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River Transport News Publisher Addresses Issues Facing River Barge Industry.

Byline: FreightWaves

The network of barges that ship through the slow-moving powerhouse that is the U.S. river transportation system is critically important despite its low profile, according to River Transport News Publisher Sandor Toth. The barge industry also has significant challenges and opportunities, Toth said in an interview with FreightWaves CEO Craig Fuller on the FreightWavesTV show, "Fuller Speed Ahead."

Although "invisible" to most Americans, barges move over 600 million tons of liquid and dry products through the nation's waterways annually, Toth said.

"The industry is rather unique because it's a huge part of the U.S. transportation system network," he said. "If you ever take a look at a map of the United States, you will see rivers extending from New Orleans up to Chicago and to the Twin Cities of Minneapolis and St. Paul, St. Louis, Cincinnati, Louisville, and all the way up to Pittsburgh. All of these major metropolitan areas are connected by an integrated river network."

Farmers and shippers of raw materials rely heavily on the river barge industry to get their products to ocean ports.

Key among those products is coal, but the push to use cleaner forms of energy has threatened the coal industry and, in turn, barge shipping, according to Toth. River-based shipping of coal to power generators previously reached 160 million tons, he noted.

"Now you've got natural gas prices so low that you're closing coal plants in the middle of the coalfields because they're not competitive," he said. "We're now moving less than 90 million tons of coal on the river."

Yet the decline in the shipment of coal has had some interesting market impacts, he added. For example, it has resulted in a surplus of empty open-top hoppers, with some converted to covered use to haul weather-sensitive commodities like cement and grain.

U.S. agricultural exports also play a key role in the ups and downs of the barge industry. According to the USDA, soybeans are the nation's top agricultural export, a market worth over $21.6 billion in 2017. Regions surrounding the Mississippi River produce most of the nation's soybeans, as reflected in the large quantities of soybeans shipped annually down the Mississippi. However, fluctuations in China's agricultural sector ultimately pose a threat to the barge industry.

Noting that China accounts for roughly 60% of the international soybean trade and is the world's biggest importer of soybeans, Toth explained that to pressure U.S. agricultural markets, China has targeted farmers, who figure large in the crucial Iowa caucuses.

"They basically put prohibitive tariffs on U.S. soybeans, and they're using soybeans as a carrot and a stick to move trade negotiations along," he said. "It's had an adverse impact on barge demand no doubt."

Natural disasters also take a toll. Recent floods have been trouble for operators, at times completely shutting down river traffic.

"We've had two successive years where we've had rivers seriously impacted by flooding and high waters for more than three to four months, six months at a time," Toth said.

Flooding affects not only barge operators all along the Mississippi but shippers of all stripes in New Orleans, causing bottlenecks.

"It also had an impact on everybody else who's moving in and out of New Orleans because when you have a lot of high water and fast-moving currents, you have shoaling on the lower Mississippi River so you can't bring vessels in either that are loaded beyond 40 feet," Toth said.

He continued, "If you're loaded to 45 feet and suddenly there's shoaling, and it happens within 24 hours, you're going to have vessels sitting off in the Gulf Coast for days or even weeks until they can dredge that out. It doesn't matter if they're in coal, grain, steel or containers. It's been a serious problem."

Some other factors are working in the barge industry's favor, Toth said. He is pleased that demand for steel raw materials and aluminum has boosted barge traffic.

"We've seen announcements from Nucor, Big River Steel, Steel Dynamics Inc. and even U.S. Steel that they're building new steel capacity," he said. "It's all-electric arc furnace capacity, a new technology. They're building new capacity, which will generate demand for pig iron and other raw materials, all of which come in on barge through the Port of New Orleans."

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Author:FreightWaves
Publication:Benzinga.com
Date:Oct 23, 2019
Words:883
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