June 1983 - Maritime Reporter and Engineering News

Competition Is The Key To The Future Success Of The Barge Industry

by Archie L. Wilson Chairman of the Board, The American Waterways Operators, Inc. and President, Dixie Carriers, Inc.

The general economic climate of our country is, to a great degree, dependent upon its national t r a n s p o r t a t i o n system, which serves as a vital link in the chain of production, distribution and sale of goods in both domestic and export trade. In order to ensure that this vital system continues to accomplish its mission, our national transportation policy must recognize each mode of transportation as an integral cog in the success of the entire enterprise.

At the same time, that policy must take into account both the advantages of and the constraints under which each system operates, or it will fail to promote competition. That the public interest is best served by competition in all areas of commerce is at the root of the American free enterprise system.

The preamble to the Interstate Commerce Act, as amended in 1940, reads as follows: "It is hereby declared to be the national transportation policy of the Congress to provide for fair and impartial regulation of all modes of transportation." The act goes on to say the policy should recognize and preserve the inherent advantage of each mode. It should promote safe, economical and efficient service, and foster sound economic conditions in transportation.

The act also states that our national t r a n s p o r t a t i o n policy should encourage the establishment and maintenance of reasonable charges for transportation services, without unjust discriminations, preferences or advantages.

The difficulty inherent in creating a transportation policy that accounts for the discrepencies between the abilities of each carrier must be overcome. An airplane is the fastest, but it takes a great deal of energy to lift a package off the ground. Hence, the cost of air freight is the highest of all, but well worth the cost for many commodities. Trucks, of course, may provide overnight delivery, but are limited as to cargo weight. The railroad car is highly efficient for a different kind of freight — essential raw materials and energy. And the railroad, of course, can handle trucks by the thousands. But the floated ton is still the most efficient overall method of transportation, because a single barge can carry the tonnage of at least 25 rail cars, and barges move freight at less than 1/2 the cost of rails.

While it is clear that no single one of these modes can meet the needs of all consumers or shippers, the continued competition between them can only benefit the economic needs of the nation as a whole. Our national transportation policy must promote that competition above all else.

Last year was a bad one for the American economy; the barge industry in 1982 had a very dramatic downturn in earnings. Fifteen of the country's larger barge lines operated at a loss in 1982.

The current Administration is working hard to stimulate economic growth. One of its methods is to cut down and ultimately put an end to federal financing of freight transportation. With this goal in mind, the most recent Administration proposal calls for 70 percent cost recovery of federal investment in navigable waterways.

On the surface, this proposal sounds practicable. However, the barge industry feels that a fair and accurate distribution of the costs chargeable to commercial navigation will result in a percentage far less than 70 percent. But we in the waterways industry also recognize that increased user fees could burden our industry to the point of ex- tinction. If those increases are enacted, our ability to compete with the other modes of freight transportation will be destroyed.

More importantly, the long-range planning and pricing structures that make American products competitive overseas are intertwined with and dependent upon our domestic production and transportation costs.

Efficient barge service now serves as an anchor on rail rates.

Placing an inequitable tax burden on the waterways industry will surely cause a sudden and massive switch by the nation's shippers to other modes. The proposed increases in user fees combined with recent developments in rail deregulation, which increase the concentration of power within the rail industry through mergers and favorable tax breaks, would drastically reduce competition between the two modes.

Ultimately, the Administration's proposals would initiate a stronger set of anti-competitive forces, create a fresh host of false economic bases, and work at cross purposes with their original intent— to promote a healthy economy.

Nevertheless, one area which holds promise for the future of the barge and towing industry, as well as other transportation modes, is the continued growth of export coal trade. The World Coal Study forecast U.S. coal exports of between 150 million and 240 million by the year 2000.

This more than doubles our current coal export figures. Currently, however, U.S.-delivered coal costs are high in relation to Australia, South Africa, and other potential sources. To maintain a competitive edge with other international coal sources, we must reduce our domestic transportation costs. How can we do so if waterways user tax legislation undermines our export policy?

The government has an obligation to be fair and consistent.

There are now established user fees for airways, highways and waterways. Although large federal sums (far larger than for inland waterways) are being spent to subsidize railroads, there is no comparable program for cost recovery of rail subsidies. In calculating the river tax, how much the river pays has to be related to how much or whether the railroads pay. As a nation, we cannot now afford to risk a taxation policy which threatens our ability to promote export trade and future economic growth.

Other stories from June 1983 issue


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