Ferry Ferry, How Does Your Garden Grow?

The update on Rochester's ferry service to Toronto is stirring up a new round of I Told You So's. Easy to see why: The service lost $4.2 million in the first six months since the federal court auction that conveyed ownership of the boat to Rochester taxpayers. To some, this news is apocalyptic: A certain radio talk show host http://www.lonsberry.com/writings.cfm?go=4 derides the service as the "Flower City Flop" and the "Fast Failure" and pretty much guarantees a permanent deficit. "It will sail forever in the red," he writes. His echo chamber chimes in with comments such as "this boat is sinking faster than the Titanic!" http://www.lonsberry.com/readcomments.cfm?story=1778

All of which may or may not prove to be correct. But the ferry's report does not provide enough information to draw those conclusions with such certainty. (To be fair, there's also not enough information to justify a bullish outlook, either.) The company disclosed just three pieces of financial information: Revenue, operating expenses and start-up expenses, and operational data on ridership. That is a tiny amount of information, compared to the volumes required by public companies every quarter. Eastman Kodak Co. for instance, recently provided investors with 35 pages of financial and operational information. It's more than enough information to make your head hurt. (Here's Kodak's report to investors: http://media.corporate-ir.net/media_files/irol/11/115911/Reports/3q05md&a.pdf .)

The Ferry's loss fairly should be viewed against a challenging backdrop – the boat re-sailed in the midst of the travel season, without the benefit of a substantial marketing plan to go with it. The summer is obviously an important season, if you consider that airlines fly more than a million people in those two months alone. The start-up factor is not inconsequential. There's a reason why retailers report sales on what they call a "same store" basis: To factor out the flurry of activity when a new location opens.

It probably is important also to note that Rochester's ferry isn't the only service experiencing growing pains. The Lake Express, http://www.lake-express.com/index.html, which runs between Milwaukee and Muskegeon, Mich., had to cancel some trips to smooth out the ride and invest in technology. It seems some passengers were complaining of seasickness. http://www.jsonline.com/news/metro/feb05/303480.asp . Another Lake Michigan ferry, the S.S. Badger, much farther north, is also working hard to attract attention of ridership. http://www.ssbadger.com/index.html . That ferry can hardly be called fast. It runs at a whopping 18 miles per hour. But it's been in business since 1952, according to the web site. Comparing those two services to Rochester financially is difficult. Both are privately owned and apparently do not release financial information.

It's dangerous to extrapolate too much, given the differences in markets, but the passenger ferry business is apparently one that continues to hold opportunity. For example, beginning in 2007 ferries similar to the one running in Rochester will connect the Hawaiian islands. The four-deck ships will have a capacity of 900 people and approximately 250 cars, trucks and buses on two vehicle decks. The Hawaiian vessels are being built by Austal Ships, the same Australian firm that built Rochester's ferry. http://hawaiisuperferry.com/ For a list of other Austal customers, go to http://www.austal.com/about.cfm#links

So does this mean taxpayers should not be worried or have questions? Of course not. It's just that, like much in life, nothing is as simple as it seems.