Page 30: of Marine News Magazine (May 2020)

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INLAND WATERWAYS

Black Swans Impact

US Barging Markets

By Eric Haun he combination of the coronavirus pandemic and main high as further market instability ensues.

oil price freefall have affected most maritime mar- “Make no mistake, if this U.S. economy goes into recession kets, including inland waterway shipping. Looking – and we may already be there – [re?neries and petrochemical at U.S. river transport in particular, the impacts of plants] will probably cut down their volumes.”

T these two black swan events vary greatly depending on the Should that happen, Grzebinski said one strategy the com- type of cargo being carried. pany could deploy to cut costs is to dial back chartered-in

David Grzebinski, CEO of the America’s largest tank barge horsepower, citing moves made by the company in 2008- operator, Kirby Corp., said in a March conference call that 2009 as an example. petrochemical customers have driven the market higher as “We charter in a lot of our towboat horsepower, and we plants and re?neries look to shore up their supply chains have the ability to shed that horsepower if demand falls,” he amid current market upheavals, noting the economic impact said. “At the end of 2008, we probably had 100 charter boats of supply shortfalls or having to shut down a plant are “pretty chartered in. By the summer of, ’09 we were down to 50- huge” compared to the cost of barging. 55 charter boats. And that actually allowed us to cut a huge “Our utilization levels have been in the 95% range in recent amount of costs. And then, by ’10 we ramped it back up.

weeks,” Grzebinski said on the March 23 call. “This morning we “Right now, we’ve got about 90 charter boats, so we have the were 97% utilized, which frankly is as busy as I’ve ever seen it.” ability to cut charter boats if we need to . . . That’s probably

But that’s not to say ?eet utilizations are guaranteed to re- the number one thing we could do in terms of shedding costs.”

May 2020 30 MN