Chapter 6
Water Carriers
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.
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.
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.
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.
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.
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 mediumto-long-haul carriers.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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-ofway).
• The waterways are provided by nature (except
canals) and are maintained, improved, and
controlled by the government.
FIXED VERSUS VARIABLE COST
COMPONENTS cont’
• The carriers pay user charges—lock fees, dock
fees, fuel taxes—for the use of governmentprovided 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.
FIXED VERSUS VARIABLE COST
COMPONENTS cont’
• Fixed costs include depreciation and
amortization, and general expenses.
• The major variable expenses are lineoperating costs, operating rents, and
maintenance.
• Line-operating costs are those expenses
associated with renting operating equipment
and facilities.
INFRASTRUCTURE
• 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.
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.
CURRENT ISSUES
DRUG AND ALCOHOL ABUSE
PORT DEVELOPMENT
• Because of today’s 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.
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 TEU’s has many ports worried for the
future.
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