As Americans get vaccinated and return to more normal buying, dining out and driving, the economy is heating up. At the end of March, the S&P Global Ratings site said that all the indicators point to a “seismic [positive] shift” in the economic outlook compared to December 2020. The U.S. economy is currently forecast by IHS Markit to grow by 6.2 percent this year, the fastest pace since 1984.
The National Retail Federation reports that the “unprecedented” surge of imports at retail container ports that began last summer is expected to continue at least through the end of this summer as retailers work to meet increased consumer demand, according to the monthly Global Port Tracker report released by the NRF. American personal saving rates climbed during the pandemic, and thanks to several aid packages, households have enough savings and pent-up demand to fuel a spending boom.
Those containerized consumer goods will likely be moved by rail and truck. What about bulk and barged commodities? The USDA is reporting and forecasting continued high demand for U.S. corn, soybeans and other ag products from China and other overseas markets. Grain inspections are up at Gulf, Atlantic and PNW ports. The retail import surge could complicate a container imbalance that is already disadvantaging certain exporters of specialty grains and other U.S. ag products. Imported fertilizer prices are also high, due in part to a ruling in a trade dispute with Russia and Morocco, but eager corn and soybean farmers planting more acres will have to pass that cost on.
Barge- and boat-builders are facing steep rises in the price of steel. These prices aren’t only demand driven. They also reflect the 25 percent tariffs on imported steel put in place by former President Donald Trump. In February, the U.S. Court of International Trade upheld the tariffs against a challenge by a U.S. steel importer. Rebar has gone up by about $250 since August, according to Platts, to averages of more than $800 per short ton. Prices for hot-rolled coiled steel have surged by nearly 210 percent since August, shattering records set in 2018.
Another supply crimp affecting barge economics has been President Joe Biden’s cancellation of the Keystone XL Pipeline, which fulfilled a campaign promise. The cancellation has disrupted barge economics along the Arkansas River. For years, shippers in Little Rock have counted on a steady supply of inbound barges loaded with steel for port tenant Welspun Tubular’s pipe manufacturing facility. The company serviced the Keystone XL project, having signed an order just last year to produce 190 miles of 36-inch pipe for the project. The Keystone cancellation triggered a shortage in available outbound barges in the port, which has in turn affected rail logistics.
Aggregates and building materials have a somewhat uncertain outlook, as Congress debates the administration’s infrastructure bill. Dozens of ethanol refineries that closed during the pandemic are now reopening in anticipation of a busy summer driving season. The U.S. Energy Information Administration currently predicts fuel ethanol production will average 960,000 barrels per day this year, up from 910,000 barrels per day in 2020. Production is expected to increase to 990,000 barrels per day in 2022, although continued high corn prices will dent ethanol margins.
While these local factors provide some bends in the river ahead, the economic recovery should eventually pull all barged commodities along with it.