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Analysis of British Columbia Ferries and its commercial vehicle policy

University of British Columbia

This thesis deals with the transportation of commercial vehicles by British Columbia Ferries between Vancouver Island and the mainland of British Columbia. B. C. Ferries is a public enterprise operated under the Department of Transport and Communications of the Government of the Province of British Columbia. Background There are substantial changes occurring in ferry operations in British Columbia, particularly in ferrying commercial vehicles. Freight traffic associated with Vancouver Island is expanding rapidly. There is a growing emphasis on highway trucks and less on rail cars for freight. This is related to the increasing use of Vancouver as an assembly and distribution point for Island goods. Non-commercial traffic is also expanding. Privately operated ferries have upgraded their services as a consequence of the growing peak-season pressure of non-commercial vehicles on B. C. Ferries. In 1973 a new vessel increased the capacity of a Canadian Pacific Rail ferry service by some 60% and at the same time a new company, Tilbury Island Terminals Ltd., began operations. These changes call for an inspection of current commercial vehicle policy on B. C. Ferries. This thesis aims to identify and analyse the issues associated with commercial vehicle policies and to examine alternative policies. Analytical framework The discussion opens by examining the reasons for special government concern in transportation. In B. C, this concern has led to government intervention by participation in the ferry system. The present arrangement is an unregulated, mix public/private system. The policy variables open to the provincial government for influencing the ferry system are limited to the prices charged and the service levels provided by the public carrier, B. C. Ferries. An overall regulatory body is not possible because of jurisdictional considerations. The thesis discusses the effects of these two variables on the entire system and proposes objectives and criteria for setting them. A pricing model suggests that the optimal economic pricing policy of a public enterprise in competition with private enterprise is achieved when the public enterprise sets its rates to cover both fixed and variable costs, just as would a private enterprise. Data base Literature about ferry operations in the province, or in general, is sparse. This is partially remedied by a discussion of some general characteristics of ferry transportation, followed by an historical account of ferry operations in British Columbia. Certain themes emerge, notably the economic importance and political sensitivity of ferry services and the inhibition of private ferry investment associated with the participation of the government in the transportation market. A body of data, mostly from original sources, gives an account of current ferry operations in the province and includes inter-carrier comparisons together with data on traffic composition, peaking, revenues, costs and pricing. Traffic trends are identified and growth projections are made. The data suggests that there is an immediate problem in accommodating peak season demand for B. C. Ferries in the next few years. It suggests that privately owned capacity can help to relieve the problem. Analysis Three alternative B.C. Ferries commercial vehicle policies are examined in detail? (A) continuation of present policies, (B) total withdrawal from the commercial vehicle market and (C) partial withdrawal from the market. Short and long term effects are examined. Finally, the thesis compares the consequences of these alternative policies for B. C.Ferries capacity expansion, the effect on competitors and ferry users and the long term implications for government influence and private investment in the ferry system. The analysis shows that while present policies approach economic efficiency in commercial vehicle ferry operations, there are certain benefits to other ferry users of a (partial) withdrawal of B. C. Ferries from carrying commercial vehicles. These can be weighed, together with strategic and other policy considerations, in a final choice of policy.

Text

2011-03-14

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http://hdl.handle.net/2429/32431

Business Administration

University of British Columbia

Graduate