New York area tug operator sees big challenges ahead

Anabelle Roehrig pushing a Penn Maritime barge before the sale of Roehrig Maritime’s eight tugs to K-Sea Transportation.

He could never have predicted it at the time, but it was the infamous 1988 tugboat strike in New York that set Chris Roehrig on the path to professional and financial success.

As members of a union local took up picket signs against a dozen New York tugboat companies that were trying to cut costs, Roehrig was a young tug skipper working for Red Star Towing.

Roehrig, who says he had wanted to be a tugboat man since his earliest years, was reluctant to get involved in the politics of a strike. But being a union member, he felt an obligation to participate. Although his company offered him a management contract to ignore the strike and to continue as a salaried captain, Roehrig went with the union and ended up walking a picket line for weeks. He still says today that honoring the picket line was the right thing to do. That decision, naturally, cost him his job. But it also started him on the road to bigger and better things.

“I was 27 at the time, and working as a captain, and they gave me a nice offer to stay. But I figured if I crossed the picked lines and the union wins, I would be kind of done. It would be pretty hard to get work around New York harbor after that.”

As things turned out, the strike was eventually settled, or at least it eventually came to an end. While Roehrig subsequently bounced around the business for a year or two, admittedly underemployed, the stage was set for this tug-loving entrepreneur to launch his own tugboat company — a move that would pay off 18 years later with a career-capping buyout.

“It took the better part of those two years after the strike to figure out how to get started and to get myself organized to take that big step to go into the business,” he said. “I had some money saved up and I was able to borrow some money from my dad and I knew a fair number of people in the business.”

Roehrig had also found what he figured was the perfect tugboat to get him started. Even better, the seller was willing to help finance the sale. She was a single-screw, 81-foot, 850-hp tug that he renamed Tilly, after his maternal grandmother. She was one of many similar tugs built for the government during World War II. The purchase price was about $150,000 and the seller, Bill Hoey of Gaelic Tugboat Co. in Detroit, had started his own company with similar entrepreneurial impulses about 20 years earlier.

“Basically we started out doing creek work in places like Eastchester Creek, Westchester Creek, Little Neck, Stamford and the Hackensack River,” said Roehrig. “We did all the creeks around Long Island Sound and all of New York harbor. We would hire out for $185 to $200 per day. We were pushing these 20,000-barrel oil barges and bulk barges loaded with sand and stone into the smallest places where most of the big companies did not want to go. That’s how we got our start and we kept many of our early contracts until the last days we were in business, although by that time most of our tugs were too big to get into the creeks.”

The company’s first tug job was in the fall of 1990. By the time of its last day in business in July 2008, Roehrig Maritime was operating with close to 100 employees and the company’s original tug, Tilly, had been sold off to an operator in Key West several years earlier. A half dozen other tugs, each successively larger and more powerful, had been bought and paid for.

The last tug acquired, at 6,000 hp, was rebuilt and then renamed John H. Malik, a founding Roehrig employee who helped guide and grow the company until his death in 2001. With a fleet of eight tugs, the company had expanded its operations way beyond those tidal creeks of the New York area. Roehrig was offering towing services all along the East Coast and Gulf Coast and its tugs were contracted to many of the biggest names in the oil and towing businesses.

But for the past year, even as his tugs have been fully contracted at attractive rates, Chris Roehrig said he had begun to detect indicators that he should accept the buyout offer that had been made by K-Sea Transportation Partners of New York, one of his longtime clients.

“It took me a long time to come around to accept the idea,” he explained. “But once I began to think about it, the universe kept sending me little signals. We are all familiar with them, but previously I had just resigned myself to living with the problem areas. Just take a look at the regulations on exhaust emissions. The way it is now, the Army Corps of Engineers requires a company to have Tier 2-compliant engines on its tugs just to bid on dredging work. And there are similar requirements coming along for control of ballast water.”

“You know, I spent the last two years on the executive committee of the American Waterways Operators, and when you are in that position, you get to see a lot of regulatory requirements that are coming down through the system aimed at boat operators large and small. I began to realize that meeting all these requirements might not be possible for a lot of small companies.”

Roehrig said he is particularly concerned about regulations that, within a year or two, will require all tugboats to be categorized as inspected vessels under federal regulations. “That is going to bring on a whole new set of regulations for operators of all sizes,” he said. “Quite frankly, I wasn’t too concerned about that at first, because if you run a good company and you are doing everything you are supposed to do, it shouldn’t really matter that much, but to me it seems now that this looming inspection requirement is going to be the end of a lot of small tugboat companies. They are just not going to be able to afford to do all that stuff and make all those upgrades and still stay competitive. A big company like K-Sea can find ways to fight against this stuff if they choose or to comply without too much difficulty, but a mid-sized company like Roehrig Maritime would have a difficult time keeping up with requirements. When it comes to new requirements, it seems to me that there’s something for everyone coming down the pipe. There are other regulations to take the mid-sized guys out. And there is the pending inspection requirement that will probably take out the little guys.”

