Kirby invested in inland towboats for barge transport the US (source: Kirby)
Inland waterways transport markets strengthened during 2022 and are expected to improve further in 2023
Favourable market conditions are expected this year for towboats and push boats shifting bulk cargoes on barges along major river systems.
The market in North America is particularly strong, driven by economic developments and rising demand for products, filtering down to higher utilisation and charter rates for barges, towboats and push boats.
Kirby president and chief executive David Grzebinski sums up the positive sentiment for owners in 2022 and forecasts further improvements in 2023. “Inland marine showed continued improvement in operating margins,” he says. “We experienced steady market conditions with barge utilisation rates in the 90% range and price increases on term contract renewals.”
Challenges to overcome in Q4 2022 included poor weather, and low water levels on the Mississippi River system causing major delays. Historic low water levels due to drought limited loading draughts and the number of barges in tows. This led to record costs per tonne for transporting corn and soya beans by barge and high prices to transport coal and bulk liquids.
Unprecedented winter weather and low-river conditions contributed to a 147% increase in delay days Kirby encountered compared with Q3 2022. Kirby’s revenues in the inland market increased 24% compared with Q4 2021. The company expects rising revenues and improved operating profits into 2023.
“The marine market remains healthy, and we expect favourable market conditions in 2023,” says Mr Grzebinski. “Our barge utilisation is strong in both inland and coastal, and rates are steadily increasing.”
There could be headwinds in 2023 with labour constraints and inflationary pressures affecting Kirby’s operations and margins. These “appear to be moderating but continue to contribute to rising costs across our businesses,” says Mr Grzebinski.
“The 2023 outlook anticipates continued growth in customer demand, steady volumes from refinery and petrochemical plants, and modest net new barge construction in the industry,” he explains. “These factors are expected to result in barge utilisation rates in the low to mid-90% range throughout the year. Overall, inland revenues are expected to grow.”
Kirby will use rising cash flow to return capital to shareholders, further strengthen its balance sheet and evaluate accretive acquisitions and high-return organic growth opportunities.
Sales and purchase market
Marcon International brokers are positive about the global inland waterways market in 2023, adding operators have seen high utilisation and strong charter rates. “The inland tank barge market continues to see around 90% utilisation and strong charter rates,” Marcon says. “We remain hopeful, with the current pace of business, to return to pre-Covid sales levels by the end of 2023.”
Marcon reported an uptick in sales business toward the end of 2022 with several sales already booked for early 2023. But there are issues to resolve before this can happen.
“Going into 2023, a lack of crew remains a serious concern with uncertainty high as to how to resolve the issue and when that can be done,” Marcon says. “And whether with barges or push boats, Marcon continues to see a limited supply of good secondhand tonnage for sale.”
Marcon closed 18 sales and one charter in 2022, after ending 2021 with 10 sales and one charter and completing 22 sales and charters in 2020.
Of the 810 inland river push boats Marcon tracks, 60 were officially on the market for sale at the start of 2023, of which 46 were in the US and the rest in international markets. This was up 21, or 54%, from those listed for sale in December 2021.
Most of those posted for sale are elderly assets, with 31 push boats more than 45 years old. Just eight of the listed boats are less than 10 years old, including two newbuilds in 2022. These are an 8-m vessel with 310 kW of power in the US Great Lakes and a 22-m push boat with 1,490 kW of power based in the US Midwest.
Marcon also had seven inland river push boats listed for charter in January 2023, including five in the US.
A third of the vessels placed up for sale in 2022 had power capabilities of less than 750 kW and another seven had power ranging 750-1,490 kW. Marcon does not have any push boats offered with power greater than 3,370 kW, reflecting that higher power units are working consistently. One towboat placed up for auction this year is Tennessee Valley Authority’s Freedom, built in 1985 by Patti Industries.
