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The Economics ofDomestic Short Sea Shipping
SNAME/Maritime Economics Panel
and the
Transportation Research Board /
Marine Board of the National Academies
28 September 2004
Washington D.C.
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Defining the Economic Framework
Market considerations
Create more questions than answers
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Major Thoughts Current and Future Markets Culture Market Expansion An Ideal Port Costs SSS Alternatives (or vice versa) Financing Construction Operation
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Current and Future Markets
Hub(s) and spoke(s) for larger trade Regional trade
Agriculture Energy (oil, product, coal) Intermodal: Container, RO/RO Project cargos
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Culture Blue Water--International Blue Water--US Flag
Brown Water
Shippers / Freight Forwarders / Third Party Logistics (3PL)
PortsThis could be the major hurdle
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Market Expansion
Bootstrap vs. Major Investment
Singapore model or grass roots model?
Lots of “staring at each other.”
But some places are doing something!
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An Ideal Port Access to cargo Friendly “natives” Convenient port facilities Good intermodal connections—physically and
operationally Rail Highway Pipelines Other Maritime
Memphis is a great example
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Costs CAPEX
Acquisition in time and money Market development, including regulatory and political influence
OPEX--Base Crew Insurance and legal Maintenance and repair Material purchasing
OPEX--Charterers Components Operations Fuel
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SSS Alternatives(or vice versa)
Air Highway Rail Pipeline Direct Shipping Market Shift
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Financing Generally based on charter cover
Difficult with specialized vessels and lack of charter liquidity
Many shipping companies are not attractive to Wall Street
Equity is the holy grail.Control the cargo.
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Construction Types of Vessels:
Tug and Barges (river type) Small ships Tug and Barge (ITB/ATB)
Liquid Bulk Dry Bulk Break Bulk Intermodal (Container, RO/RO, LASH)
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Operation Generally three types of firms:
Brown water river operators Blue water ship operators Blue water and coastal ATB/ITB/Tug
operators
MAJOR DIFFERENCES AMONGALL OF THEM