few decades, major port improvements have centred on the mechanization of materials-handling systems, especially for internal waterway ports. Transportation Management 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. Transportation Management 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. Transportation Management The port also facilitates the transfer of freight from one mode to another. The port is usually served by railroads and motor carriers. Terminals at the port will have railroad sidings to handle inbound and outbound rail freight as well as parking lots for motor carrier equipment. Transportation Management 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. The storage areas receive cargo from many trucks and railcars. Transportation Management 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 Transportation Management MARKET STRUCTURE (commodities hauled) Transportation Management 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. Transportation Management 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. Water carriers mainly transport high volume, low-value bulk commodities Transportation Management COMPETITION Transportation Management 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. Transportation Management Because the cost of the water-rail combination is lower than the all-rail route, shippers continue to request the combined water-rail service. Water carriers and pipelines are vigorous competitors for the movement of bulk liquids (petroleum and petroleum products). Transportation Management 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. Transportation Management GENERAL SERVICE CHARACTERISTICS Transportation Management 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 Transportation Management The low cost of the water carrier comes with some service disadvantages that need to be considered by shippers. Water carriers are relatively slow. The limited accessibility of the water carrier usually necessitates pickup or Transportation Management delivery by another mode of transportation to bridge the accessibility gap. The transfer between modes will obviously add to the total cost. Transportation Management TYPES OF SHIPS Transportation Management 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. Transportation Management 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. Transportation Management Another type of vessel is the barge, a powerless vessel towed by a tugboat. Barges are most commonly used by internal waterway carriers Transportation Management COST STRUCTURE Transportation Management 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). Transportation Management The waterways are provided by nature (except canals) and are maintained, improved, and controlled by the government. The carriers pay user charges—lock fees, dock fees, fuel taxes—for the use of government- provided facilities. Transportation Management 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. Transportation Management 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. Transportation Management As indicated above, the domestic water carrier’s 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. Transportation Management 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). Transportation Management 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.  Transportation Management QUESTIONS & ANSWERS  Transportation Management Source: Management of Transportation by Bardi, Coyle & Novack