In our industry, usually when there’s a big boom (or bust) going on, it’s all about offshore energy. This time, however, the boom is much closer to land.
We’re talking about the domestic onshore “energy renaissance” that Tim Wallace, CEO of Trinity Industries, referred to in his company’s most recent earnings call. New production from such sources as North Dakota’s Bakken shale basin has created strong demand for Trinity-manufactured railcars and barges to transport crude.
The renaissance has been all over the media and is well represented in this issue. In our cover story (see page 44), Pam Glass reports that tank barge operators that move petroleum products are reporting record profits, strong barge utilization and favorable pricing. This has resulted in a “frenzy” of tank-barge building at Trinity and other barge builders and projections of a strong market ahead.
Kirby, which posted record fourth quarter 2013 earnings, has benefiited from the development of U.S. shale basins. Kirby built 70 new tank barges last year and plans to build 37 more.
Moving crude oil by inland barge is relatively new. Tank barges are increasingly in demand because it’s not only a lower-cost alternative to railroads and pipelines, but many say they’re safer. Currently, crude oil makes up over half of all petroleum moving by barge from the Midwest to the Gulf Coast, according to River Transport News. RTN said that 336 inland tank barges were delivered in 2013, smashing the previous record of 261 in 2012. Crude oil is one of the primary drivers behind the tank-barge building surge.
This shift in the market has led companies like AEP River Operations, a big coal hauler, to enter the liquid cargo sector. AEP launched a new tank barge fleet in January when it took delivery of the first of 20 tank barges. ACL is also adding to its tank barge fleet.
But as with all booms, it’s wise to stay cautious. ACL chief Mark Knoy said the energy market is still trying to figure out the best logistics to move oil. “We will be a part of that. We just don’t know how big that will be.” And Walter Blessey of Blessey Marine feels that 2014 will be the “last hurrah for building tank barges for a good long time.”
