The inland tank barge market is red hot and may be overheating.
At present, tank barge capacity is tight and new bottoms are being built in bunches, but that could change next year, some warn.
Last year, deliveries of new liquid cargo barges increased 60 percent over 2011, with shipyards delivering 261 tank barges. That compares to 165 in 2011, according to River Transport News. This year’s building is on a pace to top 2012.
At barge builder Trinity Marine Products, the market is so hot that the company is revamping one of its tank barge facilities to add more production slots and also plans to reposition its hopper barge facilities to build small tank barges. What’s behind the boom? Trinity cites increased movements of petroleum and chemical products that have created “robust demand” for tank barges. Trinity’s barge-building business set a new annual revenue record in 2012. In the fourth quarter, Trinity landed $193 million in new barge orders, mostly for tank barges, which increased its barge backlog to $564 million at the end of 2012.
As for operators, last year Kirby ended up with a net gain of 22 tank barges and increased its capacity by 483,000 bbls.
American Commercial Lines also added tank barges. ACL invested $69 million in 35 new tank barges last year and plans to invest another $38 million this year. ACL’s CEO Mark Knoy said that with tank barge capacity in tight supply, the company was confident that it would quickly “realize the new earnings benefit of the new tank barges” due for completion soon at Jeffboat.
But all this construction has Walter Blessey worried. “The market is in equilibrium now, but there is a lot of building going on,” said Blessey, CEO of Blessey Marine Services. He thinks the tank barge market could become overbuilt by 2014 or 2015.
The demand may be there now, but if that changes soon, a lot of new equipment will be looking for work.