The workboat industry is no longer a mom-and-pop operation, having grown into a truly global business. Sixty percent of U.S. farm exports move on the inland waterways to ports for shipment overseas. Coal and agricultural products are among the biggest exports, and the European Union, after Asia, is one of the biggest customers.
It might seem like a remote connection, but the workboat sector should keep a close eye on the fallout from the stunning vote last Thursday in which U.K. voters decided to leave the EU. As WorkBoat reported in its July issue, the barge industry is already suffering the effects of a slowdown in the world economy — most notably in China — and Brexit will deal another blow that will likely reverberate across the Atlantic, down to the Gulf of Mexico, and up the Mississippi River.
The shock to domestic barging will be felt mostly by the falling value of the British pound and euro. Weaknesses in these currencies have sent the dollar surging, and this will hurt U.S. exports. U.S. soybeans and coal, for example, will become more expensive and this will suppress demand from customers in Europe and Asia.
This is not good for barging. “The strong dollar has been a challenge for some time now,” Mark Knoy, president and CEO of American Commercial Lines, Jeffersonville, Ind., one of the nation’s largest liquid and dry cargo barge lines, told me in an email. “I am certainly not a Brexit expert, but anything that challenges exports cannot be a good thing for us.”
The surging U.S. dollar is also a big concern for U.S. soybean exporters, who move a majority of their grain by barge to Gulf ports for export. “The overall strengthening of the dollar that has occurred over the past year has had a punitive effect on our exports,” said Mike Steenhoek, executive director of the Iowa-based Soy Transportation Coalition. “A continuing strengthening will continue serving as a headwind for our export program.”
Steenhoek said there’s also the larger concern that Brexit will usher in a period of sustained uncertainty in world markets. “This is not just confined to Great Britain,” he said. “The discussion of remaining or exiting the EU will intensify, not abate. This uncertainty in the global economy will likely increase demand for relatively stable investment opportunities, like the U.S. dollar, which will add an obstacle to our exports.”
This uncertainty raises a big question of whether Brexit represents an end to the kind of globalization and liberal trade that have opened up new international markets to the workboat industry and so many other U.S. sectors over the past few decades. The Brexit vote exposed a deep skepticism about the global economic system, and has prompted other European countries to question the benefits of their continued membership in the EU, the world’s largest trading bloc.
But there are a few bright spots for Americans from the Brexit vote. It is expected to cause mortgage interest rates to drop to a record low in the next few weeks, so now might be a good time to refinance or buy a house. And the sliding British pound against the dollar makes that summer vacation to see the Tower of London or Buckingham Palace a lot more affordable.