Information about the McClellan-Kerr
Arkansas River Navigation System
448 Miles of River Highway in the Middle of the U.S.
More shippers could take advantage of cost-effective barge services. Instead of dealing strictly with surface, air and ocean shipping, traffic managers needing to cut transportation costs while maintaining quality service might do well to explore some of the opportunities the barge industry presents. Many well-organized shippers have been using barges and inland waterway transportation for years, but for others it represents a change in thinking.
How does a novice determine whether or not shipping by barge is feasible for the company and product in question? How do barges operate? What and where do they ship?
The first thing shippers contemplating barge shipping might ask themselves is whether or not their products are candidates for movement via barges. In many cases, the answer is yes. There really isn’t any type of cargo that can’t be shipped by barge if you’ve got enough of it to move.
Anything that moves in high volume is a good barge candidate. Iron and steel; scrap metal; sand, gravel and rock; chemical fertilizer and other chemicals; coal; bulk agricultural products such as wheat, soybeans, and other grains; and forest products are the industry’s mainstays. Commercial and retail goods, sometimes shipped in containers, also can be found on barges. Whether or not something could/should be moved by barge is determined by volume rather than product type.
A company must determine if barge shipping would be suited to long transit times and the chance of a late delivery. Barge movements are relatively slow. Depending on the distance, a river shipment can take anywhere from one to three weeks to move from the origin river port to the destination river port. A barge departing Tulsa, for instance, will arrive in New Orleans in eight days, Chicago in 11 days, or Pittsburgh in 14 days.
This should not scare anyone away from barge transportation. Shippers that take a little time to investigate barge shipping options may be pleasantly surprised.
How & where
do barges operate?
The service area in which U.S. barges operate is extensive, covering a river system more than 8,500 miles long, mainly in the eastern half of the country. That system stretches northward from Pittsburgh to Chicago and Minneapolis, and southward to Knoxville, Tennessee, New Orleans, and Panama City, Florida. The western boundaries include Tulsa, Oklahoma, and Houston and Brownsville, Texas.
Approximately 60 companies operate some 23,000+ barges on the U.S. inland waterways. Companies range in size from industry giants that carry more than 50 million tons of freight a year to small family carriers. These carriers can vary greatly in their service offerings. There can be great differences in both service quality and rates among barge operators. Some specialize in dry cargo, while others specialize in transporting liquid cargo. A few integrate the two. Hence, shippers should begin their barge-line investigations by deter-mining a given company’s specialty, if any.
Once a shipper locates a potential carrier, the subject of rates will come up. Barge rate-setting is a bit more complex than it is for surface and air transport. Rates for dry-bulk commodities are generally quoted on a “dollars-per-ton” basis. This method often carries a minimum tonnage requirement of between 1,450 and 1,600 tons, depending on the type of barge. Shippers are responsible for paying that base amount even if their tonnage falls short of the minimum.
The alternative is the “dollars-per-bargeload” rate, which is a flat rate for use of the barge without concern for minimum tonnage. The choice between these two rate formats can profoundly influence the overall cost of doing business.
How do you choose between the two rate plans? If you know that you will be able to load cargo in excess of the tonnage minimums required by the barge carrier, then opt for a flat-rate basis. That way, any cargo tonnage you are able to load in excess of the minimum tonnage requirement (of the dollars-per-ton method) will move without the additional tonnage cost.
It may be difficult to determine accurately whether or not you’ll be able to load in excess of the minimums. Loading capacity is largely determined by water levels, which vary markedly from river to river, as well as from season to season. Generally, the U.S. Army Corps of Engineers guarantees a nine foot draft in all navigable waterways, and therefore most barge loads are predicted on that number. However, if you have more water than that, you can load the barges to a 10- or even an 11-foot draft. If the shipper is paying on a per-ton basis, anything a carrier can load beyond the nine-foot draft is icing on the cake. But if the shipper is paying on a flat dollars-per-bargeload basis, the shipper benefits from the ability to load extra cargo.
In a low-water situation, the benefits are reversed. The carrier loses money with the dollars-per-ton method because its barge can carry less cargo. The shipper loses out if it is using dollars-per-bargeload, because it’s paying the same flat rate whether the barge will hold the full amount of cargo or not.
What are accessorial charges?
Regardless of the rate plan chosen, shippers also can expect to pay some accessorial charges when shipping by barge. For instance, agreements with barge carriers generally include a specified number of days for loading and unloading the barge. If more time is needed, the carrier probably will add on a demurrage charge of between $100 and $200 per day.
There also are charges for intermediate stops between origin and destination to allow partial loading or unloading of cargo. Shippers should determine the exact charge for this service right up front. As a rule of thumb, that charge should be about $650 per stop-off.
Is it worth the trouble?
