1
SWOT analysis
In order to commit investments, it is important from a commercial perspective to identify
strengths, weaknesses, opportunities and threats for the design. In the previous parts, a lot
of decisions and assumptions are made. This resulted in a service and ship design that is
matched to the transport of passenger vehicles between Duisburg and London. In order to
assess the vulnerability of the design to changes in the environment, positive and negative, a
SWOT-analysis is performed in this chapter. This analysis is shaped according to the
following figure.
Helpful
Harmful
To achieve the
objectives
To achieve the
objective
Strengths
Weaknesses
Opportunities
Threats
Internal
Influences from
inside the
company
External
Influences from
the environment
Figure 1.1: SWOT analysis
1.1 Strengths



The service design can be easily adopted by adding stops in different places, minor
adjustments in the sailing speed and the possibility to leave barges at a certain
terminal. Whenever a barge is left at a terminal, it is important to know who is
responsible for the cargo inside the barge.
Changing the push boat in Rotterdam results in dedicated, optimized push boats on
both the sea and river leg. The difference in the requirements of the push boats is
that large, that dedicated push boats are the only feasible solution to transport
freight on both the sea and the river, taking the chosen corridor into account.
If there is a large increase in the flow of passenger vehicles in the corridor, the
service can be enlarged quite easily. Increasing the sailing speed and buying another
two barges makes it possible to have two departures from Duisburg instead of just
one.
1.2 Weaknesses


The use of a ship with a certain size immediately imposes a weakness, the size of the
ship requires a certain occupancy rate to be cost effective. Unfortunately this size
cannot be scaled down after it has started its operation, so an accurate estimation
of the required capacity is very important.
Most of the technologies that will be used in the coupling of the barge and push
boat are available on the market. However, there is no evidence that verifies use in
an environment like the North Sea.
1


The distribution of 30% of newly built cars are transported from Germany to both
the Southampton and Grimsby port areas and 40% of the flows to the London port
area could turn out to be erroneous in practice. If this distribution turns out to be
more in favour of the Southampton and Grimsby areas this would have a negative
impact on the business performance of the river sea car carrier concept. This shift
having a negative impact is caused by the fact that the modelled most preferable
alternative runs its service between Duisburg and London. A loss of freight on this
line could thus have a negative impact on business performance. At the same time
this distribution could also turn out to be in favour of London, but from feedback of
Broekman Automotive, it was distilled that the distribution does roughly resemble a
30%-40%-30% distribution.
The tight sailing schedule requires that the amount of delays should be minimized.
Therefore the service is very sensitive to all sorts of delays. The worst delay would
be service interruption. Such an event causes a temporary halt to the loading of cars
at Duisburg. Since these cars have to be transported, a manufacturer would most
likely use an alternative way to transport the batch of cars. Based on the agreed
contract between the manufacturer and car carrier service a reimbursement claim is
to be expected from the manufacturer for costs incurred by having to switch to
other means of transport.
1.3 Opportunities





2
Currently the business model is solely based on providing a physical movement of
new cars from a terminal in the German Ruhr area to the UK. It does not include any
value added services to its business concept. Possible added value services are those
which could be performed aboard ship while in transit. These services could include
checking and maintaining batteries and engine fluids. Such fairly simple services
would generate extra revenue and would have a positive effect on the profit margin.
Extension of product line. Currently the barge is designed to carry passenger
vehicles. With modifications it is possible to create a flexible deck configuration
system in which deck heights could be altered in such a way that larger vehicles or
equipment could also be transported. Larger vehicles include vans and trailer
combinations for example. Deck configuration flexibility would increase the
concepts marketability and increase its potential freight flows.
Possible influence of subsidies. Opportunities exist to get subsidies to help set up
the service. On a European level the Marco Polo Program provides subsidies to
services which shift freight from the roads to other modalities (European
Commission, 2009). While the river sea car carrier might not cause a shift in road
freight haulage since many car producers in Germany use block trains to move new
cars to sea ports, it does provide a cleaner alternative than road transport. This is
more so emphasized by the fact that there is no congestion on the river causing
fewer emissions through idle time. Congestion can affect busy ports like Rotterdam
and Antwerp (Freight by Water, 2004), but since the river sea concept is not directly
dependent on port freight handling capacity this should not pose a threat.
Flexibility on return freight. Feedback from Broekman Automotive (Bosvelt, 2009)
indicates that current car carriers are able to transport other types of general cargo.
In periods of less demand for car transport or with too low occupancy rates,
transportation of alternative freight remains an option to keep up revenues.
