Little River Books
A Division of J. R. Simpson & Associates, Inc.


The Waterways Journal


Why Should The American People Support Water Transportation? It Pays!

Making The Case For Water Transportation

By Wallace Venable
Emeritus Associate Professor of Mechanical & Aerospace Engineering
West Virginia University
Morgantown, WV
(He is also a founder and board member of the Upper Monongahela River Association)


It strikes me that one question we should be ready to respond to is:

"Why should the taxpayers be subsidizing river and coastal barge transportation? Can't it compete in a free economy?"

I don't think anyone can categorically say whether river transportation is really competitive because ALL transportation in the US is subsidized to some extent through a variety of research grants, loan arrangements, and taxation policy.

There may be good social policy reasons to subsidize barge transportation, in any case. These include:

  1. The low specific fuel consumption of barged freight reduces our use of oil, where it is an alternative. This in turn:
    a. Extends the lifetime of our internal petroleum reserves.
    b. Reduces our dependence on foreign sources.
    c. Reduces emissions of greenhouse gases.

  2. The safety record for barge transportation is generally excellent, (although failures can be spectacular) particularly with regard to the general public. Railroads and trucks regularly kill pedestrians and automobile occupants in large numbers, but "one or two at a time."

  3. Barge freight reduces highway congestion. If freight were diverted to highways, increased congestion would have high costs in:
    a. Lost man-hours on the part of the general public.
    b. Increases in greenhouse gas emission.
The existence of the barge industry is a major constraining factor on rail freight rates. This has been observed since 1900.

The general public gains when freight moves by water, particularly when contrasted with highway haulage. I believe the cost-benefit ratio is such that, as a taxpayer, I support the continuation of Federal support for rivers and harbors improvements.

(Editor's note: Specific links to pages about environmental friendliness, fuel consumption, barge capacities, less congestion, etc., are being developed and will be placed on the menu soon.)

February 6, 2003



The Benefit/Cost Ratio of Water Transportation?

(Excerpt from "The Waterways Journal" Editorial of February 10, 2003)


"…Not all government programs are beneficial. Not all programs have documentation to prove that for every dollar invested in them the U.S. can count on a return of $4. The U.S. waterway transportation system benefit is that high (see General Accounting Office report GAO-02-1038).

"According to GAO, "During fiscal years 1999, 2000 and 2001, federal expenditures for the commercial marine transportation system averaged $3.9 billion per year. Funding for about 80 percent of these expenditures came from the U.S. Treasury's general fund. During this same period, federal agencies collected about $1 billion each year from marine transportation system users. Most of these collections were credited to trust fund accounts that, by law, are dedicated to maritime-related activities such as improving inland waterways or supporting harbor maintenance. In addition, customs duties levied on commodities imported through the marine transportation system averaged about $15.2 billion each year, most of which were deposited in the U.S. Treasury's general fund."

"The Customs Service reported that of the total $19.8 billion collected annually from marine, aviation and highway transportation, nearly 80 percent ($15.2 billion) came from the marine transportation system.

"How can the President recommend such a blow to water transportation? The GAO is specific about how "The marine transportation system plays an essential role in the nation's economy and defense." GAO says, "For example, it moves import and export cargo worth hundreds of billions of dollars, generating jobs, both directly and indirectly, for Americans and our trading partners." The huge benefits GAO reports as being produced by water transportation have been common for decades.

"Further, says GAO, "The system's inland waterways also support the movement of grain, petroleum products, coal, paper products, and industrial chemicals. In addition to its role, the marine transportation system plays an important role in national defense by facilitating the movement of military equipment and supplying troops deployed overseas. The nation's marine transportation system also serves as an alternative transportation mode to roads and provides recreational value through boating, fishing, and cruises…."

Further, see this:

Excerpt from GAO-02-1033, September 2002

"MARINE TRANSPORTATION FEDERAL FINANCING and a FRAMEWORK for INFRASTRUCTURE INVESTMENTS"

Appendix V: Amount of Customs Duties Collected for Commodities Transported on the Transportation Systems


Unlike the fees and taxes on users that are earmarked to support the transportation systems, customs duties are not an assessment on the system; rather, duties are assess on imported goods transported by the systems. The majority of customs duties collected are deposited in the U.S. Treasury's general fund for the general support of federal activities. 34 On average, the Customs Service reported $19.8 billion collected annually for commodities imported by the transportation modes, with nearly 80 percent collected from the marine transportation System.


Table 10: Amount of Customs Duties Collected for Commodities Transported on the Marine, Aviation, and Highway Transportation Systems, Fiscal years 1999 through 2001.

Dollars in millions
  1999 2000 2001  
Transportation System Amount Percent Amount Percent Amount Percent Average Amount
Marine $14,310 75 $15,624 76 $15,637 79 $15,190
Aviation 3,577 19 4,053 20 3,371 17 3,667
Highway* 1,168 6 880 4 735 4 928
Total custom duties collected $19,055   $20,557   $19,743   $19,785


Note: Figures are nominal and have not been adjusted for inflation.

* Includes amounts collected by rail.

Source: GAO computations based on data provided by the U.S. Customs Service.


34 Under Section 612 of Title 7, about 30 percent of the gross receipts from customs duties are designated for agricultural and food programs. In addition, pursuant to 16 U.S.C. 3912, all duties on guns and ammunitions go to the Migratory Bird Conservation Fund and pursuant to 26 U.S.C. 9504, duties on fishing tackle and yachts and pleasure craft go to the Sport Fish Restoration account of the Aquatic Resources Trust Fund. Also, tariffs from wood and certain wood products are transferred to the Reforestation Trust Fund up to a total of $30 million (16 U.S.C. 1606(a)).
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