Karatzas Marine Advisors on the U.S. Tank Barge Market

The COVID pandemic has been especially hard for certain industries such as the cruise line market, and the tourism industry in general, and the airline and the hospitality industries, among others. For anyone who visited a touristy resort or an airport recently can easily attest to it as the drop in traffic has been patently obvious.

What is less obvious is the pandemic impact on markets and industries that are business-to-business and not easily visible to the consumer, such as refinery and energy markets. And, markets and services that “intermediate” between the heavy industry and consumer needs; for fuel from a refinery to reach a ship, or an airplane or the local gas pump, there is an extra link, the transport link.  And, that link is mainly the tank barge market in the United States.

Large ocean-going tank barges are utilized in the U.S. to ship petroleum and petroleum products along the Eastern Seaboard, to Puerto Rico and Alaska, and places like Florida that lack refinery and pipeline infrastructure. Smaller coastal tank barges are used to offload international tankers in ports like in New York Harbor and distribute gasoline regionally and locally. Even smaller are inland tank barges that deliver gasoline and industrial, specialized chemicals from refineries to industrial plants along the U.S. Gulf Coast and also in the Lower Mississippi. 

There are more than 4,000 tank barges in the U.S. ranging in size from 6,000 barrels to more than 260,000 barrels in cargo capacity, and their replacement cost new can range from a couple of million dollars to $60 million or even more for the large, ocean-going tank barges. Many companies all over the U.S. specialize in the ownership and operation of such tank barges, and they are the unsung heroes that ensure that there is always fuel when and where is needed in this country, and, more importantly, they ensure that rivers, lakes, the coastline and waterways are clean of pollution as the safety and pollution record of U.S. tank barge operators is outstanding.  

In good times, the utilization range of U.S. tank barge fleet can easily exceed 90%, but in late 2020, the utilization rate had dropped to a measly 70% or so.  The drop in tourism and travel, and also lower industrial production, is clearly visible on the performance of the tank barge market.

But, there seem to be light at the end of the tunnel. With a vaccination rate in the U.S. higher than in other parts of the world and an estimate that by early summer most Americans will have been vaccinated, along with a generous stimulus package run by the government, there seem to be early signs that the fortunes of the tank barge market may be about to inflect.  Cruise-line companies report robust (forward) bookings, air traffic in March was at the highest it has been since the start of the pandemic, sales of outdoors clothing are picking, up, etc, all green shots of a recovery. And, there are signs that demand for fuel (and its transport) is picking up too, and not only for commuters by car.

However, there has been still many tank barges in the market idling, the leftover of the pandemic. Market demand is increasing, but, for now, there is excess inventory.

Karatzas Marine Advisors has been exclusively marketing for sale or charter several tank barges of various sizes, ranging from the tow-line ocean-going tank barge ‘DBL 79’ in Washington State to the articulated, ocean-going tank barge ‘DBL 76’ located in Louisiana, to several inland tank barges of 30,000-bbl.  All assets are in class, in great operating condition, several of them had been drydocked and re-coated in late 2020.  Karatzas Marine has been the exclusive broker for several more coastal and inland marine asset sales in 2020, and presently, our inventory is robust for international, domestic and offshore assets.

We feel especially optimistic for the tank barge market and we invite prospective buyers and market participants to visit our website Karatzas Auctions and check out our inventory, including our trademark marketing approach of extensive photo galleries for assets for sale (to give buyers a current, convenient and objective way to verify our claims on quality of tonnage), and urge potential buyers to act sooner than later as the market is in a recovery mode and good tonnage will go fast!

In a market about to bounce, it’s the time to pick up on idling inventory, and Karatzas Marine has the exclusive tonnage and the market expertise and track-record to guide you through prudent and well-timed asset acquisitions!