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Ferry Case Studies 39
· That is supplemental to overburdened parallel systems.
· That may require modest public subsidies not exceeding other transit modes.
· That provides a time savings relative to other alternatives.
· That serves land uses and associated development that will help to attract sufficient ridership
to support cost of vessel operation (Interview with David Hopkins, New York City Economic
Development Corporation, April 12, 2010).
One ferry operator mentioned that "build it and they will come" is not a model that works.
However, interviews with a broad range of operators revealed that this model might eventually
work, but it may take up to a decade for individual ferry routes to become profitable, and dur-
ing this period public assistance is necessary.
Land Use Issues
Experience with New York ferries suggests that creating a density of travel, either through land
development (or because of it) or by connecting with other transit services is an imperative. New
York has the benefit of having very short ferry crossings--most are less than 10 minutes--allowing
for one vessel to make three or four trips in an hour. Filling up the vessels requires passengers, and
when ferries operate at full capacity they are a very efficient mode of transport. The City is currently
identifying prime infill development sites along the East River, and all sites require good transit to
succeed. Some of the best sites are at a distance from existing transit, and the best option for good
transit could be fast and frequent ferry service.
Emergency Response
While the New York ferry resurgence was initially based on trans-Hudson congestion relief
and Hudson River shore economic development, the system also became an important public
safety service during the evacuation of Manhattan on September 11, 2001. Since then, emergency
response has become an important public benefit of providing and maintaining ferry service.
This benefit was reinforced during the power blackout in the Northeast United States in August
2003, during the New York City Transit strike in 2005, and when ferries evacuated US Airways
Flight 1549 after its emergency landing in the Hudson River in January 2009 (Interview with Port
Authority, January 10, 2010).
As part of this expanded role, ferry operators participate in numerous training programs,
Homeland Security initiatives, and practice drills to ensure that the ferry system can perform
during an emergency. These are mandated costs to the ferry operators; however, except
for some minor equipment grants, these costs are not reimbursed by an agency. In addi-
tion, when an emergency does occur, the costs incurred are often reimbursed many months
later or may never be paid. These requirements place additional financial stress on the ferry
operators.
North Carolina Department of Transportation
Ferry Division
Quickfacts
Operator Service # of # of Annual Annual Fleet Age
Category Routes Vessels Passengers Vehicles (years)
North Highway 7 21 2,100,000 950,000 525
Carolina Ferry
Department of Essential
Transportation
Ferry Division
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40 Guidelines for Ferry Transportation Services
History
North Carolina has a long history of using ferries as a form of transportation, especially in
areas that are otherwise inaccessible by roads or are lacking easy road access. The current North
Carolina Department of Transportation Ferry Division evolved from the state's practice of
acquiring private ferry routes that began around 1934.
The first ferry route to eventually become part of the state's ferry network connected Oregon
Inlet with Whalebone Junction (North Carolina Department of Transportation, n.d.). Initiated as
a private tug and barge conveyance system and later as a wooden trawler ferry, in 1934, the North
Carolina State Highway Commission (Commission) began subsidizing the crossing to reduce the
toll rates. Over time, the crossing gained in popularity and users and, in 1942, the Commission
instituted fixed reimbursement for the ferry operator so as to discontinue tolls completely.
New ferry routes came on line during the 1940s and 1950s, operated both by private entities and
by the Commission. Concurrent to the expanding ferry system, the paving of Highway 12 allowed
for greater access to the Outer Banks area, leading to increased demand on the ferry system.
During the early 1940s, ferry service across the Croatan Sound was operated by a private entity
before being acquired by the state in 1946. The Croatan Sound service continued until 1956,
when the Governor Umstead Bridge was completed, thereby ending the Croatan Sound ferry
operation. Highway 12 brought new demand for a ferry service between Hatteras and Ocracoke
Island. The new ferry service was started by a private operator before being purchased by the state
in 1957. The Alligator River crossing, the first ferry service constructed and operated by the state,
began in 1947 and operated until 1962, when the Alligator River was bridged (North Carolina
Department of Transportation, n.d.).
Between 1940 and 1977, the North Carolina ferry system evolved as new services were added and
then retired when new bridges replaced existing ferry service. During that 30-year span, ferry ser-
vices were started and retired at Croatan Sound, Alligator River, Oregon Inlet, and Bogue Sound.
