Value of Maritime Shipping
The value of maritime shipping can be expressed in various ways:
- Market value of the commodities themselves;
- Benefits to users: reduced direct costs to freight carriers, shippers, and/or customers Directs costs include fuel, labor, travel time, accidents, and environmental mitigation.
- Benefits to governments and society: in terms of reduced landside freight infrastructure, landside traffic congestion, accidents, and environmental damage.
- Economic impacts including direct and indirect employment, direct and indirect revenues and profits to firms, and government revenues. Indirect employment and firm profits accrue to industries other than freight carriers.
Given the range of authorized and functional purposes of the waterways, this section provides only partial examination of these indicators and focuses transportation-related values.
Maritime shipping generates direct and indirect costs of its own and must be weighed against benefits. Much of the maritime transportation system infrastructure is provided by nature. However, most ports and substantial lengths of navigation channels require dredging and infrastructure such as dams that create environmental impacts of their own. Inland freshwater bodies are uniquely vital to ecosystems and human societies. Harbors and other maritime infrastructure typically require less total space and other inputs than highway or rail networks but the real estate occupied by ports is highly valued for other purposes. Ports compete for waterfront real estate that society often values for other purposes such as tourism, recreation, amenity value, habitat protection, and fresh water supply. Biodiversity is often greater in shoreline areas than inland areas. And because of water’s efficiency as a transmission medium, the impacts of shipping can be experienced over a wider area.
Value of Commodities
Table 1 summarizes the total value over ten years of all commodities moving on the MAFC regions three largest rivers. The total value is derived by adding the value of commodities passing through each lock on the river, so there is over counting of shipments transiting two or more locks. The figures do provide an indication of relative values of commodities flowing on each river and in each direction. America’s Locks and Dams: A Ticking Time Bomb for Agriculture? lists the value of commodities flowing through each lock and illustrates the general pattern of increased freight volumes and values aggregated at downstream locks and dams.
Table 1: Total Value of Freight Transiting Locks on Major MAFC Rivers, 2000-2010 ($ Millions)
|Ohio River (21 Locks)|
|Down||Down (%)||Up||Up (%)||TOTAL|
|Upper Mississippi (Min-St. Louis) (29 Locks)|
|Down||Down (%)||Up||Up (%)||TOTAL|
|Illinois River (8 Locks)|
|Down||Down (%)||Up||Up (%)||TOTAL|
Table 2 summarizes the approximate dollar value of Great Lake commodities shipped in 2008. Though 2010 dollar-value equivalents were not available in time for this report, a look at the economic value of for the Great Lakes Basin maritime freight in 2008 is instructive. In 2008, the total value of commodities shipped in the Great Lakes Basin amounted to nearly $13 billion in 2008 dollars. The tonnage figures exclude double counting. While many factors affect the price per ton of a given commodity in a given year, the totals are still useful in comparing the magnitude of trade and its value to the cost of maintaining and improving the infrastructure noted earlier. These benefits do not include other benefits that GLNS infrastructure provides to other industries and communities such as tourism, recreation, nor does it account for any costs to these sectors.
Table 2: Value of Selected Commodities Shipped on the Great Lakes in 2008
|Total Tonnage 2008||Approximate Value 2008 (Dollars)|
|Iron Ore and Steel Products||60,179,000||$3,318,000,000|
|Other Ores and Minerals||6,439,000||$648,000,000|
|Aggregates (including Limestone)||32,199,000||$2,226,000,000|
|Grains (Wheat, Soybeans, etc.)||5,097,000||$680,000,000|
|Petroleum and Petroleum Products||4,826,000||$669,000,000|
Table 3: Dry Bulk Commodities Exported the Lower Mississippi River (2010)
Table 3 indicates the total tonnage destined export from Louisiana ports but not the dollar value. Table 4 provides an estimated value of various categories of commodity on a per ton basis in 2007 dollars. Using these values, the reader can generate their own estimates for the total dollar value for a given commodity, port, or waterway.
The value is dependent on a number of variables and can fluctuate dramatically over time and geography. While the US Army Corps of Engineers publishes detailed records of the volume of trade, it does not publish the values of commodities.
Generally speaking, domestic waterborne commerce competes most effectively with rail and truck in moving bulk commodities with a relatively low value-per-ton and low storage costs. Commodity data collected by the US Army Corps of Engineers bear this out. Coal and crude materials have the lowest value per ton and make up most of domestic waterborne freight. Most chemicals shipped by domestic waterway are bulk fertilizers or basic chemicals. Most food and farm products shipped by domestic waterway fall into the cereal grain, animal feed and other categories. Very few high-value manufactures are currently shipped on the MRS or the Great Lakes.
Table 4: Average Value-per-Ton of Commodities (2007)
|Value Per Ton (2007 $)||Value Per Ton (2007 $)|
|HIGH VALUE MANUFACTURES
Misc. mfg. prods.
