Surge in gas prices taking toll on river traffic, too|[03/27/08]
Published 12:00 am Sunday, March 30, 2008
Rising fuel prices are taking a toll on automobile drivers, but the river industry is also being affected.
Boats pushing fleets of barges up and down the Mississippi burn up to 3,000 gallons of diesel a day, and even a slight change in the price of fuel can surge shipping costs by tens of thousands of dollars.
Many towboats passing Vicksburg refuel at Ergon Marine, the only fuel stop between Baton Rouge and Greenville.
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“You’ve got to understand this is not like filling a car up. These people are filling up with anywhere from 10,000 to 70,000 gallons,” said Albert Smith, Ergon’s fleeting manager.
Diesel prices have struck inland shipping, a major conduit for grains, raw materials and oil products, with the same sledgehammer force that has left the nation’s trucking industry reeling.
“Back in January of this year, fuel was at $2.70 per gallon. Now it’s up to $3.35 and $3.40,” said Patrick Smith of Smith Towing, a barge service based at the Port of Vicksburg.
Add a waterways use tax that runs just over 20 cents per gallon, and marine companies are paying up to $3.70 for a gallon of off-road diesel, said Randy Martin-Nez, vice president of Golding Barge Line, also in Vicksburg
In less than 10 years, the price of diesel has more than tripled.
“Let me put it this way: we were paying less than $1 a gallon in 2001,” Martin-Nez said.
The cost of shipping has driven up the cost of materials, he said, affecting profit margins and wages as well as what people pay for products off the shelf.
“Everybody is just passing it on to everybody else, and it’s just snowballing right now,” Martin-Nez said.
Louie Miller of Miller Materials and Riverside Construction said he is paying more for shipments of materials from ports upriver and also for short-hop fleeting services of Ergon Marine. Miller’s company owns four barges and pays towing companies to move them.
Miller said Ergon’s hourly rate for fleeting barges around Vicksburg’s port has risen with the cost of fuel.
“I can remember not very long ago it was $125 and hour. Now it’s like $275.”
Albert Smith of Ergon said marine fuel prices change daily with the market. It is sold to most passing barge lines at a price determined by the volume of sale.
“The more you buy, the cheaper it is,” he said. “But it’s not cheap by any means.”
High fuel prices have increased overhead costs for Ergon’s own fleet of boats, he added.
This year, Patrick Smith said, the cost of filling up one of Smith Towing’s three towboats has risen by almost $60,000.
“We have to pass that cost on to our customer, who, in turn, has to pass that cost on to his customer.”
Still, barges carry such a high volume of cargo that rising costs are distributed widely, he said.
It would take an 18-wheeler 60 trips to move what a single barge can carry. Barges hold as much as 15 to 20 rail cars.
“A barge tow is still the most economic way to move bulk product,” he said.
Patrick Smith estimated that pushing a line of 15 barges to Vicksburg from New Orleans would take about 10,000 gallons of fuel.
When the river is high, as it is now, a strong current increases fuel consumption for boats pushing loaded barges upriver.
Miller said fuel costs have doubled the cost of materials, and shipments that once cost him around $5,000 now cost more than $30,000.
“It’s just killing all of us,” he said. “And the consumer is really starting to feel it. People just don’t understand how this is going to affect them personally.”
Albert Smith was reluctant to predict if or when marine fuel will hit $4 a gallon.
“You see what’s been going on,” he said. “I haven’t seen any prices drop.”
At a glance
Marine fuel prices in Vicksburg on Jan. 2 over the past five years:
Year20042005200620072008This weekPrice$.96$1.28$1.79$1.79$2.85$3.42Source: Smith Towing