Challenges and opportunities for the inland waterways
Inland Ports and Terminals Annual Conference, Shreveport, Louisiana
Todd Tranausky, North American Transportation Editor
30 April 2015
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Issues and opportunity on the inland waterways
Market Reporting
Consulting
Events
Where the industry can focus its attention
State of the inland waterway system
Potential opportunities in changing traffic mix
Weather and lock and dam issues
Necessary investments in infrastructure
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Conditions facing shippers and operators
•
Significant delays to movements
◦ High water
◦ Lock closures
•
Extra equipment needed to cope with conditions, volumes
•
Demand increasing
◦ Dry bulk and liquids
•
Uncertainty about the future
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Rates respond to pressure
Coal barge rates
• Coal rates up from early
2014 levels
35
30
25
$/st
• Rate gains are expected
to continue as capacity is
allocated among
commodities
20
15
• Lock delays contribute to
increases
10
Jan 09 Mar 10
Jun 11
Louisville to Davant
Sep 12
Dec 13
Mar 15
Big Sandy to Davant
Source: Argus
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Not just dry bulk
•
•
Crude shippers paying more
5.5
5.0
Inland moves more sensitive
to crude price
Volumes could bounce back
quickly, create equipment
shortfall
◦ Industry’s crystal ball on
crude pricing is cloudy
4.5
$/bl
•
Crude barge rates
4.0
3.5
3.0
2.5
Sep 13 Dec 13
Apr 14
Aug 14 Dec 14
Apr 15
Wood River to St. James
Corpus Christi to St. James
Source: Argus
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Future traffic mix changes
Market Reporting
Consulting
Events
Sand’s growth potential
• Demand outpaced supply in 2013, early 2014
◦ Created a need for shippers to find rail alternative
• Potential reduced dramatically by drilling slowdown
◦ Barge is the swing mode for this traffic
• Will give railroads ability to catch up, create potential
oversupply
◦ Eliminating the sense of crisis shippers felt last year
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Crude more responsive to market forces
•
Liquids barge rates from Corpus Christi
Demand strong along the
coast
5
•
•
Shorter haul than inland
moves; requires fewer
barges
Weakening crude traffic
raises questions
$/bl
4
3
2
1
Sep 13
◦ Potential for large overbuild
Dec 13
Apr 14
Corpus to Houston
Corpus to Baton Rouge
Aug 14
Dec 14
Apr 15
Corpus to Beaumont
Source: Argus
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Fertilizer traffic growth competes for space
Urea imports
• Fertilizer moves as dry bulk
or liquid, from domestic and
imported sources
1.2
0.9
• Vessel imports via US Gulf
coast move up the Mississippi
to its tributaries
◦ 55,000t = est 37 barges
mn mt
• Domestic production barged,
railed; plenty from FL, TX
0.6
0.3
◦ 30,000t = est 20 barges
0.0
Jan
Apr
2015
Jul
2014
Oct
2013
- Global Trade Information Services
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Conditions set stage for growth, challenges
Market Reporting
Consulting
Events
Dry bulk commodities increase waterway reliance
• Increasing amounts of salt, fertilizer on barges
• Grain seeks barge backup for rail, but volumes could
decline
◦ Currency issues dent exports
◦ More domestic traffic handled by trucks, rail
• Barge operators are likely to hold capacity for committed
contract shippers
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Rates increase in response to changes
•
Fertilizer barge rates
Fertilizer rates increase or
fall sharply in response to
the demand
50
•
Rate gains cause changes in
shipper behavior
◦ Seeking to get in front of
spikes
◦ Increased reliance on
contracts
$/st
40
30
20
10
Jan 13
Jun 13
Dec 13
May 14
New Orleans to Cincinnati
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Nov 14
Apr 15
New Orleans to Joliet
Weather complicates shipments in 2015
• Ice and high water slowed or stalled barges
◦ Loading delayed by flooding at docks
◦ High waters slow transits, lower tonnages
• Adverse conditions forced at least one barge company to
halt shipments on the Big Sandy river this month
• Additional tug requirements and slower transits create
reliability issues
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Operators move equipment around to cope
Coal tonnage on inland waterways
16.0
•
Declines in coal allow open
barges to be repurposed
•
Frees up horsepower to
move other commodities
mn st
14.5
13.0
◦ Salt, fertilizer could benefit
11.5
•
Reduced grain likely in 2015,
freeing up covered barges
10.0
Jan 11
Oct 11
Aug 12
Jun 13
Apr 14
Feb 15
- Army Corps of Engineers
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Maintenance will present further disruptions
• Lock work planned across the river system later this year
◦ Ohio River Lock and dam 52 and 53 could cause delays
• Inola/Catoosa could be completely shut off by lock
closures later this year
◦ But high water levels could allow lock to be bypassed
• High water is postponing some work, making the
summer and early fall even more prone to delays
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Industry faces conundrum over disruptions
• Advocating for Congress to fund improvements
• Not appearing to customers that the system is failure
prone and that shipments might face delays
• Reliability underpins pricing power of operators, creating
a balancing act
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Financing upgrades
Market Reporting
Consulting
Events
Taxes and government intervention
•
•
Inland Waterway Trust Fund
monies not being fully used
Industry volunteered to
shoulder additional diesel
fuel tax
Desire for money to go
toward intended purpose
90
89.3
85
84.0
mn $
•
Inland Waterways Trust Fund receipts
81.2
80
75
75.2
74.1
70
2010
2011
2012
2013
2014
-Waterways Council
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Congress, Army Corps hold the cards
• Industry waiting on Corps and Congress to set direction,
funding levels
• New bill allows $100mn/yr for waterways projects
• Proposed FY 2016 budget down 13pc, “not adequate” for
dredging and maintaining existing network
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Industry faces crossroads
Petroleum tonnage on the inland waterways
•
Dealing with lower federal
investment at a time of
increasing needs
16.5
•
•
Making sure Army Corps
prioritizes those projects
most necessary to
navigation
Spending money on needed
areas, especially in the Gulf
where crude traffic is
expanding
mn st
15.0
13.5
12.0
10.5
Jan 11
Oct 11
Aug 12
Jun 13
Apr 14
Feb 15
- Army Corps of Engineers
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Final thoughts
Market Reporting
Consulting
Events
Key takeaways for operators, shippers
Rates are likely to rise as capacity tightens
Delays have the potential to get worse
Lock and dam infrastructure is cause for concern
Industry needs to take lead to ensure financing is adequate
Copyright © 2015 Argus Media Ltd. All rights reserved.
Todd Tranausky
North American Transportation Editor
Todd.tranausky@argusmedia.com
+1 713-400-7835
Houston
www.argusmedia.com
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