Nonmetal min. prods.
|FARM AND FOOD PRODUCTS
Milled grain prods.
Other Ag. Prods.
PETROLEUM AND RELATED
Averages value per ton is expressed in 2007 dollars and was calculated by dividing total tonnage by total 2007 dollar-value for each commodity group.
Source: Freight Analysis Framework v3
Direct Cost Savings to Shippers and Customers
There are several potential benefits of maritime shipping to shippers, customers, and multimodal carriers:
- Freight movement by water is the most efficient form of freight movement on a ton-mile basis in terms of fuel efficiency, fuel emissions, labor, accidents, injuries, and spillage of cargo. For example, inland towing by barge can move 576 tons one mile per gallon of fuel versus only 413 tons by standard rail and 155 tons by truck (TTI, 2009). Critics of these findings note that the fuel efficiency benefits of barges can be negated by the extra distances imposed by winding rivers and other geographic constraints (Walker, 2010).
- Maritime shipping also potentially benefits shippers and customers by providing competition to trucks and especially rail.
- For firms dependent on movement of low value-to-weight commodities, the cost savings of provided by waterborne shipping are such that it may affect the location of firms and the regional economy. For example, steel-dependent industries in the Great Lakes states have long benefited from proximity to both the natural resources and waterways that can most effectively transport them.
The US Army Corps of Engineers estimates that the Great Lakes-St. Lawrence Seaway saves shippers approximately $3.6 billion per year over the cost of the next most competitive mode ($2.2 billion to US shippers alone). Of the total amount, $1.1 billion is saved on freight transiting the Soo Locks, another $1.1 billion on internal Great Lakes traffic not transiting any locks. The remainder is saved by freight moving through the Welland Canal system and/or St. Lawrence Seaway (USACE, 2010).
On the MRS, a study conducted by Tennessee Valley Authority for the US Army Corps of engineers estimated that the cost savings of barge shipping to selected industries in the Ohio River Basin in totaled $3.6 billion (Bray, 2011).
- Fuel efficiency translates into reduced fossil fuel emissions. For example, one study found that, on average, barges generate 19 tons of greenhouse gases per million ton-miles, while standard railroads generate 27 tons and trucks generate 72 tons per million ton-miles (TTI, 2009). While barges and Great Lakes freighters have historically used dirtier fuel than trucks and railroads with regard to sulfur dioxide and other harmful pollutants, net pollution per ton-mile of cargo is still lower than competing modes. Harmful concentrations of emissions from ships at busy ports could be addressed by converting maritime vessels to cleaner fuels. Critics of barge shipping assert that single-commodity unit trains can actually produce fewer total emissions than river barges through a combination of technology and more direct routes to destination ports such as New Orleans (Walker, 2010). Environmentalists are also concerned that infrequency of maritime accidents is partly offset by the greater likelihood catastrophic spills when they do occur.
- Maritime shipping reduces wear and congestion on existing road and rail infrastructure. Each ton-mile of freight moved by waterway is a ton-mile that does not require movement by rail or truck. One study estimates that diversion of freight currently carried the IWS alone (excluding the Great Lakes) would require 58 million additional truck trips or increase railroad tonnage by 25 percent. Much of this additional tonnage would be concentrated in already congested urban areas and on less robust rural highways in localities currently served by waterways (TTI, 2009).
- Maritime shipping holds the promise of reducing the need for additional highways and railroads to accommodate projected growth in freight movement. A typical river barge can carry 1,750 tons of dry cargo, the equivalent of 16 rail cars or 70 semi-trailers. The space efficiencies of Great Lakes freighters are even greater. A large Great Lakes freighter can carry the equivalent of 700 rail cars or 300 large trucks (US Army Corps of Engineers, 2009). In 2010, a total of 73 million tons of commodities were shipped by water from MAFC states to Louisiana by barge, the equivalent of 42,000 barges. Moving the same tonnage by rail would have required approximately 670,000 rail cars or 2.9 million trucks (TTI, 2009).
Summary of Great Lakes Economic Benefits
In 2011, Martin Associates prepared a study on the broad economic impact of maritime in the Great Lakes-St. Lawrence Seaway. The study was sponsored by an international coalition of marine industry stakeholders. The scope of the study included both US states and Canadian provinces bordering the system. The study estimated the direct and indirect benefits of Great Lakes shipping in terms of direct, induced, and indirect employment; personal incomes; business revenue; indirect local revenues; and government revenues. A summary of estimated annual benefits of Great Lake shipping for each of the six Great Lakes MAFC states is included in Table 5 below.
Table 5: Estimated Economic Impact of Maritime Freight by MAFC State
|MONETARY IMPACTS (Millions of U.S. Dollars)|
|Local Consumption (Capture)||385||2,469||1,279||264||1,279||367|
|TOTAL PERSONAL INCOME||594||3,783||1,878||440||2,095||622|
|Local Business Purchases||153||1,133||638||114||773||176|
|State and Local Taxes||59||359||182||47||203||67|