As the U.S. economy slowly gains strength, demand and rates for barges has been picking up.
Barge operators are feeling some short-term pain from the flooding on the inland river system as shipments in some areas have slowed. The shipment delays have resulted in a jump in corn and soybean futures for May delivery. Operators must also deal with high diesel fuel prices, which are up about a third over a year ago.
Despite this, the outlook on the inland rivers is much brighter than it was a year ago. An improving economy helps, but cost-cutting measures that were implemented during the recession have taken hold and are showing up on the companies’ bottom lines.
Corps of Engineers statistics show that shipments on the inland system were strong last year and have continued to strengthen this year. Inland traffic was up 8.6 percent from 2009 to 2010. Last year at the Tulsa Port of Catoosa was its second best year of the decade, and at the Port of Houston barge traffic was up 30 percent over last year.
And recent (week ended April 16) barge grain movements were 12 percent higher than the same period last year, according to the USDA.
“Fertilizer lockings through the key locks are running at a torrid pace,” said Ken Ericksen at Informa Economics. Through March, barge lockings of fertilizer were 61 percent higher than a year ago.
The barge industry learned an important lesson years ago, and has been smart in recent years. During the recession the industry was diligent in keeping barge supply and demand in balance. Yes, barge operators have been building barges, but the majority of the new bottoms were replacement tonnage, not fleet additions. There have been some spot shortages of barges, especially with export coal demand booming as a result of demand from China, but barge rates have been strong.
Yes, the recovery is still shaky, but the long-term outlook is positive for barge demand. You can read more about it in WorkBoat’s June Yearbook issue later this month.
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