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The Economics of Domestic Short Sea Shipping

The Economics of Domestic Short Sea Shipping. SNAME/Maritime Economics Panel and the Transportation Research Board / Marine Board of the National Academies 28 September 2004 Washington D.C. Defining the Economic Framework. Market considerations Create more questions than answers.

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The Economics of Domestic Short Sea Shipping

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  1. 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.

  2. Defining the Economic Framework • Market considerations • Create more questions than answers

  3. Major Thoughts • Current and Future Markets • Culture • Market Expansion • An Ideal Port • Costs • SSS Alternatives (or vice versa) • Financing • Construction • Operation

  4. 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

  5. Culture • Blue Water--International • Blue Water--US Flag • Brown Water • Shippers / Freight Forwarders / Third Party Logistics (3PL) • Ports This could be the major hurdle

  6. Market Expansion • Bootstrap vs. Major Investment • Singapore model or grass roots model? • Lots of “staring at each other.” • But some places are doing something!

  7. 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

  8. 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

  9. SSS Alternatives(or vice versa) • Air • Highway • Rail • Pipeline • Direct Shipping • Market Shift

  10. 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.

  11. 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)

  12. Operation • Generally three types of firms: • Brown water river operators • Blue water ship operators • Blue water and coastal ATB/ITB/Tug operators MAJOR DIFFERENCES AMONG ALL OF THEM

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