LONDON--(EON: Enhanced Online News)--Technavio’s latest report on the barge transportation market in the US provides an analysis on the most important trends expected to impact the market outlook from 2017-2021. Technavio defines an emerging trend as a factor that has the potential to significantly impact the market and contribute to its growth or decline.
“One of the new trends in the barge transportation market in the US is the construction of new tank barges with more storage capacity. The increase in demand for crude oil in the US boosts the demand for the usage of tank barges through inland waterway transportation”
The barge transportation market in the US is expected to grow from 601.2 million tons in 2016 to 644.2 million tons in 2021. The growth opportunities are expected to come from renewable resources and movements of ethanol over the declining oil movements. The demand from chemical industry will further benefit barge movements in 2016-2017.
Sharan Raj, a lead analyst at Technavio for transportation and distribution research, says, “The barge transportation market in the country is expected to benefit from the incremental demand for petrochemical shipments in the domestic market of the US. The use of marine transportation by the petroleum and petrochemical industry is one of the major reasons for establishing the US-refineries and petrochemical facilities along the navigable inland waterways.”
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The top three emerging trends driving the barge transportation market in the US according to Technavio transportation and logistics research analysts are:
- Construction of new tank barges and tugboats
- Volatile crude oil prices
- Structural changes in barge industry
Construction of new tank barges and tugboats
“One of the new trends in the barge transportation market in the US is the construction of new tank barges with more storage capacity. The increase in demand for crude oil in the US boosts the demand for the usage of tank barges through inland waterway transportation,” says Sharan.
Many vendors in the market have started to provide shipping services for transportation of liquid-bulk cargo. For instance, in FY2014, the US-based barge transportation company, Kirby, reported an expenditure of USD 135 million for the construction of 66 inland tank barges and one inland towboat. In addition, barge operators in the US took delivery of 336 tank barges with an aggregate capacity of 8.21 million barrels in FY2012. Thus, increased adoption of tank barges among vendors will fuel the growth of the market during the forecast period.
Volatile crude oil prices
The period between 2015 and 2016 was the worst period in the history of barge transportation market in the US. The crude oil prices were as low as USD 30 per barrel in 2016, resulting in reduced activities in the upstream industry and utilization rate of barges and labor charges. The market might see a further loss if crude oil price did not recover in a year or two. Crude oil is one of the most volatile commodities globally, regularly proving that even the best forecasting models are incapable of predicting a realistic future price. The primary reason for this is the complex and interwoven value and supply chains built over time due to the over-dependence of most of the world economies on oil.
Structural changes in barge industry
The profitability of the barge market has reduced because of low crude oil price. Factors such as increased focus on onshore basins and attacks on oil production site may further impact the barge transportation market in the US. The barge industry is expected to go through several changes due to the current market scenario and geopolitical factors. Some of these factors are:
- Shifting focus from offshore to onshore basins
- Militants attacks on oil production site
- Uncertainties due to decreased E&P activities
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