Rollin' On the River

July/August 1992

Barge transportation on the U.S. inland river system can be the most economical way to move scrap—even if you’re not in a river port town.

By Dayle B. Chandler and Samuel Welch

Dayle B Chandler is an executive with Turner Marine Bulk Inc. (New Orleans). Samuel Welch is a former senior rate analyst, sales representative, and fleet repair coordinator for the Ohio River Co. (Cincinnati).

Since the days when European settlers set out in wooden canoes and log rafts to explore and set up trade routes in North America , through the river steamboat era, to today’s age of all-steel barges, the U.S. inland river system has been the nation’s major low-cost method or product transportation.

With about 8,500 miles of navigatable waterways, the inland river system runs through much of the Midwest, South, and East, encompassing cities such as Pittsburgh, St. Louis; Chicago; Minneapolis; Knoxville, Tenn.; Panama City, Fla.; New Orleans; Tulsa, Okla.; Houston; and Brownsville, Texas. And when combined with rail or tuck services (An arrangement know as intermodal transportation), river transport can reach sites well beyond river ports.

Barge Basics

Most products shipped on the inland river system are sent in barges secured together into barge “tows,” which are propelled, from the rear, by diesel-powered towboats. The size of the tow and the towboats—and, thus, the shipping capacity and economy of scale—vary depending on the river used. For instance, on the small tributary waterways—such as the Allegheny, Arkansas, Monongahela, Green, Tennessee, and Tombigbee rivers or the Gulf Intracostal Canal—2,000-horsepower towboats usually move four to six barges carrying a total cargo of about 7,500 tons. Larger barge tows are seen on the Ohio , Illinois , and upper Mississippi rivers, where a typical tow is comprised of 15 barges and measures 975 feet long and 105 feet wide. This arrangement can carry approximately 25,000 tons of commodities and requires a 2,000- to 4,000-horsepower towboat.

The giants of the inland river system can be found on the lower Mississippi River . There, towboats powered at 8,000 to 13,000 horsepower move barge tows that can include as many as 50 barges (measuring 1,500 feet long and 175 feet wide) with a total capacity of about 75,000 tons.

Barge tows aren't speedboats, but most barge shipments can be delivered to almost any river destination in one to three weeks. To estimate journey time, figure that a barge will travel 100 miles per day in either direction on a locking river. On the lower Mississippi , where there are no locks, barge tow speeds are approximately 100 miles per day when traveling upstream and about 200 miles per day moving downstream. See table on page XXX for some typical transit times for inland river transportation.

The real advantage to barge transportation is economic. Above all, this can be seen in transportation rates—compared to truck or rail, the cost savings are enormous. The reason is simple: Barge tow costs are less than truck or rail transportation costs. For example, a gallon of diesel fuel will move a ton of scrap 59 miles by truck or 202 miles by rail. The same gallon of fuel will move the same quantity of scrap 514 miles—nearly 9 times the distance a truck could move it and more than 2 1/2 times the distance a train could transport it.

Of course, very little waterborne scrap traffic travels without truck and/or rail assistance since some form of land transportation is often necessary to move cargo to and/or from river ports. But the larger the river portion of an intermodal movement, the lower the total freight bill.

Navigating Through the Choices

So, how can you, as a scrap shipper, take advantage of these transportation cost savings? The first step is identify potential barge carriers. Although there are more than 60 carriers (which, as a group, operate about 23,000 barges), many specialize in certain routes and particular types of cargo, and a few move only limited quantities of materials. See table on page XXX for a thumbnail list of some major barge lines and important data related to each.

To narrow the list down a bit further (and protect yourself from unknowingly participating in an illegal transaction), make sure that potential carriers have the government authority to carry their products. Although the Interstate Commerce Commission has relaxed many of its barge movement regulations, a barge carrier still must have a contract carrier permit or a common carrier certificate before it can transport certain commodities, including metal scrap.

To refine the list even further, to those carriers that are likely to offer the best rates for particular shipments, request from barge carriers a list of long‑term contract clients, which will suggest where backhaul rates might be available. In addition, ask the carrier's representative for his or her frank opinions about the potential for systematic and reliable backhaul opportunities. Since no two barge lines have the same contract bases, and since these long‑term contract requirement limit their traffic patterns, each carrier should offer different cost efficiencies related to particular shipments.

In addition, a barge carrier occasionally will have need for what is technically a forehaul movement to supply barges for another, technically, forehaul shipment. If you are shipping commodities in the same pattern, you may be able to take advantage of especially low rates.

Requesting Rates

The next step is to request a rate from suitable carriers. To make sure that you are getting the best‑developed rates, always provide the barge carrier's rate analyst or sales person with a complete picture of your plan. Furnishing as many details as possible will also help the carrier suggest ways to reduce your land‑side transportation costs.