Still underutilized market/tacit knowledge could be used to optimize the ship and
barge design. Market players with field experience are able to use this knowledge to
improve the concept. Mr. H. Blaauw from Marin indicated that inland shippers in
practise exactly know depth and flow characteristics for different parts of the river.

While in transit they often use this knowledge to manoeuvre ships differently than
one would assume from theory. This operational adaptability can have a positive
influence on fuel consumption and thus running costs. Experience in switching
barges is also knowledge, which shippers could use to efficiently execute. Service
wise market players have knowledge on the network of relevant other parties like
port authorities and inland terminal operators. This knowledge and relationships
would in practise be utilized to set up and maintain availability of essential facilities
for service performance.
The opportunity of converting and incorporating older but proven technology in the
concept. An example of this opportunity is the use of existing push boats and
modifying them to be able to operate in conjunction with the barges. This would
benefit from the reliability and knowledge on existing ships while being less costly
than a newly designed dedicated ship.
1.4 Threats





At the same time car manufacturers could decide to shift production to other
locations in Germany or even abroad. This is a phenomenon, which can be seen at
the moment, production capacity is being rearranged following costs cuts. This
rearrangement can have the exact same effect of a different flow distribution
mentioned in this paragraph.
A factor, which was not taken into account to determine the river sea concepts
success, was time. For at least 24 days a year the service from Duisburg cannot
operate. This is caused by water levels, which become too low for safe operations; a
constant was included in operational cost estimation. The fluctuation in these days
however is not a constant and shows a clear fluctuation per year (Valkhof, 1997).
Changing water levels do not only cause days on which absolutely no service will
operate. On days on which service is allowed lower water levels based on higher
riverbed drag effect causes higher operating costs. These risks based on time related
water levels have to be taken into account. At sea the concept will have to deal with
changing sea conditions. These are mainly wave heights and wind force. While
modelling these factors were also not included. At the time of analysis it was not
known how these forces would interact with the newly designed barges.
Calculations on these effects will have to be done in further research.
As mentioned earlier the market of new vehicle transport between mainland Europe
and the UK is dominated by a single player. This means that lowering market prices
such that entrance into the market would become very difficult could essentially
raise the entrance barrier based on market price. Closely related to this problem are
the relationships between existing market players and car manufacturers. Contracts
between these existing market players are often signed for a period of several years
and not being able to attract new customers will result in loosing this window of
opportunity for several years.
Risks to cost estimation firstly can originate from pure operation costs like fuel and
labour. The influence of these factors can be compensated for fuel by utilizing fuel
bunker service providers that hedges the fuel price, e.g. a long term contract with a
fixed price. In this way possible large cost fluctuations would be less influential. As
far as labour costs are assumed, these are not considered to have a tendency for
large fluctuation. This component can be assumed to change a few percent per year.
The demand for transport of new passenger cars highly depends on economical
drivers and consumer purchasing power. The latter cannot be influenced but the
demand for new cars and the production of new cars, which forms the supply for
3
this river sea car transport, are based on an assumed distribution between three
port areas in the UK.
1.5 SWOT diagram
The previous four paragraphs can be summarized in the same diagram as figure 19.1
Helpful
Harmful
To achieve the objectives
To achieve the objective
Flexible
Minimal occupancy rate
Optimized push boats
Technically difficult
Influences from
inside the company
Easily enlarged
Sensitive for delays
External
Possible in other regions
Transport demand
Other products
Changes in production locations
Subsidies
Dependency on transport time
Return freight
Proposed for a monopolistic market
Use of existing push boats
Increases in operational costs
Internal
Influences from the
environment
Reduces road congestion
Figure 1.2: Summary of SWOT-analysis
4
2 Investment analysis
In this chapter, the consequences of commencing a viable service are elaborated on. This
implies that the other factors besides the operational costs are determined. These costs are
largely depending on the initial investment. This investment is done prior to any operation.
There is a possibility that first contracts may already be signed with different clients, in fact
this may be a wise thing to do, as credit companies are more likely to supply credit if income
has been (conditionally) guaranteed.
The chapter will start with the amount of investment that is required. Next, the structure of
the needed finance is elaborated. The chapter concludes with a Net Present Value
calculation of the design for different price levels.
2.1 Magnitude of investment
The prices of different vessels are very hard to come by. In general, the market for new ships
is very much customized for every customer/situation. Therefore no catalogue prices can be
found based on the offered models. This situation demands for a different approach in order
to come up with a sensible estimation of purchase prices for both tugs and the barge. The
following sections describe the calculations of the prices of the three components of the
service, the barge, the sea push boat and the river push boat. All information is based on an
interview with R. Hekkenberg (Hekkenberg, 2010).
