On the Waterfront

While trucking companies and railroads battle over markets for scrap recyclables, another sector is hoping an improved steel and metals industry will translate into better markets for its business.

The use of barges to ship steel and steelmaking materials has fallen off precipitously over the past year. The decline can be attributed to the steep problems that the steel industry has been suffering. The rash of bankruptcies, outright closings and reduction in steel mill run times also has played havoc with barge shippers.

The decline in the use of barges to move material follows several years of steady increases.

Recently, as the steel industry starts to show some signs of life, there is stirring in the movement of scrap via barges. While there is some optimism, any turnaround is in only a nascent stage at the present.

Ferrous scrap (and the finished product shipments) typically make up a smaller component of the barge business. Coal, grain and other agricultural products make up a much larger portion of the barge business. Despite this, a representative from Ohio River Co., Cincinnati, one of the largest ferrous barge shippers in the U.S., notes that the company is starting to see some raw material imports of pig iron, which indicates that many steel companies are starting to see stronger markets.

Steve Alley, senior sales manager with Ohio River, says that one of the biggest advantages of using barges to move material is the per-ton cost to ship via barges. A typical barge can ship as much as 16 railcars of scrap, approximately 1,600 tons of material.

As for the cost, shipping a barge from New Orleans to St. Louis could cost as little as $5 a ton, a price that is very competitive with other modes of transportation.

Another source of optimism is that minimills now are built on waterways. “This bodes well for us,” Alley adds. Nucor, the largest minimill operator in the U.S., is one of the largest users of barges, both for inbound and outbound material. Other mills that benefit from barge traffic include Bayou Steel and IPSCO.

While costs and locations make barge a viable possibility for many companies, the downside for some is the timeliness of shipments. Due to the nature of the mode of transportation, shipping ferrous scrap via barges can be more time consuming that either truck or rail. To load and ship a barge to its destination may take as long as two weeks, compared to only a couple days for a truck or slightly longer for a rail shipment.

The primary origins of most of the barge shipments remain in the scrap hubs throughout the eastern half of the U.S. – Chicago, Houston, Pittsburgh and the upper Tennessee area are all locations where barge traffic takes place.

Further, there are large scrap yards that take advantage of barge shipments located in the Minneapolis/St. Paul region in the North, and the New Orleans area in the south.

If the recent improvement in the steel industry continues, barge operators will likely see an improvement in the use of their fleets to move materials such as pig iron, steel plate, steel coil, slabs and scrap.