In 1960, the Commission created a State Ferry Operations office independent of the Highway
Division Administration in the town of Manteo. The State Ferry Operations department was
charged with maintaining the ferry fleet, as well as managing all personnel. By 1964, the fleet had
grown to a point where the state created the Marine Maintenance Facility, separate from ferry oper-
ations, to more efficiently manage the two divisions. The Operations office moved to Morehead City
to be more centrally located. In 1974, on the recommendation of a specially formed committee, the
governor combined the State Ferry Operations and the Marine Maintenance Facility under one
department, the Ferry Division, which would exist at the Highway Division level and be responsi-
ble for all aspects of the state ferry system (North Carolina Department of Transportation, n.d.).
Organizational Structure
The current incarnation of the Ferry Division in North Carolina lives within the state depart-
ment of transportation (DOT). The ferry routes and vessels that operate on these routes are con-
sidered an extension of the state highway system, although the Ferry Division is on the same
administrative level as the Highway Division within the DOT. As a public entity, all funding
sources, budgetary decisions, and operational service are approved at the state's highest level
through the state DOT and by the governor. Legislative influence extends to yearly budgets and
federal and state funding sources. The governor has the ultimate approval through the annual
state budget process.
North Carolina operates a statewide ferry system along its coast from the Knotts Island cross-
ing near the Virginia/North Carolina border to the Fort Fisher crossing near the South Carolina/
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Ferry Case Studies 41
North Carolina border. While the ferry system is operated by the state, the routes are a mixture
of free and tolled crossings. Most of the shorter crossings are free for all users, with longer-
distance routes charging one-way fares. The state has discouraged the implementation of tolling
across all routes except for the long-distance routes with the understanding that the ferry system
is part of the state highway system and thus is provided free to all users. This notion may be chal-
lenged as the global economic downturn has begun to affect long-term budget allocations.
In addition to the statewide ferry system, there are a few ferries that provide service to national
parks located in the Outer Banks. These ferries are provided free of charge to park visitors. The
National Park Service provides ferries to manage the number of people visiting the parks while
maintaining the integrity of the park conditions.
In 2009, the ferry system reduced service as a response to budget shortfalls and increased
expenses. The Coast Guard mandate requiring additional crew aboard vessels forced North
Carolina to remove some vessels from service in order to redistribute staff to the more heavily
patronized routes. The governor recently announced that the service cutbacks were temporary,
and service would be restored to previous levels in 2010 (Interview with North Carolina Ferry
Division, January 14, 2010).
Operational Structure
System/Service Routes
Currently, North Carolina is the second largest state-owned and -operated ferry system in the
country, with service operating 365 days a year and offering over 200 daily departures during the
summer season and 150 daily departures during the winter season. The system has seven ferry routes
that provided service for nearly 1 million vehicle trips and 2.1 million passenger trips during the
20082009 fiscal year (North Carolina Department of Transportation, 2009).
The North Carolina routes have developed organically, with implementation guided by
demand for service. North Carolina began the ferry service through purchasing existing services
from private operators with the aim of preserving or creating low-cost or free service. As demand
for ferry service grew over the years, more routes were added, but in most cases bridges were seen
as the permanent solution to providing access. The practice of replacing ferry service with bridges
continued until most ferry routes that could be reasonably replaced were (as is documented with
ferry routes that once existed across Croatan Sound, Alligator River, Oregon Inlet, and Bogue
Sound). The ferry routes that remained are a collection of services for areas where bridges were
either unwarranted or unwanted, such as Ocracoke Island. Table 5-10 highlights the current
routes in the North Carolina ferry system. Figure 5-8 provides a route map.
Facility and Vessel Maintenance
North Carolina owns and operates all of its waterside facilities and vessels (Interview with
North Carolina Ferry Division, January 19, 2010). Water landings and vessels were either pur-
chased or built during the state ferry expansion. Some vessels were purchased directly from pri-
vate operators and were folded into the agency, while others were acquired in conjunction with
the United States Department of the Interior, which had established the Cape Hatteras National
Seashore Park. Still other vessels were commissioned directly by the state to satisfy increasing
ferry service demand. (See Figure 5-9 for a photo of a typical North Carolina ferry vessel.)
