Usually when we’re talking boom (or bust), it’s all about offshore energy. Not this time.
Now it’s all 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.
Tank barge operators that move petroleum products are realizing 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 is one company that has benefitted from the development of U.S. shale basins. Kirby built 70 new tank barges last year and plans to build 37 more. River Transport News 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.
Moving crude oil by inland barge is relatively new. Tank barges are increasingly in demand and are still billed as a lower-cost alternative to railroads and pipelines.
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 be cautious. Walter Blessey of Blessey Marine said that 2014 would be the “last hurrah for building tank barges for a good long time.”