The prices are based on three different components, the steel weight, the installed power,
and the estimated area of accommodation. The price of each ton of steel that is put into the
vessel is €2800, the price of each installed kilowatt of power is €250 and the price of each m²
of accommodation is €2000. The following formula is used to calculate the total price of a
component:
𝑡𝑜𝑡𝑎𝑙𝑝𝑟𝑖𝑐𝑒 = 𝑠𝑡𝑒𝑒𝑙𝑤𝑒𝑖𝑔ℎ𝑡 ∗ 2800 + 𝑖𝑛𝑠𝑡𝑎𝑙𝑙𝑒𝑑𝑝𝑜𝑤𝑒𝑟 ∗ 250 + 𝑎𝑐𝑐𝑜𝑚𝑜𝑑𝑎𝑡𝑖𝑜𝑛𝑎𝑟𝑒𝑎 ∗ 2000
2.1.1 Barge
In loaded condition, the barge has a total weight of around 3000 tons. The weight of the 546
vehicles is 650 tons, the remaining 2350 tons is assumed to be the steel of the construction
of the ship. Since the barge is propelled by the push boat, there is no installed power on
board and the crew sleeps and lives on board of the push boat, so no accommodation is
needed on the barge. This results in:
𝑝𝑟𝑖𝑐𝑒𝑏𝑎𝑟𝑔𝑒 = 2350 ∗ 2800 = €6.580.000
In the service, two barges are required so the total investment in barges is €13.160.000.
2.1.2 Sea push boat
The sea push boat has a total weight of 450 tons. 50% of this weight is construction, 45% are
stores and the remaining 5% are other weight items. The steel weight of the push boat is
225 ton. The installed power is 2200kW and the accommodation is assumed to be 50m²
𝑝𝑟𝑖𝑐𝑒𝑆𝑃𝐵 = 225 ∗ 2800 + 2200 ∗ 250 + 50 ∗ 2000 = €1.280.000
The service requires two sea push boats, the total investment is €2.560.000
2.1.3 River push boat
The last component is the river push boat. This component has a steel weight of 115 ton, an
installed power of 1150kW and the accommodation is similar to the sea push boat, 50m².
𝑝𝑟𝑖𝑐𝑒𝑆𝑃𝐵 = 115 ∗ 2800 + 1150 ∗ 250 + 50 ∗ 2000 = €700.000
The total investment that is required is €16.420.000
5
2.2 Equity Capital versus Debt Capital
In order to acquire this amount of money, a debt must be signed. Debt always needs some
form of guarantee for the debt supplying company, mostly a bank or consortium of banks. In
this case, the complete set of vessels will function as collateral.
However, the total amount of capital that comes from a debt can never exceed the value of
the security. The remaining part must be covered by equity. This may be trivial, but the ratio
between equity and debt capital are determined by numerous factors. However, this ratio is
never a fixed number, and reasoning along different routes may find very different values.
The interest rate on the equity part of the investment will be higher than on the dept part,
since a private investor that is willing to take the risk, wants more interest than a regular,
risk free bank guarantees.
2.2.1 Ratio between equity and dept
Firstly, the current financial market demands that nowadays debts are largely covered by
private equity. In economical high times, ratios of about 90 percent debt were possible, but
it is assumed that after the recent credit crunch, these ratios are hardly seen anymore.
Financial institutions demand more commitment of the lending partner and therefore more
private equity.
Secondly, the rate of interest is a determining factor for the ratio. At a high interest level, a
financial institution may be more allegeable to carry the risks of the debt. This means that
more of the total capital may be acquired via a debt. If a demand is proposed for a low
interest rate (in relation to the market) than low ratios of about fifty-fifty may be very
common.
At third, the trade in which the security is placed makes a large difference. For instance real
estate is a very common trade in which debts are made. Generally the real estate market
suffices in providing a stable platform for the financial institution to base their ratios on. In
this market a debt of nearly one hundred percent may be observed for some projects. Inland
shipping does provide a solid investment, but the market fluctuates much more than the
real estate market.
Finally the presented plan is very important for a financial institution to assess the different
sensitivities. If one is to operate a very common investment, such as a car or truck, it may be
very easy to acquire a debt. For more elaborate operations that require a tailor-made
assessment, higher interest rates and dept ratios are probably set.
Because of the financial market at the current moment, the real ratio in the first quarter of
2010 will be very low; meaning that relatively high values for private equity are needed.
Because of this, it can be justified to wait with starting the operations until the credit crunch
is past. However this is by no means certain to be so at any point in time. For these reasons
the ratio is considered to rise in the coming months, but further predictions are not very
accurate.
