Looking outside the oil patch

The oil patch is still in a depressed state. The news has also been bad on the inland waterways. Declining coal markets and oil prices have had a big impact on the dry and liquid barge sectors, idling equipment and adding to overcapacity woes.

For dry-cargo barge operators even record movements of corn and soybeans for export couldn’t offset the sharp drop in barged coal shipments. Barged shipments of coal are off 40% from the peak year in 2006. The result is a barge market that has been hit by an oversupply of bottoms and lower freight rates.

However, there are some positive signs. Kirby officials believe that the inland market is slowly moving towards a supply-demand balance. And Tim Parker, chairman of Tuscaloosa, Ala.-based Parker Towing Co., said he’s “cautiously optimistic about the future. It’s not the first time we’ve been in this situation, and it won’t be the last.”

Other markets are doing fine, especially the passenger vessel sector which enjoyed another year of strong demand and bookings. Operators are building new vessels, buying and refurbishing used ones, and adding more capacity and sailings.

Shipyards that are diversified and have little or no dependence on the oil patch, are faring well too, and many yards have expanded. One is All American Marine, who has moved into a new $10 million, 57,000-sq.-ft. facility. A major reason for the move was to increase the boatyard’s ability to build larger vessels. The yard said that is the reason they were able to ink a deal in February for the construction of a new hybrid-electric 600-passenger ferry for Red and White Fleet in San Francisco. Other yards that are seeing recent expansions pay dividends include Fincantieri Bay Shipbuilding and Metal Shark.

Gulf Island Fabrication is one shipyard that has been looking beyond the oil patch for work. The company reported a first-quarter net loss of 44 cents a share, on revenue of $38 million, attributing the loss primarily to an overall decrease in demand as a result of continued weakness in the oil and gas sector. But the Houston-based company did have some positive news. Kirk Meche, president and CEO, said in the company’s April 27 earnings call that opportunities in the petrochemical market are increasing as evidenced by “most of our bidding activity today being focused on petrochemical and non-oil and gas projects.”

Meche said he expects petrochemical projects and other non-upstream projects, including government transportation and renewable energy, “to drive new demand for our services in the near to medium term.”

“This market pivot away from a concentration in upstream oil and gas is now well under way. We have seen improved bidding opportunities, particularly outside the upstream oil and gas sector, including petrochemical fabrication work, passenger cruise vessels and government contracts.”

That is some needed good news and hopefully more is on the way.

About the author

David Krapf

David Krapf has been editor of WorkBoat, the nation’s leading trade magazine for the inland and coastal waterways industry, since 1999. He is responsible for overseeing the editorial direction of the publication. Krapf has been in the publishing industry since 1987, beginning as a reporter and editor with daily and weekly newspapers in the Houston area. He also was the editor of a transportation industry daily in New Orleans before joining WorkBoat as a contributing editor in 1992. He has been covering the transportation industry since 1989, and has a degree in business administration from the State University of New York at Oswego, and also studied journalism at the University of Houston.

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