Barge Data Reflects State Of U.S. Economy

Attendees at the recently concluded Inland Marine Expo were treated to an informative and fast-paced look at the U.S. economy through the lens of statistics important to barge operators. In a wide-ranging presentation, Ken Eriksen and Susan Olson explored the “troubled waters” facing the inland towing industry through deep dives into data on barge cargoes, volumes and trips.

Eriksen, an economist and supply chain and commodities expert through his work with Sparks Companies, Informa Economics, IHS Markit and most recently S&P Global, and currently managing member and strategic advisor of Polaris Analytics & Consulting, has been a frequent speaker at previous Inland Marine Expos. Prior to Sparks Companies, Eriksen worked for the U.S. Department of Agriculture. Prior to that, he worked in the Department of Agricultural Economics of Washington State University.

Cargo Volumes

Eriksen began by noting that the U.S. economy “continues to expand while the consumer is losing ground.” Inflation has expanded the dollar value of the $24 trillion gross domestic product (GDP), but it has also concealed the extent to which consumer spending—which largely drives the U.S. economy—has remained flat or lagged. Eriksen noted that housing starts are falling, with the average cost of a home pricing many potential homebuyers out of the market. Owning a home drives the purchase of many other items and commodities that go toward furnishing and maintaining a home.

“Consumption took much longer than did GDP to recover” after COVID, said Eriksen. In cargo terms, although the dollar value of cargoes increased, volumes did not. 
Vehicle miles driven was another metric Eriksen highlighted. Increased engine efficiencies and the spread of electric vehicles—however slow and halting—mean that “less corn is going into fuel tanks,” he said, referring to the ethanol blend levels in domestic gasoline. On the other hand, overall U.S. oil production is reaching record highs as U.S. supplies fill gaps in Europe, the United Kingdom, China,  South Korea and elsewhere left by sanctions against Russia. Some of that exported oil travels via barges to the Gulf.

U.S. coal production continues to fall, with exported metallurgical coal for steelmaking continuing to provide some coal volumes; Eriksen said metallurgical coal will soon surpass steam coal export tonnages and on the inland waterways.  
Although grain exports are forecast to surpass 5 billion bushels for the sixth time in history, U.S. grain exports are “woefully behind” in world markets. According to Eriksen, the U.S. loss of market presence is largely due to infrastructure issues, as lower-cost producers like Brazil improve their terminals and export infrastructure to offset the infrastructure advantage the U.S. has traditionally enjoyed that balanced our higher cost of production. Brazil is now the world’s leading soybean exporter, and it also has the advantage of being able to plant two crops on the same acreage, producing up to four times the corn volume per soybean acre in a year.

Soybeans are a major feedstock for the crush plants serving the U.S. domestic renewable diesel market, but animal fats and tallows to serve the same market are also being imported at record rates. “North Dakota is one soybean [crush] plant away from being a soybean net deficit state,” said Eriksen.

On the global front, Russia’s wheat exports have continued to set records despite sanctions, which major markets like China did not join. However, this year’s frosts in Russia’s wheat-producing areas may dent exports.

The Panama Canal drought is over and canal authorities will likely remove the remaining transit restrictions in June.

Barge Fleet Survey

What does all this mean for barges? The 2023 barge fleet expanded  through December 2023 by 1 percent (224 barges) to a total of 22,356 of all types. Open barges increased by 27 to 5,088, while covered barges increased by 98 to a historic high of 13,321.

“The 1970s and 1980s fleet is all but gone,” Eriksen said. Still, many barges constructed in the peak year of 1997—when 1,600 were built—remain. Barge-building slowed beginning in 2015, with 22 percent of the fleet being 25 years old or older. The tanker fleet jumped, with trips of petrochemicals becoming longer and oil trips shorter. Steel prices remain high—and so do scrap prices. Barge rates are “languishing”–as they usually do at this time of year, Eriksen said.

The annual “Inland River Record Barge Fleet” report published by The Waterways Journal will be available in late June.

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