2.2.2 Partners for Equity Capital
In order to attract an equity partner for the transport concept it is very important to have a
solid business case. This largely implies that verification of the calculations is needed.
Because of the large discrepancies in the found prices a car transport company charges and
the costs that are calculated per vehicle it may be wise to contact a partner within the car
transport business. This car transport company can also assess the possibilities for the vessel
in depth and probably has relations with the car producing companies.
This company may be even more interested because of the possibility to get insight in the
new transport concept, possibly becoming the market leader on river sea transportation.
In short, the suggestion is that if river sea transportation is to be co-financed by a private
party, the most reasonable partner is a company that already has knowledge about the
6
market. By assessing the transport concept in relation to the different current alternatives
this party can assess the possibilities and decide to start the service.
It is important to keep in mind that a partner for equity will always require a significant
interest rate, since they can their money away on a normal bank account as well.
2.2.3 Collaborations for Debt Capital
For the contract concerning the debt capital it is recommended to approach a few parties
and obtain their opinion. As said before, the debt capital market is relatively transparent, so
different proposals for the debt may be acquired. In order to get a full insight of the possible
debt conditions such as interest rate, life expectancy and pay back structure, multiple
parties should be approached.
Firstly, and most clearly, some banks should be asked for an offer. These banks may be local
banks, but can also be larger, maybe more independent banks. Some of the banks have a
dedicated branch that specializes in shipping finance. They therefore are the first
contestants to become a debt partner.
As a second option, large investment companies may be found nationally and
internationally. Some of these also have a specialized shipping branch. These companies
focus only on the financing of vessels. Therefore they may charge higher interest rates than
banks, but they may make a good second opinion.
Thirdly, private other parties may be contacted that are known investors. These may be
companies that have enough equity to supply the funds. A downside may be that the
concept and market related knowledge is not available, so that the hesitation is larger than
for the other parties
A sound approach to obtain the debt capital may, for above reasons, very well be to
approach three different partner profiles, being banks, investment companies and other
investors. The first and second may give good insight of the possibilities of the debt. With
these figures at hand, the proposals of the other investors can be judged adequately.
2.2.4 Conclusions on equity and dept
Following the elaborations in the previous sections, a couple of choices are made. This is the
ratio between debt and equity, and the interest rates on both of them.
Firstly it is chosen to have a ratio of 60% debt and 40% equity; this makes it easier to find a
bank that is able to supply a mortgage on the ship at a reasonable interest rate. The payback
period for this mortgage is taken as 20 years. The interest rate is taken as 7%.
On the equity part the interest rate is taken as 10%, which is significantly higher than the
interest rate that one can get on a normal bank account.
Cash flow analysis
To get insight in the influence of the asked price on the financials of the shipping company,
the cash flow is analysed for a period of 30 years. In order to be able to assess whether the
investment adds value to the company after a certain period, the Net Present Value (NPV) of
the free cash flow has to be calculated. The NPV is the present value of the future cash flow,
taking a certain discount rate (r) into account for the correction of the cash flow due to
interest, inflation and risk. The NPV is calculated with the following formula:
𝑛
𝑁𝑃𝑉 = ∑
𝑡=0
𝐹𝑟𝑒𝑒 𝑐𝑎𝑠ℎ 𝑓𝑙𝑜𝑤
(1 + 𝑟)𝑡
The discount rate is taken as 10%, equal to the interest on the equity part of the investment.
Next thing to do is the calculation of the cash flow of each year. This is conducted following
the scheme represented in table 20.1. A couple of factors have to be determined before the
free cash flow can be calculated. The revenues are determined by the price of transport and
quantity of transported vehicles. The transport price is the main input parameter of the
7
analysis, the quantity is derived from the occupancy rate. It seems plausible to assume that
20 percent of the total number of vehicles will not be transported by this river sea concept,
which results in a occupancy rate of 82,4 percent during the outward journey. This is based
on a market share of 103 percent (see chapter 16) and initial occupancy rate of 80 percent,
which is common in this sector (Bosvelt, 2009).
Table 2.1: Free Cash flow scheme
1
2
3=1-2
4
5=3-4
6
7=5-6
8
9=7-8
10=9+4
11
12=10-11
Revenues
Operational costs
EBITDA
Depreciation
Operational result
Interest paid on debt
Result before tax
tax
Result after tax
Cash flow
Dept repayment
Free Cash flow
The operational costs are based on the outcome of chapter 17, €80.197,20 for one year.
