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TECHNICAL REPORT - IMPACT OF HIGH OIL PRICES ON FREIGHT TRANSPORTATION: MODAL SHIFT POTENTIAL IN FIVE CORRIDORS Exhibit 25: “Coaster” RORO Costs, Central Forecast Scenario, $90 per barrel $0.90 $0.80 $0.70 $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 $0.00 0.0 5.0 10.0 15.0 20.0 25.0 Time Cost Knots Fuel Cost Total Cost Exhibit 26: “Coaster” RORO Costs, Pessimistic Forecast Scenario, $160 per barrel $1.00 $0.90 $0.80 $0.70 $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 $0.00 0.0 5.0 10.0 15.0 20.0 25.0 Time Cost Knots Fuel Cost Total Cost TEMS, INC. OCTOBER 2008 30
TECHNICAL REPORT - IMPACT OF HIGH OIL PRICES ON FREIGHT TRANSPORTATION: MODAL SHIFT POTENTIAL IN FIVE CORRIDORS Exhibit 27: “Coaster” RORO, Summary <strong>of</strong> Vessel Costs Scenario $/Barrel It can be seen in Exhibit 27 that the Coaster RORO costs per FEU are all substantially <strong>high</strong>er, almost double, those <strong>of</strong> the larger GLSLS max ship at all levels <strong>of</strong> fuel price. This differential reflects the improved capital, operating, and energy efficiency <strong>of</strong> the larger ship, which in turn becomes a key factor in the ability <strong>of</strong> maritime technology to successfully compete with rail and truck for market share. Finally, Container on Barge (COB) service, which is one <strong>of</strong> the few options available for the Mississippi River, is the most energy efficient transportation mode being evaluated. COB shows a surprising insensitivity to rising energy <strong>prices</strong>. According to MARAD 19, COB can move a ton <strong>of</strong> freight 514 miles on one gallon <strong>of</strong> fuel; while rail moves it 202 miles and trucks move only 59 miles. This shows up in the costing models as well, where fuel comprised only 18 percent <strong>of</strong> COB line-haul cost in Base Year 2005, while it represented 35 percent <strong>of</strong> rail cost and 46 percent <strong>of</strong> trucking cost. Accordingly as fuel <strong>prices</strong> go up, COB costs rise only a small amount in comparison to the costs <strong>of</strong> other modes. COB costs rise from 21¢ per FEU-mile in the 2005 Base up to only 28¢ per FEU-mile in the 2020 Pessimistic <strong>oil</strong>-price scenario. This opens up a huge differential in the cost comparison between COB and that <strong>of</strong> other modes. In the past the price differential has not been quite enough for shippers to justify the added time that COB service would take. In the future, the differential may be much larger if energy <strong>prices</strong> continue to rise, making COB service much more competitive. RORO is suggested for both ship and COB options, because RORO vessels can be loaded and unloaded much more quickly and at a lower cost than crane-loaded vessels. This makes RORO appropriate for short-distance shipping lanes where <strong>high</strong> port charges could easily overwhelm any advantage that water may have in line-haul efficiency. RORO makes for a more cost effective movement overall because even though its line haul cost has gone up by a little, this added transportation cost is more than <strong>of</strong>fset by the much larger savings in port handling charges. 5.5 MODAL PERFORMANCE COMPARISON Fuel % <strong>of</strong> 2005 The <strong>impact</strong> <strong>of</strong> <strong>high</strong>er <strong>oil</strong> <strong>prices</strong> on U.S. transportation costs is dramatic. Exhibit 28 shows how inland shipping costs change under the low, central, and <strong>high</strong> <strong>oil</strong> price scenarios by 2020. 20 In the Central Case scenario with <strong>oil</strong> <strong>prices</strong> at over $90 per barrel in 2020: base • Truck costs increase from $1.41 per FEU-mile to $2.28 per FEU-mile, an increase <strong>of</strong> over $0.87 per FEU-mile. 19 See: http://www.irpt.net/irpt.nsf/LinksView/EnvironmentalAdvantages?Opendocument. 20 The order <strong>of</strong> modes in the legend goes from most expensive to least expensive mode, respectively. TEMS, INC. OCTOBER 2008 RORO Cost per FEU-Mile Ship % <strong>of</strong> 2005 base 2002 Historic $28.85 53% $0.37 76% 2005 Base $54.79 100% $0.48 100% 2020 Optimistic $59.61 109% $0.50 104% 2020 Central $91.03 166% $0.64 133% 2020 Pessimistic $157.18 287% $0.93 193% 31
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