The now-retired tug operator said that in addition to regulatory pressure exerted directly by government agencies, there is also pressure exerted on operators by the oil companies.

“Working for the oil companies as a subcontractor has also become very difficult,” he said. “There are a lot of safety management requirements that a small company can’t even begin to think about doing. At Roehrig Maritime we were Responsible Carrier certified and we were ISM (Institute for Supply Management) certified. We even had one oil company that wanted us to go ISO (International Organization for Standardization). When you start getting all these three-letter acronyms behind you, the amount of support work that is involved is monumental. It inflates your shore staff and it distracts your boats and crews.”

Roehrig said he has also observed, both with admiration and with concern, the dramatic conversion of much of the petroleum transportation business involving barges to the articulated tug-barge design. This, he says, appears to be the future of the barge business and it is also exclusively the realm of large companies. Not only is the expense of building or converting a tug with an ATB connection system beyond the means of most small operators, but also tugs with articulating connection systems are almost always built to go with a matching barge, and that, too, is beyond the capability, and beyond the business plan, of small and medium-sized tug operators.

“The way I see it, the market for conventional twin-screw wire towing tugs is going to shrink dramatically over the next few years. This is another reason why I decided to pack it in. These ATB units are the future. That’s what the oil companies want to have carrying their products. I guess there might always be some work involving conventional tugs and smaller barges, but even today we are seeing companies like K-Sea and Reinauer building smaller and smaller barges in the 25,000 to 30,000 barrel range complete with articulated pin systems.”

That’s the bad news. The good news for 47-year-old Roehrig is that he finally said yes to Tim Casey, president of K-Sea Transportation and, within six months, accepted total payment of close to $45 million for the assets of his company, primarily consisting of eight tugboats and related equipment. The tugboats ranged from 2,400 hp to 6,000 hp. For its part, K-Sea stated that the acquisition will provide “additional towing power” for its oil transportation business.

It was just a year earlier, in the summer of 2007, when K-Sea paid a bit more than $200 million for the assets of Smith Maritime Ltd. of Hawaii and Sirius Maritime LLC of Seattle. Those assets included 10 tugboats and 11 tank barges, all operating on the West Coast or in the near-Pacific trade.

K-Sea Transportation Partners is a publicly owned maritime operator with about 65 tugboats and 75 tank barges, including the tugs of Roehrig Maritime, most of which have been repainted in K-Sea’s red and white colors. The company reported income in fiscal 2007 of $15 million on revenue of $226 million. During that year K-Sea reports that its vessels transported more than 140 million barrels of refined oil products.

As for Roehrig, the ink is barely dry on his non-compete agreement with K-Sea, which keeps him out of ownership or management positions in competing aspects of the tugboat business for the next five years. But the agreement does not seem to require him to conceal the smile on his face, nor discourage him from making leisurely life plans for the next few years. Roehrig, who went to work as a deck hand on tugboats while still in high school, said he plans to spend winters in Florida and summers at his home in Oyster Bay, on New York’s Long Island.

“I can see that I’m going to be playing a lot of golf and doing a lot of fishing,” he said. “I’ve got a couple of other buddies who also are retired fairly young and, yes, we’ve got some golf and fishing trips planned. Plus I will certainly do some traveling with the family.”

“It’s hard to say,” he continued. “Who knows, but I may grow tired of the leisurely life in two or three years and be back here looking for something new to do.”

On a more serious note, Roehrig said he looks forward to spending much more time with his wife and two daughters, aged 7 and 8. And he anticipates spending more time on behalf of local charities with which he has become involved over the years.

“There really are a lot of things I would like to do, and now I’ve got the chance to go ahead and do them. For example, I’ve always wanted to learn how to operate a z-drive tugboat, and some folks I know have already offered to let me try my hand at that. That is certainly the future in the ship-assist business.”

Does he miss the boats? After all, here’s a guy who grew up around boats of all sizes and who admits to wasting a portion of his youth staring at tugboats tied up at the oil terminals and sand and gravel docks near his home.

“Sure I miss the boats. It’s kind of sad that right now I have no connection with any boats, except the few pleasure boats that I own. The other day I was in New York and I saw a couple of my boats going down the river with K-Sea colors, and that kind of hit me. But it’s the people that I miss more — the guys in the industry, my former employees, and all the people that I know at so many different companies. I can still talk to them on the phone any time, but I’m not an active part of it anymore. I’ll miss that.

“But, at the same time, there’s a lot to be said for not having to flinch every time the phone rings, and having to constantly wear a cell phone on my belt. You know, 18 years of being available around the clock all year long. Those are long years. In this business we say they are like dog years. You’ve got to multiply them by three or four because of what they are really like. So, basically I may miss the boats, and I miss all my friends and colleagues, but it’s a real nice feeling not to be wondering what bad situation the next phone call might bring.”

By Professional Mariner Staff