Both the revenue and the operational costs are changing every year due to inflation. This
effect is corrected by adding 3% to both the costs and revenues each year. Because those
costs included the costs of capital, and the scheme in table 20.1 calculates that separately,
the costs of capital have to be subtracted. According to Table 15.3, the costs of capital are
34% of the total costs.
To decrease the amount of tax that has to be paid in the first years of operation, it is
interesting to decrease the booked value of the vessels as soon as possible. However, tax
authorities have set boundaries to this. The minimum period in which the vessels can be
depreciated to zero is eight years (Blaauw, 2009).
The amount of tax that has to be paid is depending on the result before tax, and can be
calculated with figures from the Dutch Tax authorities. There are two scales with different
percentages, up to €200.000 a company has to pay 20% tax; above that amount, a company
has to pay 25,5% tax (Belastingdienst, 2009).
The calculation of the NPV starts in year 0, when the ship is bought. The cash flow of that
year is negative, since it is money that was spend on the ship. The value is 40% of
€16.420.000, €-6.568.000.
As stated earlier, the revenues depend on the price of the transport. To assess the influence
of that price on the NPV, three different price levels are investigated. The lowest one is just
above the operational costs, €92 per car. The most expensive is at the level that Broekman
Automotive charges, €114 per car for a combination of inland shipping and short sea
shipping. And finally one level that is lower than the price of Broekman Automotive, based
on the assumption that the service needs to be competitive and the market opts for the new
service instead of the existing services. This price is taken 10% lower, €102,60.
The following graphs show the free cash flow and NPV for the three different prices.
8
Free Cash flow & NPV, price €92
€ 4.000.000
€ 2.000.000
€0
Value (€)
0
1
2
3
4
5
6
7
8
9
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
-€ 2.000.000
-€ 4.000.000
Cash Flow
-€ 6.000.000
NPV
-€ 8.000.000
Year
Figure 2.1: Free Cash flow and NPV at a price of €80,30
Notable about the price of €80.30 is that no negative cash flows are present. This is true
under the assumption that none of the threats in chapter 19.4 do happen. A small increase
of operational costs or decrease of the revenues will lead to a loss. Besides this, it takes a
long period before the investment has repaid itself, even after 30 years still 28% is not
repaid. Therefore this price is certainly not high enough to justify the initial investment.
Free Cash flow & NPV, price €114
€ 10.000.000
€ 8.000.000
€ 6.000.000
Value (€)
€ 4.000.000
€ 2.000.000
€0
0
1
2
3
4
5
6
7
8
9
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
-€ 2.000.000
-€ 4.000.000
Cash Flow
-€ 6.000.000
NPV
-€ 8.000.000
Year
Figure 2.2: Free Cash flow and NPV at a price of €114
The price of €114 shows a completely different picture, the cash flows are much larger and
the investment has repaid itself after 8 years. It is however questionable whether this price
results in the desired occupancy rate of 82,4% when it is placed into the market next to the
current competitors. Broekman Automotive has stated that Cobelfret has a monopoly in the
current market and that it is therefore necessary for new competitors to be significantly
cheaper.
9
Free Cash flow & NPV, price €102,60
€ 4.000.000
€ 2.000.000
€0
Value (€)
0
1
2
3
4
5
6
7
8
9
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
-€ 2.000.000
-€ 4.000.000
Cash Flow
-€ 6.000.000
NPV
-€ 8.000.000
Year
figure 2.3: Free Cash flow and NPV at a price of €102,60
With a price between the costs of the design and the market price of Broekman Automotive,
it should be possible to get a significant position in the market. At the moment that the
market has accepted a new player, it will be possible to increase the price to even more
profitable levels. The price should always be maximized to a level at which the required
occupancy rate can just be maintained.
2.3 Opportunities of return freight from the UK
An attractive way of enlarging the feasibility of the project is an increase of the revenues.
This can be done in three ways, increasing the price of freight to the UK, attract freight from
the UK and sailing a different route back to Rotterdam, for example stopping in Zeebrugge.
The first way is not favourable, since that damages the competitiveness of the design. The
second way is the best, without an increase in costs more money can be earned. The last
way is more difficult, since the extra distance implies more costs.
The distance from London to Zeebrugge is 180km and from Zeebrugge to Rotterdam 100km.
The total distance of a cycle thus increases by 40km, which is 4%. Besides this increase in
distance, the cycle time increases as well. The extra distance takes about 2 sailing hours, and
loading and unloading of the possible cargo takes 10 hours at maximum. This increase in
time requires a 10% higher speed, which implies an increase of 33% of the costs. Combining
this with the increase due to the distance, the total costs of one cycle are €111.011,-. A NPV
calculation with this costs shows that €26000 needs to be earned with the return freight, to
make the detour to Zeebrugge attractive.
