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
481,263 42% 660,385 58% 1,141,649
Upper Mississippi (Min-St. Louis) (29 Locks)
Down Down (%) Up Up (%) TOTAL
544,255 62% 332,121 38% 876,376
Illinois River (8 Locks)
Down Down (%) Up Up (%) TOTAL
134,417 45% 163,705 55% 298,121

Source: America’s Locks and Dams: A Ticking Time Bomb for Agriculture?

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
Coal 39,572,000 $1,553,000,000
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
Chemicals 1,068,000 $425,000,000
Other 7,686,000 $3,131,000,000
Total 157,251,000 $12,709,000,000

Source: Great Lakes Waterborne Commerce Profile Table 1: U.S. Great Lakes Basin 2008 Waterborne Commerce

Table 3: Dry Bulk Commodities Exported the Lower Mississippi River (2010)

Commodity Short Tons
Corn 32,571,978
Soybeans 25,327,265
Coal 9,148,271
Processed Grains 8,019,464
Wheat 4,509,061
Rice 2,409,171
All Others 573,779
TOTAL 81,985,210

Source: Inland Waterways and Export Opportunities

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

Precision instruments

Pharmaceuticals

Transport equipment

Tobacco prods.

Electronics

Textiles/ leather

Machinery

Motorized vehicles

Misc. mfg. prods.

Furniture

Printed prods.

AVERAGE

PRIMARY

MANUFACTURES

Plastics/rubber

Paper articles

Base metals

Newsprint/ paper

Wood prods.

Nonmetal min. prods.

AVERAGE

CHEMICALS

Chemical prods.

Basic chemicals

Fertilizers

AVERAGE

51,988

42,089

27,325

20,491

18,307

9,919

9,464

6,647

6,192

4,665

3,711

$18,254

2,578

1,359

1,318

828

556

178

$1,136

2,725

735

259

$1,240

FARM AND FOOD PRODUCTS

Alcoholic beverages

Live animals/fish

Milled grain prods.

Other foodstuffs

Other Ag. Prods.

Animal feed

Cereal grains

AVERAGE

PETROLEUM AND RELATED

Gasoline

Fuel oils

Crude petroleum

AVERAGE

CRUDE MATERIALS

Metallic ores

Building stone

Waste/scrap

Nonmetallic minerals

Logs

Natural sands

Gravel

AVERAGE

Coal

1,360

1,356

1,167

1,027

614

357

133

$859

685

561

437

$561

267

170

99

55

43

14

10

$94

$28

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).

Societal Benefits

  • 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

IL IN MI MN OH WI
JOBS
Direct 2,813 15,516 10,603 2,516 8,504 3,466
Induced 2,521 17,852 8,061 2,258 9,222 3,071
Indirect 1,842 14,964 8,155 1,496 10,355 2,240
TOTAL JOBS 7,177 48,332 26,819 6,271 28,081 8,777
MONETARY IMPACTS (Millions of U.S. Dollars)
Personal Income
Direct 122 726 484 115 379 164
Local Consumption (Capture) 385 2,469 1,279 264 1,279 367
Indirect 88 587 335 60 437 92
TOTAL PERSONAL INCOME 594 3,783 1,878 440 2,095 622
Business Revenue 439 7,895 3,800 1,344 3,032 1,405
Local Business Purchases 153 1,133 638 114 773 176
State and Local Taxes 59 359 182 47 203 67
Federal Taxes 107 681 338 79 377 112

Source: The Economic Impacts of the Great Lakes St. Lawrence Seaway System

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