WJ Editorial: The Other Retirement Cliff
There’s a fast approaching retirement cliff that has been a regular topic in recent times.
No, it’s not the ongoing retirement of the Baby Boomer generation. (Wait. What did you think we meant?) It’s the aging and pending retirement of our nation’s barge fleet.
As Waterways Journal contributor Ken Eriksen reported in June, the average age of a hopper barge is between 18 and 20 years now, depending on whether they are open or covered. The typical service life of a hopper barge is between 25 and 30 years — although barge owners are reportedly extending the life of some barges through refurbishment. The tank barge fleet is slightly older. So, the overall fleet is getting on in “barge years.” Vessels built in the boom years of the 1990s may be nearing the end of their operational lives.
There has been a reduced capacity for new construction barges over the last few decades with shipyard closures driving that reduction.
The fact that Heartland Fabrication is financing its $60 million to $65 million expansion and upgrade of its Brownsville, Pa., facility shows the need — and the potential for big enough outfits to continue to make money building barges, despite steel prices and other challenges. When the two-year expansion cycle is complete, Heartland expects to be producing a barge every 24 hours (down from every 36 hours today) and to produce up to 280 barges a year by 2028. The advanced automation tools and other upgrades Heartland is installing are hopeful investments in the future of barging.
NABRICO (formerly Arcosa), the nation’s largest barge-builder, also has the organizational capacity and capital backing to address the retirement cliff since being acquired by Wynnchurch Capital earlier this year, per recent discussions the WJ had with company management.
Barging continues to have a bright future, and barge-building facilities should be kept humming for a good many years. According to the U.S. Department of Transportation’s Freight Analysis Framework (FAF5), total waterborne tonnage is expected to experience sustained positive growth. Shippers are moving more bulk commodities to inland waterways to reduce transportation costs. The waterways have capacity for additional cargo, and shifting freight from trucks can ease highway congestion. The increased demand gives the industry reason for optimism.
