Catching a ride with a (slow) recovery

The slow pace of recovery within the U.S. and global economies still has much of the North American tugboat industry working on a slow bell. But business operators remain optimistic and investments in the future continue to be made, albeit at a modest pace.

Handling of LNG tankers such as this one being berthed at the new Canaport LNG facility at Saint John, N.B., Canada, has become a growing source of new business for the tugboat industry.  Tugs at work here are those of Atlantic Reyser, built in Canada specifically for this purpose. (Photo courtesy of Canaport LNG)

The prevailing attitude among tug and barge operators seems to be that things are soon to get better — maybe even coming close to the way things used to be.
"The markets are getting stronger with the economy as a whole, and certainly our view of the future is a positive one," said John Witte, executive vice president of Donjon Marine, which recently acquired a shipyard and is busy with introduction of a new 10,800-hp tug and matching barge at the shipyard. "But how long it will take for things to get back to some of the higher market conditions that we had a few years back is anyone's guess," he added.
"I think we've seen the worst of it so far, and things are definitely going to turn around," said Robert Dann Jr., vice president of engineering with Dann Marine Towing of Maryland, which just introduced a new 100-foot coastwise towing vessel for U.S. East Coast service. "We're going to be towing or pushing anything with her that we can get our hands on: cement, oil, coal, dump barges, aggregate, anything," said Dann.
Like all businessmen, tugboat operators can't help but be optimistic, particularly as signs of economic recovery are plentiful. This is particularly true in regards to movements of containers at U.S. and Canadian ports. Seagoing containers generally don't move without tugboat assistance, so reports of container movements constitute a relevant indicator of the health of at least the ship-assist sector of the tugboat business. The good news is that containers are on the move everywhere.
Sharp gains in both U.S imports and exports for the first quarter of 2011 gave a boost to container movements at many ports, according to industry reports. Resurging business activity, gains in domestic employment, increased consumer buying and a falling U.S. dollar were contributors to those gains in international commerce. For the first quarter U.S. imports were up 19 percent with exports increasing by 11.6 percent, according to the Journal of Commerce.
Reflecting these numbers, many North American ports are reporting increased volumes of container traffic. In addition to most of the big West Coast ports, other container destinations around the country were also reporting increased volumes this year. New Orleans reported more than 40 arriving container vessels at its Port of New Orleans facilities for each of the first few months of this year, after container volume set a record of 427,000 TEUs in 2010.
On the East Coast the Port of Baltimore reported record volume (by a slight margin) of 632,500 TEUs for all of 2010. Officials attributed the recovering level of container traffic to improved economic conditions in that region.
Materials exported from U.S. ports in the first quarter occupied more than three million containers, according to commerce reports. That's a lot of containers.
West Coast ports of the United States and Canada reported sharply increased volumes of container traffic for both 2010 and the first quarter of this year. Canadian ports like Vancouver also reported surging export shipments of bulk commodities, particularly coal and grain.
Of course not all tug operators are involved with movements of container vessels. An increasing number of North American tugs are involved with movements of LNG tankers in and out of specialized receiving terminals. With several new terminals opened in the past few years, and with more due to open in the near future, this is certainly a potentially lucrative growth area for companies with the right equipment.
Another big sector of the industry is movements of petroleum products where the outlook may not be so universally optimistic.
While the United States is still a vast oil-consuming machine, the overall level of refined oil consumption in America has been stable or trending slightly downward in the last five to 10 years. The recent recession combined with the more-recent surge in oil prices has also limited recovery levels in some aspects of the business.
"I don't see volumes of oil movements increasing here in the New York area," said Gary Cutler, co-owner of Poling & Cutler Marine Transportation, which recently introduced a new 1,500-hp tug with a new gasoline barge for work in the New York area. "Volumes may actually be declining, considering some of the recent economic factors," he added. "But despite the downward pressure on volumes, we find that we are able to sustain our market share and keep our own volumes at healthy levels, probably as a result of good customer service," he said.
In many other industries the effects of the recent recession have been far reaching with depressive effects on a wide range of businesses that might be users of tug and barge services.
In the case of many small operators in niche business segments, working to simply survive is still a common sentiment.

 Companies with the means to do so have continued to invest in new equipment such as this 60,000 barrel clean oil barge, B. No. 264, being delivered recently from Bollinger Marine Fabricators in Louisiana to Bouchard Transportation of New York.  The manned, 350 foot barge is being pushed by the Bouchard tug Evening Tide.(Photo courtesy of Bollinger Shipyard)

Donjon Marine is hardly a small business, but the words of Witte are reflective of hard times that almost all businesses have experienced in the past few years.
"While indications are that we are certainly staying the same, and probably getting stronger, it could also be that in this kind of economy even holding our own can be seen as a positive trend, rather than going backwards," said Witte.
Even with the economy improving, the recent rise in diesel fuel prices has added one more hardship for tugboat operators, particularly those who have no means of passing on costs to customers in the form of surcharges.
Still, investments in new equipment continue to be made, although mostly by the largest operators who have the means and the cash flow to support a capital improvement project. In this issue of American Tugboat Review and again in next year's, the results of investments by some of the largest tug companies in North America will be documented, along with those of smaller operators and innovators, as they are introduced.
By Professional Mariner Staff