The information you provide should answer all of the following questions, although if you're new to barge transportation, or just want to some guidance, the barge line representative should be able to help you answer some of the points. If representatives fail to ask these types of questions, prompt them; it will assure you of an optimum rate calculation.

• What is the exact commodity you wish to ship? Be specific: You may get a different rate for shredded scrap than you would for motor blocks.
• What is the exact size and weight of the shipment? What is its value?
• When will shipment occur?
• Which barge loading and unloading facilities will you use? If you're not familiar with available transfer terminals, ask the barge carrier representative for the names and telephone numbers of several competitive facilities, then obtain transfer and service rate quotations.
• How long will the transfer terminals need the barge for loading and unloading?
• Which land-side carriers will bring the shipment to and from the transfer terminals?
• What type of river barge will the shipment require? Weather-sensitive dry goods are usually shipped in jumbo covered barges, which typically carry between 60,000 and 70,000 cubic feet of cargo, while non-weather-‑sensitive dry cargo is normally shipped in jumbo open (or hopper type) barges that have a cargo capacity of 70,000 to 80,000 cubic feet. Both of these types are available as semi-integrated (also known as rake type) or box type barges, the latter of which are square at each end, allowing them to carry 6 to 10 percent more cargo than semi‑integrated barges. Liquid cargo barges are used to transport all types of liquid materials, while deck barges are primarily employed to move machinery and other large objects.
• Will the commodity require a particular degree of barge cleaning prior to loading?
• What are the time requirements of the other players involved in the total shipment plan? Among those to consider are inspectors, company representatives, surveyors, and insurance personnel.
• How soon after loading will the barge need to be delivered to its unloading destination? If several barges will load at the same time, do you need them delivered at the same time?
• Will the shipment require any intermediate stops for partial loading or unloading during the journey to the final destination? If so, where and for how long?
• Can you supply material safety data sheets for the commodities being shipped? Offer to fax this information to the carrier.
• Can the transfer facility at the unloading port hold the loaded barge in its fleet prior to unloading? Does the facility anticipate any delay in beginning the unloading once the barge is delivered?
• Are any bills of lading required for the movement of the cargo? Who should the barge line send them to?
• Who is responsible for payment of barge affreightment and demurrage charges? What billing address and payment approval contract should the barge carrier use?

Controlling Overall Costs

There are other points to consider when evaluating and negotiating rates. For one, note that barge transportation can be quoted in two different ways—by the ton or by the barge load—and the type of quotation you request can profoundly affect your transportation costs. The most common quotation for dry bulk commodities is on a dollars‑per‑ton basis with a minimum ton‑per-barge requirement. A dollars‑per‑barge-load arrangement, on the other hand, offers a flat rate for the use of a barge without concern for minimum tonnage.

If you know that you can load cargo in excess of the tonnage minimums required by the barge carrier, then it's probably best to request a flat rate since the excess tonnage basically travels for free. If, however, you elect to purchase barge transportation on the dollars-per-ton basis, try to negotiate a tonnage-per-barge averaging agreement, perhaps with a quarterly reconciliation. That way, you'll avoid paying for tonnage you didn't ship but which might otherwise have been charged because some shipments were below the barge line's minimum.

Another way to trim costs is to negotiate with the carrier the number of "free" days for loading and unloading cargo, working for "all purpose free time," which includes both loading and unloading days. Furthermore, because the barge line will charge demurrage for each barge day used beyond the free days, it's essential to monitor the amount of time spent loading and unloading. (Expect demurrage charges of between $100 and $200 per day per barge.)

Other costs can also be negotiated. For instance, barge carriers frequently charge for intermediate stops for partial loading or unloading of cargo, but the amount of these stop‑off charges are negotiable. Before finalizing a barge contract, determine the exact stop‑off charge, which should be about $650 per stop.

Storage charges can be limited through negotiations as well. These charges, which apply to barge days in which your barge is loaded but you haven't yet finalized the shipment destination, are normally about half the demurrage charge—or about $50 to $100 per barge per day.

A Bigger Bang for the Buck

The key to keeping transportation costs down is more than just a low initial freight rate. The value of customer support and quality-oriented services provided by the barge carrier also factor into the equation. Thus, to evaluate the total cost of shipping, value-added elements like service, reliability, dependability, ease of doing business, and error‑free documentation and invoicing, must come into play. All are essential to controlling the costs of each segment of the movement.

The following are reasonable for you to request.

• An on-line information service that provides accurate logistical data on the movement of barges in your service. You should be able to receive this information at any time using a computer, telephone modem, and toll‑free number connected to the barge carrier's data base. Such communication can help you economically manage other services related to the shipment, such as trucking or rail lines, transfer terminals, rail car permits, and ocean vessels.
• Accurate, easy-to-read invoices, perhaps with electronic payment and billing options.
• Bills of lading and documentation customized to your needs or those of your customers.
• On-line information summaries of tonnage shipment details, including numerical or statistical process analysis of fulfillment of your affreightment contract.

