Wednesday, 13 February 2013

Managed Moorings.

I have a bit of a concern about what is happening with Canal and Rivers Trust Moorings. I do not make any claim to understand the logic behind the way that the moorings are managed. What I am sure about however, is when a mooring stands empty it has to be a financial loss to the trust. The idea that the reserve price for a mooring is being set at a break even figure is I think being a bit economical with the truth.

I know that some in the boating community already feel let down. Every boater in Britain instinctively knows when something's not right. People are beginning to question in greater detail. Are boaters with moorings being made to pay a disproportionate amount towards the waterways upkeep? 

The price and worth of any mooring is what people are prepared and able to pay. On our inland waterways system there are alleged problems with boaters operating on a (continuous cruisers) CC licence and being in a single place for long periods in time. A proportion of the CC community I accept are not cruising and in some cases outstaying their welcome. Is this uptake of constant cruising licences made up in part of boat owners being priced out of moorings? 

Lets take a scenario, say a small marina, containing 20 berths. Engineer’s Wharf is such a small marina and would fit the scenario. The moorings currently cost £5189 a year.

BW Quote from 2007 "A modern urban village provides the setting for a brand new basin on the Paddington Arm of the Grand Union Canal at Northolt in west London. British Waterways has worked alongside Taylor Woodrow’s Bryant Homes to develop the basin, known as Engineer’s Wharf, and has created 20 new narrowboat moorings which we are now able to offer boaters in the London area."

The Information below was collated from the Canal and Rivers Trust moorings auction site on the 18th of January 2013

Auction: 4563 - Engineers Wharf Residential, Paddington Arm (Grand Union Canal)
Auction: 4564 - Engineers Wharf Residential, Paddington Arm (Grand Union Canal)
Auction: 4565 - Engineers Wharf Residential, Paddington Arm (Grand Union Canal)
Auction: 4566 - Engineers Wharf Residential, Paddington Arm (Grand Union Canal)
Auction: 4567 - Engineers Wharf Residential, Paddington Arm (Grand Union Canal)
Current Guide price: £5,765 inc VAT per year
Current Reserve price: £5,189 inc VAT per year
Mooring type: Residential mooring
Current number of bids received: 0

With twenty moorings at a break even cost of £5,185 this equates to £103,780 per year. This is the equivalent to £8648.33 per month as a minimum operating cost. However, as 25% of the berths have not been allocated, that's means that if the figures provided by CaRT are correct this marina is operating at a £2162.02 per month loss. In the last eight months there have been almost no take up of any of the moorings. That's a minimum £17,296 loss of rental. Its possibly much more. This is a loss of moorings fees is already equal to the cost of three boats moored for a year. Keeping prices artificially high and operating at a loss does not make any business sense at all. Therefore I can only assume that there has to be another reason for operating at a full loss rather than a reduced loss.

BW and now CaRT have never revealed the fine details of how the figures for establishing the cost of a mooring are calculated. As a monopoly CaRT cannot have a business confidential reason for not revealing the method for calculating the figures. Who else could benefit - other than those who pay CaRT for a mooring! Now can you imagine if the moorings were reduced by 25% (to £3891) I feel sure that there would either be a good take up or alternatively you would find out what the market was prepared to pay. The significant losses would be instantly reduced but the actual costs would relate to establishing a real market price.

The CaRT moorings are let by auction for a period of three years at an opening bid which is called the reserve price. This is a minimum bid that can be placed on the mooring. A second price called the guide price is CaRT's "worth" figure. Unlike a buy it now on an eBay auction. The figure has no meaning whatsoever. But it does create a false sense of the lower price being "good" value. This is a form of social engineering. 

But, when is an auction not an auction - when its a CaRT auction. If you were to bid on a mooring, and the auction is supposed to end at 13:00. At the closing time you are the high bidder. You assume that this means that you have won the auction. Wrong.... The closing time is often extended beyond the original deadline until no new bidding activity has taken place for a period of time. This means that boaters without access to the internet are placed at a disadvantage and this creates the temptation to increase bids beyond what people can afford.

When is a mooring not a mooring when its located within a private marina. Many private marinas pay a fee  per mooring to CaRT for access to the waterways. When new marinas were being built, many of them received a guarantee from BW/CRT that they would limit their on-line moorings to keep the marina demand high enough to protect investments and allow for higher mooring charges. This positive discrimination benefits marina owners and CaRT, there are no benefits for boaters when priced are artificially held high. As CaRT is a monopoly, when working in tandem with marinas in this way, CaRT helps to create the suspicion of a cartel.



  1. Hi Mike,

    Good article, but there are one or two points where I think you are being slightly unfair.

    First your figures assume that BW/C&RT have priced the mooring on the basis of 100% occupancy and therefore if they fail to achieve that they are operating at a loss. I don't know of any business (Restaurants, Hotels, Marinas etc) that would base their charges on being full 100% of the time. I assume C&RT operate the same way.

    Second you state that "As a monopoly CaRT cannot have a business confidential reason for not revealing the method for calculating the figures". Assuming that part of their costs are the price they paid for the land and the rate they borrow money at then to reveal details of their pricing strategy might disclose (or at least be able to give an educated guess at) these figures. Which would be very interesting to people they are negotiating with or are in competition with to buy land.

    I do however think that C&RT are trying to get the best of both worlds with their so called auctions. They should either state the price for a mooring and lease it on a first come first served basis or have a genuine auction where the highest bidder wins. Setting a price and selling to the first buyer gives them certainty about how much they will earn. A proper auction provides the opportunity of an increase in profit, but there is a risk of making less or even a loss. The current system means that they benefit from the upside of an auction, but are protected against the downside. Still given the capitalist nature of the soon to depart head honcho, what else would you expect?


    1. John, I have done a reply in a new posting "Regulation of oligopolies."




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