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Analysis of Cost of Labrador Marine Services: A Study of Base Freight Rates and Passenger Fares

Lead Researcher and Department
The Harris Centre

The study attempted to analyze the cost components of each vessel used in the Labrador Marine Service, with the objective of the development of a rate structure that would be tied to these costs. The total operations costs were divided into fixed and variable components for each vessel used in the service, namely, the Sir Robert Bond, the Northern Ranger and the Trans Gulf. The unit cost of each output for each vessel was calculated. Due to wide variations in the cost characteristics of vessels, system average costs of each traffic output were calculated and became the basis for all further analysis. Using these system averages three equations were identified to enable the calculation of freight, passenger and vehicle transportation cost between any ports being served

It was concluded that, while the equations offer a reasonable method of calculating the cost of moving freight, passengers and vehicles from port to port in Labrador there is an information gap which needs to be addressed. If Government wishes to incorporate other ancillary and incentive charges it should, during the 2005 shipping season, begin a detailed accounting of the cost associated with all provided services and these costs should be incorporated in rates used in future years. Such accounting will be necessary to ensure that the charges derived there from reflect the costs both of handling and transporting freight. By so doing an incentive will be created for shippers to use appropriate containers and thereby minimize overall costs.


Marine Transportation, Labrador Marine Service, Regional development

Zone 1 - Nunatsiavut Government
Zone 2 - Hyron
Zone 4 - Aurora

Industry Sectors
Marine shipping agencies (Transportation and warehousing — Support activities for transportation — Freight transportation arrangement)
Support activities for water transportation (Transportation and warehousing — Support activities for transportation)

Thematic Categories
Marine Transportation (Transportation)
Regional Economic Development (Rural Development)

Harris Centre (STJ)