By Shelley Byrne
and Nelson Spencer Jr.
American Commercial Barge Line (ACBL) is among the giants of the barge transportation industry. Its successes and failures have a ripple effect on the entire industry, from the all-important mariners to the shippers that depend on inland waterways for cost-effective and safe transportation of goods while realizing a lower carbon footprint.
Following restructuring in 2020, ACBL entered a new chapter of its long history. It emerged with financial stability, new ownership, a new board of directors and new senior leadership. Mike Ellis was named CEO. The Waterways Journal requested an interview and had the opportunity to visit with Ellis recently, who provided insight on the company plans to forge ahead in 2022 and beyond. Topics of the conversation included plans for reinvestment, environmental stewardship, industry challenges and opportunities.
Strong Balance Sheet
Emerging from restructuring in a stronger financial position and a new balance sheet was a giant leap forward. The company no longer had to sell important assets for financial reasons and Ellis and his team were given a commitment by the new ownership and board of directors to reinvest in its future.
Ellis said the company has always had good “bones,” but that they needed to be supported. That includes making appropriate investments that he placed in four categories: workforce development, marine assets, fleeting and terminal operations and industrial technology.
Ellis sees ACBL’s fleet of towboats and barges, at least in the immediate future, growing by acquisition of existing equipment versus new-build programs.
Steel prices are affecting the ways ACBL and many others do business.
“Steel prices have chilled the new-build market almost to a shutdown,” he said.
The latter part of 2022 and 2023 should see some relaxing of steel prices and investment returns that justify new construction to offset future retirements.
Generally, ACBL’s investments will differ based on the needs and opportunities of its three main divisions of business: dry cargo, liquid cargo and ports and terminals.
“Those three businesses all see different opportunities going forward,” Ellis said. “Our strategy on our dry side of the business is to continue to strengthen our mainline capabilities.
“ACBL has done a good job in continuing to invest in its mainline vessels that we consider 6,000 hp. and above. We have continually kept those vessels in great condition—because we know that’s one of our most strategic assets—and continue to do that with some major projects this year on some of our higher-end vessels.”
The maritime industry at large is correcting an overage of excess dry barges and doing more with less, he said, but he added that shrinkage in the dry barge fleet is necessary to stabilize the flow of supply and demand.
“The dry fleet needs to continue to shrink,” he said.
The liquid barge fleet may attract more immediate investment at ACBL, both for unit tows and in the mainline operations that typically transport chemicals. It is likely more 30,000-barrel barges will be used in the chemicals market as the infrastructure to support them grows, Ellis said.
There must be a proper return on investments for both the dry and liquid sides to support sustainability, Ellis said.
“There has been building on a speculative basis without the fundamentals,” he said of some past practices in the industry. “Ultimately, every dollar needs a return, and I think our industry has become more disciplined with this downturn.”
The maritime industry never wants to lose transportation market share to another industry, he said, adding that it is important to provide the services needed to customers but not to be so over-supplied to where companies cannot invest in the future.
Ellis added that he sees the need for further consolidation in the industry as well. ACBL wants to be one of those consolidators, he said.
Investing In Company Infrastructure
ACBL considers its infrastructure to be its fleeting and terminal facilities. This is an area where the company has been making significant investments that should continue in 2022 and beyond. The return is in added efficiencies and in building facilities resilient to high water.
Ellis anticipates an increasing number of high-water events in the future. “The 100-year flood seems to happen every other year nowadays,” he said.
When high-water events took place, previously the company had to move its Baton Rouge Tiger Fleet downriver to continue operations. In 2020 and 2021, however, ACBL has put in additional pilings and spar barges in the area.
“We invested significant dollars in Tiger Fleet so we can stay there during high water events,” he said.
Additionally, following impacts from Hurricane Ida in August, ACBL is making significant infrastructure improvements in its Tri-Fleet areas in the New Orleans region, with some permits for expansions already in place.
“Investment in infrastructure is very important in how we turn our fleet,” he said. Such improvements are helpful all year long but become essential in high-water situations, he said.
Additional investment is being planned in the Cairo, Ill., and Houston, Texas, areas. “To have the right amount of fleeting so we can be efficient is very important,” Ellis said.
Like many others in the marine industry, recruiting new talent has been a challenge, amplified by COVID-19. While many long-tenured wheelhouse personnel remain loyal and are helping lead and train others, ACBL does face challenges crewing vessels.
