Water Transportation Services
Description
Companies in this industry provide inland, coastal, and deep sea transportation of freight and passengers. Major companies include Carnival and Kirby Inland Marine (both located in the US); as well as Mærsk (Denmark); COSCO (China); and Hapag-Lloyd (Germany).
The US water transportation services industry includes about 1,600 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $43 billion.
Major segments of the water transportation services industry, including coastal and Great Lakes freight transportation, cruise ships, deep sea freight transportation, and inland water freight transportation, are covered in separate profiles.
COMPETITIVE LANDSCAPE
Demand for water freight transportation is driven by commodities trade and global imports and exports; demand for passenger transportation is driven by disposable income and travel preferences. The profitability of individual companies depends on efficient and safe operations. Large companies have advantages in capacity and diversity of service. Small companies can compete effectively by transporting specialized cargo or serving smaller markets. The US industry is highly concentrated: the 50 largest companies account for about 85% of industry revenue.
Companies in some segments of the water transportation industry compete against providers outside their industry. For example, coastal and inland shippers compete directly against railroads, pipelines, and trucks to transport cargo and bulk commodities; cruises compete with vacation alternatives, such as hotels, resorts, theme parks, and land-based casinos.
PRODUCTS, OPERATIONS & TECHNOLOGY
Major segments of the water transportation services industry include cruises (about 50% of US revenue), transportation of dry bulks (more than 10%), and transportation of bulk liquids and gases (less than 10%).
Primary freight categories include bulk liquids and gases, box and pallet freight, intermodal containers, dry bulk, automobiles, and waste. Among major deep sea vessel types are containerships, which transport intermodal shipping containers; dry bulk carriers, which transport commodities such as iron ore, coal, and food; liquid bulk carriers such as tankers that ship crude oil, chemicals, and petroleum products; and roll on-roll off (RORO) vessels that transport wheeled cargo such as cars, trucks, and trains. Common coastal carriers include dry cargo barges, towboats, RORO vessels, and liquid tanker barges.
A ship's capacity is measured by several formulas. Dead weight tonnage (DWT) is the total weight of cargo, supplies, and crew that can be loaded on an "empty" ship. Gross register tonnage (GRT) measures the total internal capacity of a vessel. One GRT is equal to a volume of 100 cubic feet. Twenty-foot equivalent units (TEUs) refer to a containership's total cargo-carrying capacity.
Passenger transportation includes transport via cruise lines, chartered ships, ferries, and water taxis. Top cruise destinations include the Caribbean, Bahamas, Alaska, Bermuda, Mediterranean, Hawaii, and Canada. The Caribbean is the most popular cruise destination. In 2022, about 9 million cruise passengers traveled to the Caribbean, Bahamas, and Bermuda. On the other hand, the Central and Western Mediterranean cruise represents approximately 3 million passengers, coming in second to the Caribbean, Bahamas, and Bermuda, according to Statista.
Fleet management is a crucial challenge for both passenger and cargo ship operators. Fleet maintenance costs can be substantial, and new ships require enormous capital investments. Companies typically rely on revolving credit lines to fund such purchases. Companies that lack adequate capital for fleet expansion may choose to lease ships. Leasing agreements have the added benefit of allowing companies to more easily remove capacity when demand falls, although such benefits must be weighed against higher long-term costs. Companies may also choose to charter vessels from other operators.
In the passenger market, adding bigger ships with new features is critical to attracting customers. However, companies must carefully time the introduction of new ships to maximize the revenue potential of their existing fleet. Cruise operators also make substantial investments in port facilities. Such investments help to improve customer experience and ensure preferential berthing.
The US water transportation services industry includes about 1,600 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $43 billion.
Major segments of the water transportation services industry, including coastal and Great Lakes freight transportation, cruise ships, deep sea freight transportation, and inland water freight transportation, are covered in separate profiles.
COMPETITIVE LANDSCAPE
Demand for water freight transportation is driven by commodities trade and global imports and exports; demand for passenger transportation is driven by disposable income and travel preferences. The profitability of individual companies depends on efficient and safe operations. Large companies have advantages in capacity and diversity of service. Small companies can compete effectively by transporting specialized cargo or serving smaller markets. The US industry is highly concentrated: the 50 largest companies account for about 85% of industry revenue.
Companies in some segments of the water transportation industry compete against providers outside their industry. For example, coastal and inland shippers compete directly against railroads, pipelines, and trucks to transport cargo and bulk commodities; cruises compete with vacation alternatives, such as hotels, resorts, theme parks, and land-based casinos.
PRODUCTS, OPERATIONS & TECHNOLOGY
Major segments of the water transportation services industry include cruises (about 50% of US revenue), transportation of dry bulks (more than 10%), and transportation of bulk liquids and gases (less than 10%).
Primary freight categories include bulk liquids and gases, box and pallet freight, intermodal containers, dry bulk, automobiles, and waste. Among major deep sea vessel types are containerships, which transport intermodal shipping containers; dry bulk carriers, which transport commodities such as iron ore, coal, and food; liquid bulk carriers such as tankers that ship crude oil, chemicals, and petroleum products; and roll on-roll off (RORO) vessels that transport wheeled cargo such as cars, trucks, and trains. Common coastal carriers include dry cargo barges, towboats, RORO vessels, and liquid tanker barges.
A ship's capacity is measured by several formulas. Dead weight tonnage (DWT) is the total weight of cargo, supplies, and crew that can be loaded on an "empty" ship. Gross register tonnage (GRT) measures the total internal capacity of a vessel. One GRT is equal to a volume of 100 cubic feet. Twenty-foot equivalent units (TEUs) refer to a containership's total cargo-carrying capacity.
Passenger transportation includes transport via cruise lines, chartered ships, ferries, and water taxis. Top cruise destinations include the Caribbean, Bahamas, Alaska, Bermuda, Mediterranean, Hawaii, and Canada. The Caribbean is the most popular cruise destination. In 2022, about 9 million cruise passengers traveled to the Caribbean, Bahamas, and Bermuda. On the other hand, the Central and Western Mediterranean cruise represents approximately 3 million passengers, coming in second to the Caribbean, Bahamas, and Bermuda, according to Statista.
Fleet management is a crucial challenge for both passenger and cargo ship operators. Fleet maintenance costs can be substantial, and new ships require enormous capital investments. Companies typically rely on revolving credit lines to fund such purchases. Companies that lack adequate capital for fleet expansion may choose to lease ships. Leasing agreements have the added benefit of allowing companies to more easily remove capacity when demand falls, although such benefits must be weighed against higher long-term costs. Companies may also choose to charter vessels from other operators.
In the passenger market, adding bigger ships with new features is critical to attracting customers. However, companies must carefully time the introduction of new ships to maximize the revenue potential of their existing fleet. Cruise operators also make substantial investments in port facilities. Such investments help to improve customer experience and ensure preferential berthing.
Table of Contents
- Industry Overview
- Quarterly Industry Update
- Business Challenges
- Business Trends
- Industry Opportunities
- Call Preparation Questions
- Financial Information
- Industry Forecast
- Web Links and Acronyms
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