For so many shippers, barge shipping is an unfamiliar practice. Some will wonder if it’s
worth the trouble to launch a search. Those familiar with the mode argue that it offers enormous advantages
Shippers who take the time to investigate barge-shipping options will be pleasantly surprised. First, they’ll find tremendous cost savings over straight land-based transportation services. The comparative fuel efficiency of barges vs. land carriers largely accounts for the markedly lower freight rates. One gallon of diesel fuel will move one ton of freight 59 miles by truck, 202 miles by rail, or 514 miles by barge. One barge has the carrying capacity equivalent (in tons) to 15 railroad cars or 60 semi-trailer trucks.
How does that translate
into rate savings?
To move one ton of freight one mile by barge costs .97, by rail $2.53, and by semi-trailer truck $5.35.
Clearly, shippers can save big money by using barges. In recent years, barge carriers have gone to great lengths to match a number of value-added services provided by land-based carriers. For instance, many provide an on-line information service with tracking reports and updated estimates on destination arrival times that shippers can access via a personal computer. Shippers can request such amenities as customized bills of lading, report cards on how well the barges have matched service requirements, and electronic billing and payment.
Comparing barge to land-based transport
If shippers want to make a true comparison of barge-shipping costs vs. the cost of land-based transportation, they must take these options into consideration. The key to keeping costs down is more than just low initial freight rates. It also includes the value of the customer-support services provided by a carrier. To understand and evaluate the total cost of shipping, it’s important to be aware that value-added elements like service, reliability, dependability, ease of doing business, and error-free documentation invoicing all come into play.
How reliable is barge transportation? When you put aside the issue of longer transit times, it is simply a matter of fine-tuning your schedules. If you know when a shipment is coming in, it doesn’t matter if it’s three days or 30 days.
Barge Shipping Time in Days to Major Cities
Worth a look
In the final analysis, some shippers will find that their operations aren’t suited to barge shipping. But for many, it would be a big mistake to dismiss barge shipping out of hand.
The benefits of barge shipping — cost and service quality — are likely to surprise many shippers. For these companies, there is nothing to lose and potentially a great deal to gain.
How to Get a Rate Quote
To get an accurate quote for barge service, shippers need to inform the carrier of their exact requirements. The following list of questions will help shippers identify their shipping needs and communicate them to their carriers.
- What exactly is the product or commodity you wish to ship?
- What is the size, weight, and value of the product?
- When do you plan to make the first shipment of the product?
- Which specific barge-loading facility will be used and how long will the facility need the barge for loading? (If you don’t know of any transfer terminals in the loading city, ask barge carriers for the names of transfer terminals from which to obtain rates. Transfer terminals are the facilities used to move freight from a barge to a land-based transportation mode, or vice versa.) Public, as well as private port terminals can be contacted.
- Which land side carrier (truck or rail) will participate in the shipment by bringing the freight to/from the transfer terminal?
- Which type of river barge will your freight require? (covered barges or open hopper barges for various types of dry freight, tank barges for liquids, or flat deck barges for vehicles, very large machinery or fabricated items.)
Common carriers are certified to serve the McClellan-Kerr Arkansas River Navigation System, providing service to all points on the inland waterways system and the inter-coastal canal. Barge operators can provide rate information and make arrangements for shipment by water.
- Will the freight require any special barge cleaning before or after loading?
- Will the freight need to be specially secured to the barge floor or walls before shipment? (You need to ask).
Shipments to and from inland river ports along the McClellan-Kerr Arkansas River Navigation System are increasingly becoming a part of international trade. The use of LASH barges, which are loaded directly aboard transoceanic freighters, expedites movement of traffic. With the establishment of Foreign Trade Zones, international trade — both inbound and outbound — is experiencing a surge of growth.
Foreign Trade Zones
Foreign Trade Zones are designated geographic areas at which goods can be imported and then displayed, stored, sold, or manufactured without being subject to quota restrictions, most customs formalities, duty or bonding. Ranter than a U.S. business getting a reduction in the duty on foreign goods shipped through a foreign trade zone, the duty is delayed until the goods enter U.S. trade channels.
A Foreign Trade Zone is advantageous to American business in a multitude of ways. Products manufactured in the zone using foreign materials may be exported again without any import duty being paid on the foreign materials. An American buyer can inspect and sample foreign goods before buying them and paying duty. Refusal or repair of damaged goods can take place duty and quota free.
Foreign goods can be stored for any length of time until they are needed; cash flow can be improved because duty will be paid only on the portion of the shipment imported into the U.S. from the zone. Indefinite storage in the zone permits importers to import goods now and hold them until the next quota period or until the best price can be obtained on the U.S. market. American businesses benefit greatly by the existence of Foreign Trade Zones.