Aging Locks and Dams Create Concerns for Companies that Rely on Barges
By: Steve Banker – Forbes.com
Dana Weber, the CEO of Webco Industries, a tubing manufacturer, is speaking out about her concerns about the ongoing lack of sufficient spending on locks and dams on the U.S.’s inland waterways.
Webco, headquartered near Tulsa Oklahoma, was founded in 1969 based on the perceived demand for tubing products across Oklahoma, Louisiana, and Texas. Based on the demand, and the belief that an Oklahoma plant close to their customer base could be cost competitive as long as barges could be used to bring in raw materials, Webco was founded and began shipping in 1970.
Most of Webco’s raw materials originate in the northeastern U.S., although they also receive raw materials from the southeastern U.S. and overseas. Webco has another plant in Pennsylvania, not located near a waterway, that consequently relies on truck – rail for various reasons is not practical – to get most of their raw materials. These goods come from suppliers located for the most part less than 200 miles away. Despite the much greater distances involved, it is cheaper for the Oklahoma plant to receive raw materials from the Northeast via the Port of Catoosa than it is for their Pennsylvania plant to receive materials from local suppliers. Indeed, Ms. Weber says that Webco saves over $4 million per year in freight based upon their usage of barges.
Over time, the advantage of barge transport has only increased. Truck rates have increased much faster than barge rates, and there have been capacity shortages around securing flatbeds. If anything, Ms. Weber believes, those trucking pressures will increase based on the new hours of service rules.
Barge moves do require longer lead times. For Webco the lead times increase from one week to a month with barge, which increases inventory carrying costs. But the freight savings far outweigh inventory carrying costs, especially with the very low interest rates now prevailing.
One downside to the use of barges is that low water levels in late summer and high water levels in the spring can prevent barges from using a waterway. However, Webco has a good advanced understanding of when those events are likely to occur and work with their suppliers to stock up in advance of river disturbances.
However, Ms. Weber’s greatest concern when it comes to barge is the deferred maintenance and aging locks and dams. Ms. Weber’s concerns are not unique. Cargill has been public about their concerns. And the American Association of Port Authorities put out a statement saying that the latest transportation budget proposed in the
President’s fiscal year 2015 budget “falls well short of the waterside maintenance and modernization needs of this country.
Bob Portiss, Port Director at the Tulsa Port of Catoosa, and a Director at the National Waterways Conference, points out that towing service providers are one of the very few industries begging for increased taxes that would then be used to maintain inland waterways. The Inland Waterway Trust Fund is paid for with a 20 cent tax on every gallon
of diesel fuel that the towing services industry uses. But the Trust Fund has not collected enough to meet the backlog of work that needs to be done.
Bob made the point that “Water transportation is one of the least expensive modes of transportation. It allows US businesses to be competitive.” Finally, Ms. Weber points out that the last thing the U.S. transportation infrastructure needs is to shift more products from barges to our highways, which could negatively impact the entire economy due to truck capacity limitations. If anything, the U.S. would get more bang for the buck trying to
get more traffic moving by barge.