This is a good time to be in the barge business. Looks like there is plenty of work and more to come, depending on where you operate on the inland waterway system.
Though aggregate shipments of crude oil, refined products and biofuels by barge from the Midwest to the Gulf of Mexico dipped in the first quarter of this year, they did rebound slightly in the second quarter, according to Department of Energy statistics. (This is crude oil from North Dakoka and Canada.) And that’s just from the Midwest to the Gulf. There are also movements in other directions. “More of it is moving east,” said Sandor Toth, publisher, River Transport News. “And there are more competitive options, more model options,” he said.
To that point, moving Bakken oil by rail has become a popular way to transport petroleum products, particularly between coasts, but barge companies are still getting plenty of work out of it. By the way, North Dakota crude set a quarterly record high of 95.1 million bbls. during this year’s second quarter, according to DOE statistics. Rail can’t carry it all and proposed pipelines are not headed east and west.
Meanwhile, the U.S. Department of Agriculture said this month that the record corn and soybean crops it was expecting would be even larger than first predicted.
With more rail space being taken up by crude oil products, farmers are looking for other modes of transportation. That should open up some options for barge grain carriers, even though demand is down. “Export demand isn’t as strong as other years,” said Toth. “Nobody is beating down our door. There’s no shortage of grain overseas.”
Patience will be a virtue in this case. “It will eventually move, but I expect that it will sit for awhile,” Toth said.
As I reported in the October issue of WorkBoat (“More domestic coal to move by barge,” page 24) the railroads’ loss may be the barge industry’s gain. Crude oil shipments from areas such as North Dakota’s Bakken oil fields has eaten up railroad capacity, leaving commodities such as coal and grain with fewer transportation options.
“We’re seeing a tremendous amount of crude oil and chemicals, fracturing sand, Bakken oil moving by rail,” said Mike Toohey, chief executive, Waterways Council, a trade association representing the barge industry. “Oil is considered a higher value commodity, so it gets the rail capacity.” In other words, railroads make more money hauling oil than grain or coal.
On the coal side, the commodity is not being loaded onto trains as it comes out of the mines, so in many instances it’s being trucked to the water, then loaded on to barges and taken to power plants whose inventories are suffering because of the below average temperatures from last winter. As to how much the lack of train capacity has increased the amount of coal being hauled by barge, Toohey said his organization wouldn’t know that number for a couple of years. “These are [barge] companies that are not publicly held companies, so their movements are not made public,” said Toohey. “It’s only when the Corps of Engineers puts out the numbers that move through it’s locks that we get some accurate tonnage numbers, and that usually takes about two years. What I can say is that barge industry business is very good right now.”
And there you have it.