North Carolina operates RO-RO ferries on all of their routes. The vessels are a mix of River
Class and Sound Class ferries, of which the Sound Class ferries have specially designed hulls and
propulsion systems to handle tricky sea conditions; some ferries are double-ended ferries. In
total, the system has 21 vessels in its fleet, and there is one vessel on order (Interview with North
Carolina Ferry Division, January 14, 2010).
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42 Guidelines for Ferry Transportation Services
Table 5-10. North Carolina ferry routes.
Route Service Season Service Schedule Crossing Crossing
Time Location
Bayview Year-round Every 1.5 h 30 min Pamlico River
Aurora Departures
Currituck Year-round Every 2 to 3 h 45 min Currituck Sound
Knotts Island Departures
Swan Quarter Year-round Every 3 to 6 h 2.5 h Pamlico Sound
Ocracoke Departures
Cedar Island Year-round Every 2 to 3 h 2.25 h Pamlico Sound
Ocracoke Departures
Hatteras Jan 1May 11, Hourly 40 min Hatteras Inlet
Ocracoke Sept 29Dec 31
Cherry Branch Year-round Every 30 min 20 min Neuse River
Minnesott Departures
Beach
Southport Year-round Every 45 min to 2 h 35 min Cape Fear River
Fort Fisher Departures
The state also owns and operates a vessel for dredging and piling work, the Dredge Carolina, and
three tugs that assist it (Interview with North Carolina Ferry Division, January 14, 2010). The
Dredge Carolina does work during the permitted time period allowed by regulators and is equipped
for workers to live on board during the working season.
North Carolina maintains all of its vessels at its central maintenance facility located at Manns
Harbor. Maintenance is conducted by in-house engineers and technicians. They complete all
required haul-outs, engine repowers, painting, and handle any vessel breakdowns. Maintenance
Figure 5-8. North Carolina ferry routes.
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Ferry Case Studies 43
Figure 5-9. Typical ferry vesselNorth Carolina
Department of Transportation Ferry Division.
parts are stored in a facility adjacent to the central maintenance facility, with usually approxi-
mately $1.8 million worth of parts kept onsite (Interview with North Carolina Ferry Division,
January 14, 2010). Maintenance parts are trucked to the three satellite facilities as needed. The
three satellite facilities handle lighter-duty repairs to allow the vessels to return to duty within a
short period of time.
In addition to maintaining its own vessels, the state performs its own dredging, piling, and clus-
ter work to maintain clear waterways within the various sounds. The state works closely with the
United States Army Corps of Engineers to determine the optimal time for dredging allowance.
When the dredging season is over, maintenance crews work to improve pilings and other water-
side improvements and maintenance.
North Carolina is one of the very few operators that provide 100 percent of maintenance in
house (Interview with North Carolina Ferry Division, January 14, 2010). The state completed a
new state-of-the-art maintenance facility at Manns Harbor that can handle the necessary capac-
ity needed for vessels in dry dock. The centralized maintenance facility also enables the Ferry
Division to effectively manage maintenance tasks, such as parts inventory, for a fleet that is sep-
arated across many miles.
Staffing Levels
The ferry system has approximately 500 to 525 employees during the low season (November
to April) and 575 to 600 employees during the high season (May through October) (Interview
with North Carolina Ferry Division, January 14, 2010). Administrative staff is split between
Manns Harbor, where the main maintenance facility is located, and Morehead City, where the
previous State Ferry Operations department was located.
Due to the great distance separating the various routes from the maintenance facility and head
administrative office, there are three satellite maintenance facilities. These facilities are located
at Cherry Branch, Cedar Island, and Hatteras. Vessel crew also report directly to their route loca-
tions. Crews work seven-on/seven-off shifts, with two crews for each vessel. Coast Guard regu-
lations require a minimum number of crew members on board at any one time, which has forced
North Carolina to increase its crew staffing.
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44 Guidelines for Ferry Transportation Services
As a majority of the ferry routes serve the Outer Banks, a well-known vacation destination,
the cost of living for staff members is significantly higher than the cost of living in other parts of
the state, especially the interior. The condition of the state's resources and the Ferry Division's
budget have prevented salaries from keeping pace with the cost of living in the Outer Banks. This
circumstance has made it difficult for the Ferry Division to attract the necessary workforce. In
response, the Ferry Division has completed a staff dorm where staff and crew can live during the
work week; a second dorm is under construction. Two dorms are already operational at Hatteras.
