WJ Editorial: Demand Persists Despite Industry Headwinds
Anyone who has been paying attention can list the headwinds the barge and towing industry has faced over the past year. Steel has grown more expensive on two fronts. Tariffs have raised the price of steel and other inputs, and demand from data center projects and construction in other industries has tightened steel capacity, pushing prices higher still. The war on Iran has driven swings in oil and gas prices. A tough farm economy has hit fertilizer shipments. Experienced workers continue to retire, and competition for new workers remains stiff. The Jones Act waiver and extensions also threw uncertainty into the economic environment for shipyards and may have delayed some investment decisions.
Higher diesel prices pushed barge rates up, but they also highlighted the widening price gap between barge, rail and, especially, truck. According to the November 5 USDA Grain Transportation Report, truck rates are up 67 percent from a year ago, while barge rates rose 19 percent. Published rail rates rose more than barge. Rail tariffs plus fuel surcharges are up roughly 10 to 24 percent year over year in most transportation modes, and the average rail fuel surcharge stands at a record 76 cents per mile, compared with 19 cents a year ago.
Still, WJ’s reporting so far this year points to an uptick in new towboat construction and christenings compared with 2025, a sign that the headwinds are not enough to outweigh strong demand. An aging fleet is being replaced. Billions of dollars in energy investment, especially in the Gulf Coast states, are boosting demand for barge and towboat capacity. A federal push to revive American shipbuilding is releasing billions more in military contracts, and some of that work may be subcontracted to smaller shipyards that have upgraded their capacity and facilities. More yards are doing so with help from Port Infrastructure Development Program (PIDP) and Small Shipyard grants. Consolidation among shipyards and towing companies is also creating larger companies that are better able to raise capital and invest for the long term.
The dredging industry is also riding high. Federal dredging awards hit a record $2.4 billion in fiscal year 2024. Fiscal year 2025 remained strong at $1.8 billion. That was about 25 percent lower than the year before because there were fewer large deepening projects, but it was still near the seven-year average. The industry has invested roughly $3 billion in new dredges, support vessels and equipment in recent years. Recent additions include large self-propelled hopper dredges such as Manson’s Frederick Paup, among the largest ever built in the United States, and the hoppers Amelia Island and Galveston Island. There are also powerful cutter-suction dredges and high-capacity mechanical units such as Curtin Maritime’s hybrid clamshell dredge Catalina. More newbuilds, including additional hopper dredges, are underway at U.S. yards.
There is no shortage of uncertainty in the economic and political environment, and the costs of doing business are unlikely to ease quickly, but the towing and dredging industries have something working in their favor: the underlying need for their services. Energy projects, domestic shipbuilding, aging fleets and the continuing need to maintain and improve the nation’s waterways are creating demand that extends beyond the current economic cycle.
