Tuesday, December 30, 2014

Riverati Thoughts on The Year in Review and the Future Ahead

If you're a towboater, 2014 has been a good year.  We've seen rail traffic constrained by a bumper crop of corn and grain.  We've seen truckers hit with a shortage of CDL drivers.  We've seen oil and commodities prices drop.  The river stayed at a fairly stable water level. Line haul companies saw bumper crops and lots of petroleum . Fleeting services saw lots of shifts with the big harvest.  Shipyards saw a bump with the glut of orders for tank barges and new hoppers coming up to meet the grain demand.  The Water Resources Reform Development Act (WRRDA) was signed and bodes well for the improvement of key locks and dams in the river industry's infrastructure.  All said, 2014 was a pretty good year for us.  What does 2015 hold for us?

Since we're a relatively small industry compared to trucking or rail, and we're limited in our reach to locales with river access, it is easy to see how we've gotten a smaller portion of the intermodal transportation dollars through the years.  As the other modes begin experiencing their capacity limitations, the WRRDA is a step in the right direction towards the improvement of the economics and efficiency of our waterways network.  The question is this: will we be ready for this new found attention and demand in the coming years?  As prices rise due to increased demand in the other modes, and logistics professionals look for ways to move goods more cheaply, will the river industry be ready to accommodate to take advantage of the opportunity and meet the new demands of the new customers?

Crossing over into the towboat industry from other modes, the first impression is how far "behind" the river industry was in terms of infrastructure, economics and technology, but how much volume we move successfully despite all this.   We're an industry of flat bottomed boats pushing flat bottomed barges up or down the river delivering up to 10,000 acres of corn anywhere the river can take it.  Its truly amazing how much volume we can move for so little cost. The sheer volume of money that the river industry deals with and how little things have progressed in the way we do our business is truly astounding.

To be sure, there are companies out there operating newer and more modern equipment that take advantage of modern efficiency and technology to improve their profitability.  These companies are industry leaders who look over the horizon for competitive advantage to remain big players in the future.  

However there is still much that is old and antiquated. Towboat and barge design have changed little in the past 60 years.  Companies not in the upper echelon of the industry can still operate dated equipment and be very profitable.  This is a double edged sword.  Its good that old equipment is still viable because it keeps costs down, but it also notes a lack of real progress in the industry's method of doing business.  The economics of our industry limit our customers to large corporate or government entities who have large amounts of capital to spend on bulk commodities moving slowing in the waterways system.  The players are industrial commodity related that are almost always several steps removed from the commercial or private customers who use the final product. 

Our industry that can easily suffer from a lack of vision.  With the cast of customers and providers set in stone, the only thing that can fluctuate is crop production or commodity prices.  We get tunnel vision on our own little world of loading, moving or repairing the next barge. There is little evaluation of other kinds of customers who could take advantage of the waterways network if the price was right.  This article will provide no answers, but will pose these questions and contemplate them out loud. Feedback is welcome.
  • Who are the new categories of customers that would benefit using river transportation? 
    • The Agriculture/Grain Industry is pretty efficient and established, but it requires enormous infrastructure to execute.  Who are the people that don't go anywhere near a towboat or loading dock that could stand to benefit from river transit?  
  • What are their barriers to entry?
    • Cost is the obvious one as well as delivery time.  What could we do to break these barriers down? ABF Truck Lines will sell portions of truckloads to customers who load themselves.  Could we subdivide barges into smaller loading section that multiple customers could lease sections of for carrying their goods?
  • What is the next step in the growth of our industry?
    • Same question asked a different way
  • Why don't we move containers by barge?
    • Can someone please explain this?  Rumor has it that we don't do this because of the time-cost (the containers don't move fast enough to their destinations). Rumor also has it that it is because of infrastructure issues with no cranes at receiving ports to unload them. Finally, there's a question about what to do with the empties once they're finished. 
      • It seems to me that we could use deck barges and load them with the big, container-yard forklifts in a roll on/roll off setup.  
      • We could also collect the empties that the commercial world produces and ship them back to New Orleans and Mobile for transit back overseas.  
  • How can we integrate better with Railway and Trucking to improve the flow of goods between our modes of transportation?  Increased cooperation will yield increased revenues for everyone.  Roll on/Roll off access for trucks could have a huge impact.  
    • This could also impact moving fleets of vehicles from places like a Ford Plant to regional distribution centers
    • See previous bullet
  • Can we improve on our licensing process?
    • The blue water mariners have Maritime Academies where they earn their basic licensing credentials for becoming a merchant mariner.  Why isn't there a similar setup for the river? We've got great slack water harbors that would be fertile training grounds for young steersmen to learn their craft well before they get into more difficult situations in the rivers.

  • What are the next disruptive technologies for the river industry? What is the thing that is going to knock everybody off their rocker?

If we don't seriously sit down and figure out what the opportunities for our industry are, then we'll get left behind as the other modes of transit figure out how to profit off our missed opportunities.  If you are wondering why I've included pictures of a sunken boat and this one that is on ground, arent you?  If we sit back and believe that things will continue the way they always have, then we'll get left behind, high and dry like this boat.  We've got to try to look and see what is over the horizon.  We need visionaries who are willing to identify and sieze the unexpected opportunities afforded us in the years to come.

1 comment:

  1. Our life is always full of mysteries and uncertainty but, in my opinion, this is one of the reasons why life is good and interesting.


Please Keep All Comments Free From Foul Language and Explicit Material