Room and board is provided free of charge. The intent is to reduce the cost for staff traveling
from home in the interior part of the state and also to entice prospective workers with a benefit. It
has so far proven to be very popular with the staff (Interview with North Carolina Ferry Division,
January 14, 2010).
Financial Structure
Fares
As North Carolina considers its ferry system an extension of the state highway system, most
of the ferry routes are provided free to passengers, with the exception of its longer routes and the
SouthportFort Fisher route. Table 5-11 shows the fare breakdown by route.
Reservations are offered only on the Cedar IslandOcracoke and Swan QuarterOcracoke
routes. All other routes are offered on a first-come/first-served basis. Motorists with reservations
must claim their reservation at least 30 minutes prior to departure or it will be canceled.
Funding Sources
North Carolina receives its ferry funding through a combination of state revenues and federal
funds or grant monies. The annual ferry budget is set through the state DOT, which portions out
the state revenues accordingly. Federal grants and funds are applied for on a year-to-year basis,
depending on the type of funding available. Most of the federal funds received are applied to cap-
ital projects rather than operating needs.
Table 5-11. Ferry route fares.
Route Fare
BayviewAurora Free
CurrituckKnotts Island Free
Swan QuarterOcracoke Pedestrian$1.00
Bicycle Rider$3.00
Motorcycle$10.00
Vehicle and/or other combination less than 20 ft$15.00
Vehicle and/or other combination 20 to 40 ft$30.00
Vehicle and/or other combination 40 to 65 ft$45.00
Cedar IslandOcracoke Pedestrian$1.00
Bicycle Rider$3.00
Motorcycle$10.00
Vehicle and/or other combination less than 20 ft$15.00
Vehicle and/or other combination 20 to 40 ft$30.00
Vehicle and/or other combination 40 to 65 ft$45.00
HatterasOcracoke Free
Cherry BranchMinnesott Free
Beach
SouthportFort Fisher Pedestrian$1.00
Bicycle Rider$2.00
Motorcycle$3.00
Vehicle and/or other combination less than 20 ft$5.00
Vehicle and/or other combination 20 to 40 ft$10.00
Vehicle and/or other combination 40 to 65 ft$15.00
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Ferry Case Studies 45
There are only four tolls in the state of North Carolina, three of which are for ferry crossings.
The state collects approximately $2 million annually in toll income (Interview with North Carolina
Ferry Division, January 19, 2010). The operating budget for fiscal year 2009/2010 was $30 million,
which comprises a mix of toll revenue, state transportation improvement funds, and supplemental
federal funding grants. A typical federal grant size is $1.8 to $1.9 million, with a needs-matching
grant from the state required.
Implementing additional tolls on ferry routes has been politically infeasible in the past, with
a high degree of opposition from both citizens and elected officials. The global economic down-
turn has begun to change perceptions, as the annual ferry budget has continued to decrease--
down 3 percent, 5 percent, and 7 percent over the past 3 years, respectively (Interview with North
Carolina Ferry Division, January 19, 2010). The budget has decreased from $35 million in
2008/2009, to $30 million for 2009/2010, to a projected $27 million for 2010/2011. In the first
6 months of fiscal year 2009, the Ferry Division spent $17 million, over half of its annual budget,
which contributed to service reductions to offset future budget shortfalls. The state indicated that
to optimally run the system, an annual budget of approximately $38 to $48 million is necessary to
maintain existing services and to continually improve the system (Interview with North Carolina
Ferry Division, January 19, 2010).
A study currently being conducted by North Carolina State University is examining how the
ferry system can increase efficiency in a variety of ways. One option being looked at in the
study is the effect on ridership and revenue of increasing tolls or implementing new tolls. A
survey conducted as part of the study found that most people agree with the idea of paying a
toll to help offset some of the budget reduction, although a proposed toll was not included as
part of the study. Other forms of new tolling being studied include seasonal tolling or increased
tolling prices.