Savings by Example

For a more practical look at how barge transportation can lower freight rates, consider this example: Several months ago, we were invited to bid on a piece of high-volume business that required movement from an Illinois town located some 80 miles from the nearest river port to Houston, which is served by barge. The shipper had been using rail for years and had in place a rail contract rate of approximately $25 per ton. Could we beat it?

Indeed, we could. After negotiating with the railroad to transport the shipment between its origin and the river port destination and contracting with a rail-to-river terminal to transfer the cargo from railcars into barges, we combined the cost of those two components with the barge rate and bid to the shipper a complete intermodal transportation package of $22.65 per ton. The total through rate broke down this way: $9.15 per ton for the 8-mile rail trip from the shipper's plant to the river, $2.50 per ton for the transfer terminal's services, and $11 per ton for the 1,500-mile barge transport to Houston .

Our bid offered the shipper a savings of more than $2 per ton compared to its existing all-rail rate. In fact, the shipper's volume was such that savings under the rail/barge intermodal plan would have been in excess of $300,000 per year.

As it turned out, the shipper ended up staying with rail. Learning of the very existence of the competitive barge rate inspired the rail company to offer the shipper a new rail contract with lower rates. When these rates were combined with the fact that the shipments wouldn't need to be transferred from rail to truck, the all‑rail package had renewed appeal.

Thus, it should be clear that river barge transportation is something many shippers can't afford not to look into. Cost savings can be enormous—even if you don't end up shipping by barge.

A Guide to Guidance

If you're considering barge transportation, obtain some reference materials to help guide you through the process. The following resources can be obtained at no charge or a minimal cost.

For free color wall maps or notebook-size maps of the inland river system, call Midland Enterprises, 800/950-4404.

To request a detailed color briefcase-size map booklet of the river system at no charge, call American Commercial Barge Lines at 812/288-0100.

A vest-pocket-size directory of terminals along the inland river system is available free of charge from Canal Barge Co., 504/581-2424. This guide is a must if you might be transporting recyclables by barge in the South.

The Inland River Guide, a comprehensive handbook to virtually every professional and organization involved in the inland river industry, is available for $50 from Waterway Journals Inc., 319 N. Fourth St., St. Louis, MO  63102. Perhaps the most intelligent catalogue of all the participants in a given industry ever compiled, its very design is a tutorial on inland river transportation, making the cost more than worth it.

Finally, the authors of this story are available to answer further questions on matters related to barge transportation. Dayle B. Chandler can be reached at 504/581‑4700; to speak with Samuel Welch, call 513/891-0666.

Typical Barge Transit Times

Origin Destination Transit Days

Chicago Beaumont, Texas 19
New Orleans 15
Blytheville, Ark.12
St. Louis 7

New Orleans Beaumont, Texas 3
Blytheville, Ark. 7
Chicago 19

Louisville, Ky. New Orleans 10
Beaumont, Texas 14
Blytheville, Ark. 7

Major Barge Lines

Barge Quantities Primary Areas and Types Served

American Commercial Barge 2,030 covered Nationwide
 Line Co.1,100 open
1701 E. Market St. 175 liquid cargo
Jeffersonville, IN  47130, 812/288-01003, 305 total

Canal Barge Co. 220 open Nationwide,
835 Union St., Suite 350  95 liquid cargo with a
New Orleans, LA  70112 —————————concentration
504/581-2424 315 total in the south

Cargo Carriers 530 covered Mississippi
15407 McGinty Road  20 liquid cargo River between
Minneapolis, MN  55440 ————————— St. Paul , Minn.,
612/475-6763, 550 total and New Orleans

Crounse Corp. 645 open Ohio River and
2626 Broadway its tributaries
Paducah, KY  42001-9611

Ingram Barge Co. 650 covered Nationwide
4400 Harding Road 470 open
Nashville, TN  37202 200 liquid cargo
615/298-8200, 1,320 total

M/G Transport Services 500 open Ohio River and
537 E. Pete Rose Wayits tributaries
Cincinnati, OH  45202
513/721-3795

Midland Enterprises Inc.1,300 open Nationwide
580 Walnut St., Suite 1450 800 covered
Cincinnati, OH  45202 185 stumbo
800/950-4404, 2,285 total

National Marine Inc. 690 covered Nationwide
1515 Poydras St., Suite 1500 250 liquid cargo
New Orleans, LA  70112 —————————
504/529-8600 940 total

Riverway Co. 450 covered Nationwide
7703 Normandale Road, Suite 110   5 liquid cargo
Minneapolis, MN  55435
612/893-8700