10
11
3 Final Conclusions and Recommendations
In this chapter, the sub questions are summarised and answered in paragraph 1. These
questions are stated in chapter 5, Design Objective and repeated bullet wise. The answers
are given and a conclusion is drawn from the partial answers. Finally, the recommendations
are given in paragraph 21.2.
3.1 Conclusions
Part II
 Identifying production locations (origin) of passenger vehicles, both in Germany and
the UK. (Chapter 7)
In Germany, different locations can be addressed that produce passenger vehicles.
Volkswagen, Ford, Mercedes, BMW, Ford and Audi are the main producers and factory sites
can be found throughout the country. The production facilities in Wolfsburg, Zwickau and
Eisenach produce very large numbers of vehicles, while others produces a very limited
amount of cars.
In the UK, production numbers are limited. The majority of cars produced are Mini’s and
Nissans. The Mini’s are part of the BMW concern. The other producers (i.e. Land Rover, MG
and Jaguar) have very limited production numbers. The Mini’s are produced in Oxford.
 Identifying shipping locations (destination) of passenger vehicles, both in Germany
and the UK. (Chapter 7)
The passenger vehicles from Germany to United Kingdom are mostly transported to
terminals in the UK. The major terminals are located in Southampton, the London area and
Grimsby (near Hull). These terminals are the foremost handlers of passenger vehicles
destined for the British market. From these terminals, the new vehicles are then transported
inland.
Passenger cars that are produced in the United Kingdom that are destined for the German
market mainly shipped to one of the continental terminals, located in Rotterdam, Zeebrugge
and Antwerp. From there the vehicles are transported directly to dealers or another inland
hub.
 Determine the number of passenger vehicles to be transported between UK and
Germany. (Chapter 7)
The different numbers in car registrations and productions show that there is a substantial
flow between both countries. It also shows that there is a great imbalance in the flows.
Table 21.1: Total passenger vehicle flow from the United Kingdom to Germany
From
To
Number
Germany
United Kingdom
559879
United Kingdom
Germany
107484

Identifying the current practices on transporting passenger vehicles between
production and shipping locations in the UK and Germany. (Chapter 8)
Current transport modes for the route between Germany and the United Kingdom include
short sea shipping, rail and road transport. Inland shipping is relatively uncommon.
12

Determining the costs involved with current ways of transporting passenger vehicles.
(Chapter 9)
By selecting different combinations of modes in a chain, a calculation of the total transport
costs can be made assuming the mode is chosen based on costs.
Table 21.2: Lowest cost (€) per vehicle per origin – destination couple
To/From
Grimsby
London
Southampton
Koln
22,87
20,62
25,37
Saarlouis
35,37
32,09
34,94
Eisenach
39,36
38,18
42,93
Bochum
21,59
19,34
25,37
Russelsheim
32,99
30,74
35,49
Zwickau
43,63
46,23
49,78
To/From
Grimsby
London
Southampton
Wolfsburg
27,13
29,73
33,28
Hannover
26,04
28,44
32,19
Ludwigsfelde
35,65
38,25
41,80
Dusseldorf
20,87
18,62
23,37
Leipzig
100,39
102,99
106,54
Dingolfing
58,19
55,94
60,69
To/From
Grimsby
London
Southampton
Regensburg
52,79
50,54
55,29
Ingolstadt
52,43
50,18
54,93
Neckarsulm
39,71
37,46
42,21
Bremen
18,78
21,18
24,93
Sindelfingen
42,77
40,52
45,27
Rastatt
38,68
36,43
41,18
Part III
 Identifying the requirements transportation of passenger vehicles and the water
infrastructure imposes on the river sea transport concept. (Chapter 11)
Passenger vehicles impose specific requirements on the concept. Because of the high value
to weight ratio, easiness to move during transport and high damage costs these
requirements are determined quite specifically. The list of requirements that are opposed
on the concept and then translated to either the ship or the service is:
 Damage on vehicles should be minimized
 Loading and unloading should be done in minimal time
 Availability must be maximized for sailing
 Accessibility in the corridor should be maximized
 The concept should be highly cost competitive with the current ways of
transport
 The concept should be time competitive with the current ways of transport
 The concept must be durable
13
 Identifying various ship design concepts. (Chapter 12)
By combining the current practices in both inland and short sea shipping, two major
different concepts are set. One is a single hull ship and one is a tugboat and barge
combination. Within the combined vessel, five different concepts are generated, differing in
specialise tugs for river and sea and number of transported barges per tugboat.
figure 3.1: Four ship concepts

Determining the influences the river sea transport concept imposes on the service
design. (Chapter 13)
By selecting one of the tug and barge combinations, a transfer is needed between tugs at
the river mouth. This transfer demands a speed adjustment of both legs, so they are at the
transfer point at the same time. By selecting a range in river speed (between 5 and 10 knots)
and sea speed (between 10 and 20 knots), the different operational speeds per route are
determined. Most routes are only possible for some speeds and some routes are never
possible to service based on the need for this transfer.
