Tautachrome Inc (TTCM)

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$RDSH Intermodel - Coastal Shipping Market

http://www.roadships.us/coastal_markets_34.html

According to a study by Reeve & Associates, new data for 2003 indicates a potential US coastwise shipping market of around 80 million truck loads out of a national intercity total of 527 million. Fig.1 reflects the potential market for coastwise traffic.



Fig 1. Potential Coastal Shipping Market in the US
Source: Reebie Associates: Flows include all truck and intermodal traffic over 500 miles moving to and from origins and destinations within 50-200 miles of a coastal port on the US mainland.

Further, according to the study, "A domestic coastal shipping service needs to capture a relatively small share of the market to be viable" - ranging from 1-6% (based on vessel string provides five sailings per week in a particular corridor. Vessel capacity is 500 48' & 53' trailers).

· The potential market is very large - required market penetration levels for coastal shipping to be viable are not excessively high.
· Both existing truck and rail intermodal traffic comprise the potential market.
· A domestic coastal shipping service must be competitive with both truck and intermodal service in terms of cost and service quality.
· "Cheap and dependable" service will be an important selling factor.
· Providing time competitive over 500 miles will probably require ships (25 knots) rather than barges (8-10 knots)
· Likely retailers of the service are trucking and intermodal companies that control the cargo today.
· Maritime transportation service providers may act as wholesalers of shipping and terminal services to the ground operators.

"Four Corridor Case Studies of Short-Sea Shipping Services," a study submitted to the US Maritime Administration by Global Insight and Reeve and Associates, August 2006.

This study provides economic analysis for the following four corridors and measures the economic potential for coastal shipping along these routes: the Gulf of Mexico to/from the Atlantic between the ports of Beaumont, TX and Camden, NJ; the Atlantic coast between Port Canaveral, FL and New Haven, CT; the Pacific coast between San Diego, Oakland, and Astoria; and the Great Lakes, between the ports of Milwaukee and Muskegon, MI.

Using freight data and through stakeholder interviews, the study designed an analytical template to test each corridor's coastal shipping potential. The template included reasonable assumptions for transit times, cost for each leg of a journey, and investment required.



Fig 2 "Four Corridor Case Studies of Short-Sea Shipping Services", a study submitted to the US Maritime Administration by Global Insight and Reeve and Associates, August 2006.

Using this template the authors priced out each component of a truckload freight movement on the Atlantic Coast Corridor using alternate modal options and did a cost comparison of each. Here are their findings:





Fig 3 "Four Corridor Case Studies of Short-Sea Shipping Services," a study submitted to the US Maritime Administration by Global Insight and Reeve and Associates, August 2006.

The results from the modal comparisons were based on assumptions that included a 140 53' trailer RO/RO vessel with an average speed of 25 knots. As can be seen from Figure 3, the SSS option was $45 cheaper but 9.5 hours longer than rail intermodal, the next cheapest alternative. However, given the Roadships America Inc. business model of larger vessel capacity and faster operating speed, this would make the SSS alternative even more cost effective. Additionally, should at some point the driver and truck power unit were to drive on/off the RO/RO in a true ferry-type service, the cost of marine terminal handling at origin and destination ports would be eliminated thereby providing significant added savings.

The study concluded that each of the four corridors they studied may be commercially viable when the following conditions are present:

1. The market has enough density to enable relatively large vessels that provide scale economies in terms of operating and capital cost to be deployed with high enough service frequency to be competitive with trucking.
2. Vessel capital and crew costs as well as marine terminal expenses must be achieved at "best in class" levels for U.S. operations for short-sea-shipping to be price competitive with ground alternatives on a door-to-door basis - this appears to be double in three of the four corridors with the Pacific Coast corridor being less successful primarily due to higher marine terminal expenses.
3. Short-sea shipping can be particularly competitive for heavy and /or hazardous shipments currently moving over the road such as chemicals.
4. When short-sea shipping provides a more direct point-to-point routing and/or avoids area of traffic bottlenecks and urban congestion, it can be highly competitive with ground transportation in terms of both cost and transit time.