those are being addressed by projects already under construction, or those that will hopefully be authorized by the pending WRDA bill. Clearly, this means there is capacity to expand freight movement by barge, which is already our nation's lowest cost, safest, most environmentally friendly, and most fuel efficient mode of transportation. The capital construction cost needed to maintain the Inland Waterway System as an efficient and reliable transportation sector over the next 20 to 25 years is estimated to be approximately $4.0 to $4.5 billion dollars, which is miniscule, or tiny, compared to the capital dollars required for rail and highway infrastructure over the same period. MN What are some of the emerging trends in the industry? NW Better asset utilization - The most significant trend in the barge industry over
the past eight years has been the reduction in its overall fleet size. This first and most obvious result of the smaller fleet has been an upward pressure on freight rates. But, this is just the first phase of change in a rationalizing marketplace. For more than a generation, this industry operated with a very unhealthy glut of barges. With over-capacity, neither shippers nor carriers were required to manage barge assets with discipline, given the fact that barges were setting idle in demurrage status, onethird of the time consumed for each barge loading. As a result, our historic measures of productivity really don't describe what I think this industry is capable of achieving. With higher rates, higher demurrage fees soon followed. Demurrage fees aren't good for the shipper and they aren't good for the carrier, either. I think we are about to see a recognition by shippers that releasing barges faster will not only save demurrage, but will also add available capacity
to the industry's fleet; and thus reduce freight rates in the long run. This situation will reward those barge lines that can turn equipment faster, and the industry will be able to add capacity without capital investment. With such a great incentive for both the carrier and the shipper to improve asset utilization, we will start to see what this industry is really capable of achieving. MN If you could have the federal government change one policy, which would it be? NW If I could change one policy, I would require Inland Waterway Capital Construction and Major Rehabilitation projects be funded at the full capability level each year until completed. Under the current process of funding at less than full capability, the Corps of Engineers is forced to execute their construction mission in a very inefficient and occasionally wasteful manner. Once a
project is authorized for construction, navigation projects should be - and formerly were - completed in six to ten years, and now require more than 20 years to complete. The stretching out and delaying of projects through under-funding results in project costs escalating 20 to 40 percent to even doubling. The Olmstead Project on the Lower Ohio River is a prime example of what results when annual funding is less than full capability level. Currently, the impact of underfunding the Olmstead project is a delay of five years, and the cost has increased approximately $230 million dollars, and the project is only approximately 50 percent completed. The chronic under funding of projects, and the consequent stretching out of construction schedules, also postpones the benefits of the operating efficiencies that a completed project delivers. For projects currently under construction throughout the inland waterways, under funding has
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June, 2007 � MarineNews � 35