Industrywide, Ellis believes it is important to find new and innovative ways to help recruits see the many benefits of working on towboats.
“There’s no other industry I’m aware of that can progress somebody from entry level to a six-figure salary as quickly as this industry,” he said. “I just don’t think there is one, period, especially without a college degree.”
Still, he said, not all new employees are considering what their lives might be like three to five years down the road.
“They need shorter, quicker hurdles,” he said, ultimately seeing a path toward the wheelhouse or shoreside positions.
He pointed out that despite the challenge, ACBL has not sacrificed safety and has retained low safety incidence and severity rates throughout. Ellis credits the ACBL team for the achievement.
Workforce training that helps accelerate career growth has been a focus and it hasn’t been just for deckhands. ACBL implemented an extensive training program for senior leadership down, both on the river and shoreside.
Market And Commodity Trends
The import market is very strong, Ellis said, with goods coming into the Gulf and moving upriver. In particular, he highlighted growth in the steel and cement sectors, which would further benefit from U.S. infrastructure investment.
Downriver business in agriculture also remains solid. As environmental changes affect the globe, many countries have croplands challenged by lack of rain, but agricultural communities in the United States have the benefit of a location in the heartland where water is abundant, both in terms of rainfall and access to the inland waterways.
“As an industry, we have some great opportunities to continue our dominance in ag and continue to be a large exporter,” Ellis said.
Additionally, the company is keeping a watch on other developments within the industry, such as the advancement of container-on-barge projects.
The move toward greater environmental sustainability may advance container-on-barge as customers take advantage of greener ways to bring their cargoes upriver to Chicago, St. Louis or Pittsburgh before transferring them to other modes of transportation, he said.
The industry must find a way to build efficient infrastructure to support the efficient transfer of containers from barges to trucks and rail, Ellis said, noting that when funds are available to help decarbonize the industry, the industry will take advantage.
U.S. Investment In Infrastructure
Ellis said the recently passed federal infrastructure package will be very helpful to the maritime industry as a whole. Waterway infrastructure funds will help in the construction of prioritized projects at locks and dams.
Additionally, he said, the barge industry will benefit by the amount of steel and cement that are going to be used in this country to support the building of infrastructure.
Another benefit could come from expanding broadband internet. Continually, in exit interviews, employees leaving the company talk about the importance of reliable access to internet at any time of the day or night. While companies already utilize satellite technology, it’s not cost-effective, so rural broadband internet expansion may also play an important role in helping with retention and recruiting.
“We think that peripherally helps our industry,” Ellis said. “Also, some newer systems on boats that are more cost-effective rely on internet access.”
The Environmental Advantage
ACBL is also looking into the future as a founding member of the Blue Sky Maritime Coalition, which recognizes the need to address global climate change and is committed to accelerating the transition of waterborne transportation in both the United States and Canada to net-zero greenhouse gas emissions.
The organization has a good agenda focused on trying to collaboratively move the industry forward, Ellis said.
“One could argue that we’re already the greenest form transportation versus truck and rail, but that will change if our industry doesn’t push the envelope on reducing our carbon footprint. Our goal is to remain the leader when it comes to the least amount of carbon to move a ton of product,” Ellis said.
ACBL is implementing an environmental social governance (ESG) policy. “It’s a pretty significant effort and commitment from our standpoint,” Ellis said.
Along with other measures, ACBL plans to publish its carbon footprint scorecard to the public to remain accountable in its commitment to environmental sustainability, Ellis said.
The company also hired an outside consultant to assist with strategy around environmental solutions that are commercially viable.
“We’ve dedicated significant resources to it, because it is a high priority for our ownership and our stakeholders,” he said.
Maintaining the environmental advantage is important to shippers. “If they can get their products from point A to point B with less carbon footprint, they’re going to do that,” Ellis said. “If we’re even close on price, they’re going to choose the greener option.”
Ellis sees significant potential for ACBL, driven by the team’s passion to transform the business to be more innovative and customer solution focused. He pointed out that he loves visiting boats and that all senior staff meetings start with sharing information from a boat visit. When going on a boat, the shoreside management team members don’t bring along checklists. “We work specifically on building relationships and understanding the needs of our mariners,” Ellis said.
Ultimately, Ellis believes the success of ACBL depends on its ability to attract and retain great people.
“We have a very supportive board of directors and stakeholders who share our desire to transform our company,” Ellis said.