A single hull ship is not bounded by any speed because it is not depending on a barge
transfer. Speeds for this ship are mostly bound by the water conditions (depth, waves,
width).
 Designing the primary specifications of the designed vessel in terms of dimensions,
on board equipment and hull shape, and determine the derived specifications (e.g.
capacity). (Chapter 14)
Based on the different requirements specified in chapter 13, maximum and minimum
shapes are identified that can be operated on the selected waterways. In total, five different
barges were constructed and five different single hull ships were designed. The barges had a
length of 110 meters and the single hull vessel was 130 meters long. The breadth of the
barges ranged from 13.5 to 21.5 meters. The number of deck was determined at 5. The
increase of a deck was not possible because of height restrictions and decreasing the
number of decks was not considered feasible, as the draught of the vessel was needed for
stability.
14
 Determining the operational costs corresponding to the ship design. (Chapter 15)
For every concept the operational costs are based on the fuel consumption. This
consumption was determined using the Holtrop-Mennen method. For every combination of
speed and barge (variant) the cheapest concept was chosen. The resulting tables are
presented below.
Table 21.3: The cheapest concept on the sea
Variant
1
2
3
4
5
Speed (km/h)
18,5
22,2
A or B
A or B
A or B
A or B
A or B
A or B
A
A
A
A
25,9
A or B
A or B
A or B
A
A
29,6
A or B
A or B
A or B
A
A
33,3
A
A
A
A
A
37,0
A
A
A
A
A
14,8
B
A
A
A
A
16,7
A
A
A
A
A
18,5
A
A
A
A
A
Table 21.4: The cheapest concept on the river
Variant
1
2
3
4
5
Speed (km/h)
9,3
11,1
B
B
B
B
B
A
A
A
A
A
13,0
B
B
A
A
A

Designing the service cycle schedule: activities with corresponding time periods and
costs. (Chapter 16)
The complete selection of vessel and schedule is done in chapter 16. This is done based on
costs of the river sea transport concept in respect to the costs of transport by current
modes. The result is that a once-a-week schedule is constructed for a service between
Duisburg and London. The operational speeds are kept relatively low, as costs are decreased
with a decrease in speed. Transfer is done at Rotterdam. This schedule gives a total costs of
€80917,20 for the operation per year.
15
Part IV
 Performing a SWOT (Strength, Weakness, Opportunity, Threat) analysis. (Chapter 19)
The SWOT analysis shows a number of factors that influence the viability of the concept.
Some of these factors can be assessed quantitatively by increasing the price for transport,
ultimately increasing revenue. This increased revenue is used to cover threats.
Internal
Helpful
Harmful
To achieve the objectives
To achieve the objective
Flexible
Minimal occupancy rate
Optimized push boats
Decisions based on costs
Influences
from Easily enlarged
inside the company
Reduces road congestion
Technically difficult
External
Possible in other regions
Transport demand
Other products
Changes in production locations
Influences from the Subsidies
environment
Return freight
Use of existing push boats
Sensitive for delays
Dependency on transport time
Proposed for a monopolistic market
Increases in operational costs
Figure 21.5: Summary of SWOT-analysis

Performing an investment analysis for the proposed transport service concept.
(Chapter 20)
The investment analysis was made for three cases. The first is operation at which the price
where the operational costs. This meant a payback time of significantly more than 30 years
for the initial investment. At the current market price that was stated by Broekman
automotive the payback time was decreased to about 5. When a competitive price of 10%
less than the indicated market is set, the payback time is 7 years.
 Determining the competitive price for the proposed transport service concept.
(Chapter 20)
In respect to the market price and the expected costs, €102,60 may very well be suited as a
price to obtain a viable business case. This business case is able to attract enough cargo
(passenger vehicles) that is transported using river sea transport. Based on the investor, an
assessment must be made to quantify the risks. Without assessing these risks the conclusion
is made that every euro of the price above the operating costs (€80,30) is used to cover risks
and depreciation. Every euro under the market price is used to attain the necessary market
share.
