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Management of

Transportation

Bardi/Coyle/Novack

2006 Thomson

Chapter 6

Water Carriers and

Pipelines

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Brief History: Water Transport

Early form of freight and people transport

Important contributor to early U.S.

economic and social developmentInitial population/industrial concentration along

coast and rivers

Waterways are natural ways

public expenditure for improvementsoccasionally necessary

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Industry Overview

Measures ofEconomic Significance

A primary transporter of

dry bulk commodities

bulk petroleum, petroleum products and

chemicals

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Types of CarriersLegal Forms

Private water carriers cannot be hired and onlytransports freight for the company that owns or leases the vessel.

For-hire water carriers Regulated common carriers

Regulated contract carriers

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Types of Carriers, contdClassified by Waterway Used

Internal or inland carriers operate barges,

towboats

Great Lakes carriers operate laker ships Coastal carriers operate ocean-going ships

and barges

Intercoastal carriers operate ocean-goingships and barges

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Number of Carriers, Competitive

Conditions

Relatively small number of small firms

Approx. 550 domestic for-hire carriers

Inland carriers earn highest share of revenues

Moderate intramodal competition

Intense intermodal competition

With rail for dry bulk commodities

With pipelines for oil and petroleum products

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Selected Operating Characteristics

Medium to long distance shipments

400 miles on ave. for inland

1500 miles on ave. for coastal Relatively large carrying capacity

Barges: 1500-3000 tons per barge

L

ake vessels: 20,000 tons Low cost service

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Selected Service Characteristics

Speed of service

Slowest mode for dry cargoes

Trade-off with cost favors low-value goods

Service disruption

Vulnerability to ice and bad conditions

Other characteristics

Packaging requirements for high-value goods

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Operating and Service Implications

Water carriers well suited for low value-to-

weight traffic where transport rates are

significant part of delivered cost

Service characteristics may add cost for

user.M

ust be traded off with low rates

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Equipment and Terminals

Operating equipment vessel types

Terminals

Require significant capital investment

Most publicly provided, operated by local

governments, authorities

Few provided by large volume shippers

Functions facilitate intermodal transfers

Provide temporary storage at port

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Pipelines

Industry Overview, contd

Ownership: Ranked by Share of Revenues

Individual, vertically integrated oil

companies

Jointly owned oil pipeline companies

Railroads

Independent oil companies

Other industrial companies

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Operating Characteristics

Oil Pipeline Network

Includes system of

Gathering lines and stations

Crude oil and product linesPumping stations, refineries, and terminals

Gathering lines

Move oil from wells to gathering stations

Relatively short distance movement

Small diameter, laid on ground surface

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Operating Characteristics, contdOil Pipeline Network

Crude oil lines

Move crude oil from gathering stations torefineries

Long distance movement

Shipments ave. 800 miles, may move 1000sof miles

Large diameter lines laid underground

Pumping stations provide power

Capacity determined by line diameter andpumping station power

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Operating Characteristics, contdOil Pipeline Network

Finished product trunk lines

Move product from refineries to market area

terminalsLong distance movement

Shipments ave. 400 miles, may move 1000s of miles

Large diameter lines laid underground

15 grades of finished product, includingkerosene, jet fuel and gasoline

Final delivery to customer usually by truck

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Service Characteristics

Relative advantages

Low rates

Low loss and damage rates

Warehousing function (3-5 mph)

High delivery dependability

Relative disadvantages

Slow speed limits responsivenessLimited geographic flexibility

Limited variety of products carried