Several of the push boats listed for sale in 2022 were outside the US and the average age increased due to a shortage of work amid the looming global economic downturn. The average age of the vessels for sale is 40 years, compared with 38 years in December 2021.
Of the 54 vessels listed for sale where engine type is known, 16 are powered with Cummins, followed by 11 with EMDs, eight with Caterpillar engines, six with John Deere and four with Mitsubishi, and nine comprised of seven other types.
There are 46 push boats for sale in the US, representing 77% of the global total, seven in Europe, five in Latin America, one in Canada and another in an undisclosed location.
New deliveries and orders
Investment in inland towboat fleets continues in the US, with owners ordering new vessels and taking deliveries from domestic shipyards still hungry for new contracts.
One of the highest profile shipyard orders so far in 2023 is from American Commercial Barge Line (ACBL), which ordered a new towboat with the first low-emissions Mitsubishi engines in the marine industry.
Steiner Construction won a contract to build this vessel with propulsion complying with US Environmental Protection Agency (EPA) Tier 4 emissions standards. ACBL’s new towboat will support barge operations in the Port of Houston, one of the busiest ship channels in the world, when it is delivered Q4 2023.
ACBL chief executive Mike Ellis says this vessel will have “the first Tier 4 Mitsubishi engines. Investing in our future is a key part of ACBL’s strategy,” says Mr Ellis. “The addition of this new Tier 4 retractable towboat represents our commitment to providing our customers with innovative marine transport solutions while minimising our impact on the environment.”
This 25-m vessel will have a beam of 10 m, an operational draught of 3 m, a retractable wheelhouse and twin engines producing 1,940 kW. Steiner Construction chief executive Bubba Steiner says it will build an “innovative towboat” for ACBL. “Equally important, is this vessel will be equipped with many of the latest advancements in shipbuilding and design. We are eager to bring it to life.”
Laborde Products will supply the main engines. Its chief executive Brian Laborde says, “Tier 4 Mitsubishi engine standards represent the strictest of EPA emissions requirements for marine diesel engines today and will significantly reduce emissions.” He adds, “Engines that meet these stringent standards promote cleaner air, improved fuel efficiency and better performance.”
On 15 February, Nashville, Tennessee-headquartered Ingram Marine Group held a naming ceremony for its latest fleet addition, 24-m towboatSteve Alley. This was built by Main Iron Works and designed by the shipyard, owner and Ashraf Degedy naval architects, with a 10-m beam and capacity to hold 82,000 litres of fuel.
Its twin Caterpillar Marine Tier 3 diesel engines drive 76-in Michigan special propellers through Reintjes gearboxes and electrical power comes from John Deere generators. Steve Alley is the fifth vessel built in a series of 10 ordered by Ingram Marine.
In January, Dupre Marine Transportation welcomed new push boat Wells Porche to its fleet. This was built by Intracoastal Iron Works for operations around the US Gulf Coast and Lower Mississippi River. According to automatic identification system (AIS) data, it was operating in Houma and New Orleans, Louisiana, in February. Its MG540 marine gears and EC300 electronic controls were supplied by Sewart Supply.
Hines Furlong Line took delivery of new towboat Bronco and leased it to Campbell Transportation Q4 2022. This 1,490-kW vessel was built by Steiner Shipyard in Bayou La Batre to a Sterling Marine design with two Caterpillar C32 main engines, compliant with US EPA Tier 3 emissions standards. These were supplied by Louisiana Cat and are coupled to Twin Disc 540 reduction gears with a 7:1 ratio from Sewart Supply.
Steiner Shipyard built similar towboats in 2021 and 2022 for Florida Marine Transportation and expects the next vessel in this series to be finished March 2023, although this could slip into Q2 2023.
The next delivery from FMT Shipyard is expected to be towboat Brendan Crystal, built as part of the series for Maritime Partners. McDonough Marine Service welcomed its latest small tug Mark E in January 2023, which can be loaded on to lorries for mobilisation and delivery to inland waterways and rivers in the US.
