A year ago in WorkBoat magazine, we said that inland barge operators shouldn’t count on any big improvement until 2011 at the earliest. However, though the recovery is fragile with companies still hesitant to add costs and personnel, it looks like improvement on the inland waterways is already well underway.
For the barge industry, the good news is that it wasn’t a supply issue that drove the downturn. “It was a demand issue,” Tom Vorholt of Marquette Transportation Co., Paducah, Ky., said at an industry meeting held recently in New Orleans. During the slump, which encouraged fleet reduction and retirements, operators showed discipline and now it is paying off.
“We have stability,” Vorholt told attendees at the Mississippi Valley Trade & Transport Council’s annual conference. “We have our arms around the supply side to some extent.”
Now, a big boost in demand for export coal from the central Gulf, a result of floods in Australia, cold weather in Europe and demand from China’s coal-fired electric plants, has put even more pressure on an already tight supply of barge bottoms. Coal has to compete with grain for any spare barges. There simply isn’t very much capacity left in the open hopper market with all the demand from the export coal market.
But it’s not just coal. Many believe that demand for U.S. grain will explode, with world grain stocks declining 60 million metric tons this year while world grain demand is increasing by 40 million metric tons. “This is what’s good for my business,” said Jay Johnston of SCF Marine, the inland river services division of SEACOR Holdings Inc.
Johnston, who also spoke at the MVTTC conference, said it’s good for the barge business when you have the coal guys competing with the grain guys for bottoms. “I’m getting calls from coal shippers that I haven’t heard from in years,” he said. “The coal guys don’t like competing with grain.”
Battles like this are good for the inland waterways industry. And with a barge fleet that appears to be stable in both supply and age, things are indeed looking up for operators.
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