16
3.2 Recommendations
The assumption that car transport is largely based on cost needs to be verified
Sources from Broekman Automotive indicated that the majority of car transporters compete
on price. However the chain between producer and customer includes some point where
value added activities take place. This may alter the decision for any party to choose a
specific mode (being currently available or the new river sea vessel). Secondly it may depend
on transport time from door to door (production facility to dealer). This may be less
important, but should be addressed.
The spread of car production and attraction must be determined more specifically
The total attraction of new passenger vehicles in the United Kingdom and production in
Germany are assumed. Both overall characteristics (total production and attraction) can be
verified quite easily, but the spread over different terminals in the United Kingdom and
production in Germany is indicated by sources. This indication is not an accurate estimation,
so specification is needed.
The total costs of operation of the river sea concept need to be examined
Total costs for one year of operation are determined in order to set a price per transport per
car. These costs are based on current models, that are not completely suiting tug and barge
combinations that navigate on a sea. A detailed study of such an operation is required to
obtain more realistic costs of operation.
The operational costs of current modes need to be verified
The choice of transport mode is largely based on costs. The costs of current modes (rail,
road, inland waterway and short sea shipping) are therefore also of high significance for this
choice. Transport companies probably have very deep insight in these costs, as they operate
such modalities. The found costs are determined from literature, based on bulk cargo,
containers and general cargo, and are therefore not conform the vehicle transport market.
An update of these costs may lead to different conclusions.
The financial implications of debt and equity must be evaluated
The market for debt and equity is not transparent. This means that realistic interest rates
and rates on return are hard to come by. An investor is probably able to assess the
calculated price and risk in order to determine the possibility to invest in the new concept.
The return freight must be assessed to spread costs
The price is set based on no return freight. This is the worst-case scenario. In practice, a
RoRo vessel is suited to transport vehicles, but also palletised cargo. From market research it
has been stated that vehicle transportation from the United Kingdom to Germany is not very
plausible. General cargo can however be a considerable option to transport. This will
decrease the price that is asked considerably, increasing the viability of the concept on the
outbound and return leg.
The change of tugs must be researched along with the facilities at hand
For now, the interchange of tugs is done at the port of Rotterdam. The possibility of this
interchange is crucial in the viability of the concept. The port authority may also charge the
transfer, increasing the costs of operation.
17
3.3 Reflection
Besides the strengths and weaknesses of the design, a SWOT-analysis of the process that
resulted in the design can be made as well.
Strengths
 Earlier research on river sea shipping focused on containers or on RoRo trailers. Both
load units can contain a large variety of products and it is therefore very difficult to
determine the optimal transport solution for this type of load unit. By the
elaborated choice of the passenger vehicle it is possible to make more detailed
choices.
 The practical knowledge of Broekman Automotive (Bosvelt, 2009) and MARIN
(Blaauw, 2009) has been valuable to make elaborated choices and to obtain figures
and number that are not found in literature.
Weaknesses
 For modelling purposes concept analysis was conducted based on cost components.
Competitiveness on service time was not taken into account. Expert opinion
(Bosvelt, 2009) revealed that this component shows great variability in current
practises. This component is entirely controlled by the manufacturer and can change
at any time. For certain batches of cars, the time component can be irrelevant, these
are relative cheap, mass produced, car models. On the other hand bathes of highly
customized luxury cars will often have to be transported as fast as possible. When it
comes to time importance, the river sea concept has a disadvantage compared to
other modes. Current service lead time from Duisburg to London is 67 hours. At best
this could be improved to roughly 55 hours with higher speeds with accompanying
higher running costs. A high risk exists that when quicker transport is essential,
manufacturers would opt for alternative modes like road or rail (block trains).
Opportunities
 Including a value of time in the transport costs makes it possible to include time as
well. This sounds easy, but the determination of the value of time of a vehicle could
be a dedicated project as such.
 The service that is designed is limited by the scope setting throughout the analysis.
Currently for example the transport service can be run between Duisburg and
London with the chance of sufficient loads to maintain profitability. This line is based
on analysis of a corridor between the German Ruhr area and the UK. Technically
however this concept is not bound to this geographic area. Other automotive hot
spots like the Belgian Zeebrugge or French Le Havre areas are situated relatively
close by and provide good opportunities to increase potential freight flows. These
potential flows can increase cash flow and possibly have a positive influence on
business performance. To acquire a more accurate view of transport flows
originating from these areas, further market analysis is needed before they can be
included in the existing chain models.
Threats
 Obtaining figures from a single player that is active in the market makes it very hard
to validate that figures. If the market player has a certain goal with the figures, he
can easily manipulate them. In this case there are remarkable differences between
the values of the costs found in literature and the market price of Broekman
Automotive.
18
19
20
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(Statistiek, 2010)
(DecisioBV, 2002)
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22