2022 was a punishing year for the barge industry, with difficult operating conditions, a labor shortage, the war in Ukraine disrupting the grain transportation market and inflation sending the costs of doing business into the ozone.
So, what’s the outlook for 2023?
Unfortunately, more of the same. Although weather is hard to predict, what is predicted are continued unusual climatological events that produce bigger than normal and longer-lasting storms, droughts, and flooding that not only impact barging but cultivation of the goods they carry. The tight labor market will likely linger for at least another year, as will the war in Ukraine. As for inflation, no one really knows, as that will depend on government policies as well as worldwide economic trends.
But there are other issues to watch as well. Sandor Toth, editor and publisher of River Transport News, which offers news and analysis of the commercial barge industry, told an audience at Marine Money’s Marine Finance Forum in New Orleans on Nov. 30, that developments in the global energy market will have a big impact on coal movements and oil prices, while high diesel fuel prices will hurt barge operators. “Global energy is huge,” he said.
On the weather, Toth said flooding and drought events in many other parts of the world will affect harvests of agricultural commodities like soybeans, which in turn will impact demand for U.S. grain exports which are carried largely by barge to U.S. ports for export.
Then there’s production of domestic steel. “Nucor (the largest steel producer in the U.S.) is building new plants. Integrated mills are shutting down and geography is shifting more in favor of the South and the inland river system,” he said. “It’s going to have a big impact in terms of how we ship and where we get our raw material volume from, and what will be the demand for raw materials on the inland river system.”
The industry should also keep an eye on China. “China is our biggest purchaser of soybeans. They come in and dramatically and massively disrupt the market,” Toth said. “We can go from zero exports of sorghum grain exports one year to five million tons of export the next.”
And not to be forgotten is the fraught domestic labor market that has forced operators to find new ways to attract, recruit and retain workers, while fiercely competing among themselves for a shrinking pool of applicants. “How long will this persist and how long will equipment utilization stay depressed given that,” remains to be seen, Toth said.