The U.S. barge market is facing a retirement cliff which could impact ag transportation logistics, one analyst warned.

Ken Eriksen, managing member and strategic adviser at Polaris Analytics & Consulting, provided an overview of the evolving landscape of agriculture and barge transport during a recent FreightWeekSTL panel session hosted by the St. Louis Regional Freightway.

The analyst talked about the outlook for commodities and the barge industry. Here are four takeaways from the conversation:

Barge retirement cliff

“Where we are today with the barge market is rather fascinating, and we’re facing a retirement cliff in the dry, covered barge market. They average roughly 25- to 30-some years, and there’s a huge spike of barges … within that 25-to-30-year age right now. Out of a 13,200-barge fleet, we’re seeing about 2,000 barges that are coming to the end of their useful life, and there could be some tightness, and we only have a couple major builders in the United States anymore. We’ve got to be very diligent in how we prepare for that retirement cliff if people retire them en masse.”

Infrastructure needs

The lock and dam system has not aged gracefully, but the infrastructure has lasted well beyond its designed and engineered lifespan.

“There’s a lot of work to be done. And now within the Waterways Resources Development Act, there’s been a lot of positive reinforcement of revenues to come in, and the industry’s done well working with Congress to see this shift in the amount of fuel tax revenue that is paid for projects; the cost share is now 75 percent by the federal government, 25 percent from the industry. Except that when you have problems elsewhere in the system, and we’ve seen this on the Tennessee River and a few other places where projects that have major cost overruns, or there’s a major impediment or something failed, they’ve got to siphon the money off and direct it someplace else.

“So now you just get further behind, and you’re still trying to play catchup. So being able to have full funding for projects like locks and dams is important if we want to maintain our resiliency with our infrastructure.”

Future of shipments

On the open barge side, coal production has dropped by more than half since 2015, from 1.2 billion tons to below 600 million tons, with a corresponding drop in barge loadings. As a result, there isn’t as much coal in the St. Louis region’s river system. This could change given the new administration’s support of the use of coal, creating both challenges and opportunities as it relates to multimodal options and multi-commodity services.

“So if you do get a bit more of a push on or at least stable coal movements, now you’re going to find a stability with the amount of towboats you need, and the same time with grain exports and grain production from one year to next, we could see massive shifts, because at the end of the day, unlike any other commodity, grain has one chance to be planted, one chance to be treated, one chance to be harvested. And none of that’s guaranteed.

“If we lose some volume, like we did through 2023 and we had low water, we saw a diversion of cargo go off through other port ranges. And that’s the reliability and resilience of the U.S. ag system. There are still market outlets for us, or ways to get out of the country with our grain, but the same time, you bring back another 15 million tons of grain to the river, which is wholly possible, and if we have decent water in the Mississippi River system, we could really see some good shift back to the river, and that could put some tightness in the system that’s out there. So, we could see some exciting times as we go forward here.”

Hub of America

“Indiana likes to be called the ‘Crossroads of America,’ but maybe Illinois is the ‘Hub of America.’ You look at the ability to hit the three major rivers … and the great one that is the Great Lakes, and that gives you multiple avenues. And that’s part of that reliability. You get multiple outlets to the world market. Secondly, you’ve got a strong crush industry, strong grind industry and perhaps a growing feeding industry within Illinois that’s very attractive, but you got all the modes with rail, barge, truck, container, that’s very attractive. So there’s a positive opportunity there.”

This story was distributed through a cooperative project between the Illinois Farm Bureau and Illinois Press Association. For more food and farming news, visit FarmWeekNow.com.