Container-on-barge offers a solution

The problem faced by today's transportation industry is colossal. Traditional infrastructures are suffering from congestion, and new answers must be explored. Fierce competition makes it difficult for transportation companies to earn a profit while continuing to offer good service. Freight rates on goods have become cheap by any standard. The next field on which to compete will be innovation, the capacity of a transportation company to innovate with new product to satisfy its ever-demanding clients and the new physical constraints.

The transport mode that offers the most promising growth for the next 10 years in Europe is inland shipping, a mode that now is grossly underused. With the increasing demand in transport correlated by the congestion problems faced today, a change in modes is necessary. Today's inland transportation network is mainly used for bulk cargo, as well as an increasing volume of containerized goods. I believe inland shipping is a very competitive alternative to road transportation, and should be further used for other types of goods. The challenge will be to attract a new market segment that has been left entirely to trucking.

This new market sector is for the transport of fast-moving consumer goods. It is highly desirable to have a modal shift from roads to rivers where congestion does not exist. This can be realized using a combination of innovative technology and policies. Currently, the cost per ton-kilometer of using barges is significantly less than for trucks. This is mainly due to the economies of scale that one can realize by transporting 600 tons in a barge, compared with 30 tons on a truck.

The challenge for promoters of inland shipping will be to convince the shippers that their overall transportation costs can be reduced, even if it means changing their inventory pattern, and adapting their supply chain. The government should encourage such a switch, which in the long term will be of great benefit to all stakeholders.

Haris Khan

University of Antwerp

Antwerp, Belgium

Puerto Rico is a growing market

Your detailed article on the Puerto Rico liner trade ("Out of the Woods," May 17-23) was well-done and an example of the analysis and insight that well serves the readership of The Journal of Commerce. I always enjoy reading your in-depth trade lane analyses.

With regard to overall market size and growth in the Puerto Rico lane, we believe the data put out by your PIERS affiliate is more meaningful than overall Census Bureau trade statistics, which include bulk commodities that don't move in containers. Our tabulation of the PIERS data shows an overall southbound market of 526,904 TEUs in 2003, or 3.32 times the northbound market of 158,581 TEUs that same year. Those figures exclude the new and used vehicles that primarily move outside of containers. The article referred to the changes in total marine cargo, including bulk commodities that haven't move in containers since 1999. Within the liner sector, all participants would point out that 1999 data includes a wave of cargo driven by Hurricane Georges, which caused meaningful damage to the island in late 1998. As such, comparisons of the current market size to 1999 results in anomalies that we believe aren't consistent with longer-term market trends.

A review of the Puerto Rico liner market by direction and by year over the last 10 years shows a compound annual growth rate of 1.67 percent southbound, 5.12 percent northbound and 2.37 percent combined. The core southbound market will never be a double-digit percentage grower, but it will never show consistent declines because it is linked to what Puerto Rico's people consume in their everyday lives. As the population grows, this consumption-oriented market can be expected to continue to show consistent stable growth. The latest economic indicators from the Government Development Bank for Puerto Rico show 1.4 percent population growth between fiscal 2003 and fiscal 2004. The 10-year compound annual growth rate of 1.67 percent is consistent with and just above the long-term population growth rate. (The "Just the facts" sidebar accompanying the Puerto Rico articles incorrectly showed an estimated decline of 0.6 percent in population growth in 2003; the estimate actually called for an 0.6 percent increase.)

An indication of the strong and vibrant consumption market that exists in Puerto Rico is the fact that many of the larger, well-known retailers have their highest-grossing stores on the island. As the population continues to grow, carriers serving the island can count on consistent stable growth in the overall southbound market at increments slightly above the population growth rates, as has been the case historically.

John D. McCown

Chairman, chief executive

Trailer Bridge Inc.

New York