In 2008, the United States experienced rapidly rising fuel and gasoline prices during a short
period of time. This affected not only the everyday layperson, but all industries with gasoline and
fuel as primary operating expenses. Overall, the North Carolina DOT provides and pays for fuel
for all of its departments, the Ferry Division included. The state spends $6 million annually on
fuel, and the rapid rise in fuel prices in 2008 wiped out its "rainy day" fund for that year. The
state indicates that there likely will be no change in operating procedure for purchasing and dis-
tributing fuel among the different DOT departments, and individual departments will not be
responsible for purchasing or budgeting for their own fuel.
Planning Issues
Environmental and Regulatory Issues
The state of North Carolina complies with all state and federal environmental regulations,
including the regulations of the Coast Guard and Homeland Security. Many of North Car-
olina's air quality regulations follow the California Air Resource Board Title 13 regulations for
compliance.
The Ferry Division is moving toward meeting the United States Environmental Protection
Agency's requirement for Tier 3 diesel engines after repowers. This is currently the extent to
which the state is investigating new technologies and/or vessels. A new ferry is on order and is
under construction at a ferry dock in Texas; its delivery is expected in 2011. A separate bid has
recently been awarded for a second Sound Class ferry to be completed in 2012.
Outside of regulation compliance, the state DOT and Ferry Division are engaged in environ-
mental stewardship through an environmental policy, as well as programs such as the ferry-
based water quality monitoring program. The environmental policy outlines the Ferry Division's
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46 Guidelines for Ferry Transportation Services
mission statement as well as goals for service and includes (North Carolina Department of
Transportation, 2008):
· Continuing [its] commitment to environmental stewardship and improvement, including a
commitment to the prevention of pollution and the preservation of natural resources. The
North Carolina DOT Ferry Division also strives to meet or exceed relevant environmental leg-
islation, regulations, and other requirements.
· Providing a framework for setting and reviewing objectives and targets via the development
of relevant procedures.
· Being cognizant of the ferry system's impacts to land, air, and water resources and inhabitants
of these resources.
· Making this environmental policy available to the public, including those who work on behalf
of the Ferry Division, on the web site.
· Requiring Ferry Division employees whose work duties may significantly impact the environ-
ment to review the Environmental Management System and become familiar with the ways
that they can ensure environmental stewardship.
The Ferry Division is also compliant with ISO: 14001, which is the international standard for
environmental compliance.
In addition to its environmental policy, the Ferry Division, in partnership with Duke Univer-
sity and the University of North Carolina (UNC)Chapel Hill, gather water quality data as part
of a program called "FerryMon." Ferries on the Neuse River/Pamlico Sound collect water on the
ferries through a system located on board the vessels. The data are logged and downloaded by
cell phone to computers at Duke and UNCChapel Hill. Through the gathering and logging of
data, a database is being established that will help in monitoring water quality standards over
time, as well as during natural events such as storms or hurricanes (Institute of Marine Sciences
at UNCChapel Hill et al., n.d.).
Land Use Issues
Each ferry terminal in the North Carolina system consists mainly of a small terminal build-
ing, a waiting area for vehicles and passengers, and a loading dock. Most terminals are located in
areas where it made sense to establish a water crossing. Historically, there has been little effort to
focus landside development immediately around the terminal areas. In some cases, the lack of
development is encouraged, as the terminals are gateways or entry points to existing communi-
ties such as on Ocracoke Island. Ferries are seen more as a form of transportation than a catalyst
for landside development. In the past, ferry routes have given way to bridges, which tend to limit
development along the shoreline.
Most passengers using the ferries arrive by vehicle, as the ferries are just one link in an overall
transportation trip. There is also little local transit coordination, as ferry routes often cross mul-
tiple local jurisdictions and involve trips that are generally not conducive to transit.
North Carolina experiences a dramatic high-season ridership during the summertime. The
Outer Banks experiences both vehicular traffic and ferry traffic congestion as vacationers flock
to the area. Given the capacity constraints of Highway 12, ferry users often experience one to two
boat waits during the high season. While ridership had been falling over the past few years, the
summers of 2009 and 2010 experienced a modest ridership increase during the high season. This
increase was likely due to more vacationers staying in state or closer to home to save money dur-
ing the economic downturn.
Emergency Response
The Outer Banks is vulnerable to large storms and hurricanes that can wipe out Highway 12,
which is the major entrance and exit to the area. For some places along the Outer Banks, such as
