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Q2 Z2,(Q2) Z2(Q2) - Institute for Water Resources - U.S. Army

Q2 Z2,(Q2) Z2(Q2) - Institute for Water Resources - U.S. Army

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Looking at the time variables, it is worth noting that average<br />

costs have fallen significantly over the five year period in the sample.<br />

An average decrease of about 2 1/2 percent per year is indicated.<br />

The quarterly dummy variables show average cost declining steadily<br />

throughout the year. This accords reasonably well with a priori expec-<br />

tations. The first quarter (the only dummy variable which proves to be<br />

statistically different from the omitted variable) has significantly<br />

higher costs than other quarters. This is to be expected since the<br />

winter months represent generally adverse operating conditions <strong>for</strong> tows.<br />

In summary, it appears that the barge industry is capable of ex-<br />

panding its output over a wide range at lower unit costs in the short<br />

run. In addition there is evidence that the industry has experienced<br />

'considerable cost saving reductions over the past few years. The re-<br />

sults <strong>for</strong> the cost-size relationship are mixed, yet they point to at<br />

least two interesting issues. One is the indication that the different<br />

types of operating equipment (towboats and barges) are not used with<br />

equal efficiency. This may in part be due to imperfections in the mar-<br />

ket <strong>for</strong> chartered towboats. .<br />

The second issue is the difficulty of obtaining satisfactory<br />

measures of the output and size of transport firms. The EBM does<br />

represent an improvement as it corrects <strong>for</strong> differences in equipment<br />

and operating conditions. It does not correct, however, <strong>for</strong> special<br />

features of waterway transport service which apparently have signif-<br />

icant effects upon the operating costs of the industry.<br />

140

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