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congestion, emission, and safety costs, and also reduced or avoided costs of futureinfrastructure expansion. Section 5-2 reviews available estimates of the RFR for SSSservices. Section 5-3 reviews the avoided external costs of highway congestion, fuel use andemission – per- trip and per-mile – when SSS services are used for moving freight as analternative to trucking. Section 5-4 describes the impacts of SSS in terms of avoided futurecosts of infrastructure expansion.5-2 Estimating Required Freight Rate (RFR) for SSSResearchers at the U.S. Merchant Marine Academy have developed a cost model todetermine the required freight rate (RFR) that the SSS operator must charge to break even.Lombardo and colleagues developed the model based on the prevailing national freight ratesfor moving a standard overland RoRo by truck, and equivalent SSS vessel operating costs formoving a single RoRo ship carrying 80 trailers. Based on the findings of cost model, theRFR for moving a truckload was estimated at about $1.25 per statute miles. The cost modelalso estimated the RFR for SSS and assumed that for SSS to be sustainable the RFR must belower than this standard $1.25 rate per statute mile. 59The model calculated the RFR for SSS as a function of operating speed (allowed to varybetween 5 knots and 40 knots), route lengths (allowed to vary between 200 and 800 nauticalmiles) and minimum cargo volume (assumed at 80 trailers per load.) The model found thatmeeting the minimum volume requirement is often key to sustainable service and that marketshare and profitability usually go together. Lombardo and colleagues concluded that theRFR of $1.25 per statute mile would be economically viable for SSS operations assumingthat a single RoRo would have a minimum load to fill up 80 tractor trailers, with operatingspeed falling in the range of 15-20 knots. They found that RFR curves were extremely flatnear the minima, i.e., the diseconomies of marginally faster operating speeds are notparticularly punishing in terms of imposing additional costs (e.g., fuel cost associated withhigher speeds), concluding that: “The minimum RFR rises more slowly than route length,indicating that the cost advantage of SSS increases on longer routes.” This improvement ineconomy is only limited by the feasible limits of how much freight SSS service could carryhow far. However, due to the geography of the U.S. East, Gulf, and West coasts, the studyfound, SSS services cannot be implemented over routes much longer than 800 nautical miles.Table 11 shows the calculated total RFR rates for end-to-end SSS cargo delivery, RFR pernautical mile, and the optimal operating speed assuming an 80-trailer RoRo vessel.59 Lombardo, Gary A., Robert F. Mulligan, and Change Q. Guan, U.S. Short Sea Shipping: Prospects andOpportunities, U.S. Merchant Marine Academy, prepared for Short Sea Shipping Cooperative (SCOOP),November 1, 2004.ONR SSS Final Report 54