The industry was battered by the recession and floods, but will benefit from increased liquid-bulk transportation
New York, NY (PRWEB) January 07, 2014
Companies in the Inland Water Transportation industry transport commodities, goods and, to a lesser degree, passengers along rivers, ports and intracoastal waterways. During the recession, a plunge in economic activity and production drastically reduced the need to transport commodities and goods along inland waterways. As such, demand for industry services dropped, with revenue falling 21.9% in 2009. Thereafter, stagnant overall freight volume and natural disasters stifled the industry's recovery. In the five years to 2013, Inland Water Transportation industry revenue is expected to decline at an annualized 2.4% to $5.8 billion, with a 0.5% rise in 2013.
According to IBISWorld Industry Analyst Maksim Soshkin, "After the recession, freight volume along inland waterways began to recover, but growth was hampered by flooding, drought and falling demand for coal." In 2011, major flooding occurred along the Mississippi River, damaging infrastructure and making parts of the river unnavigable. As a result, companies had to cancel or delay shipments, which reduced revenue. The following year the United States experienced the worst drought in decades. Crop yields fell, in turn depriving the industry of a key source of demand (over half of US corn exports are transported along inland waterways). The drought also caused water levels to decline, reducing the amount of cargo industry operators can move in a single haul.
"In recent years the volume of coal transported by industry companies also declined because low-priced and relatively clean shale gas acted as an attractive alternative for power companies," says Soshkin. Additionally, coal exports declined due to the rising global supply of the commodity. In 2012 alone, demand from coal mining plummeted 14.8%. However, increasing US refined petroleum product output and strong demand from chemical manufacturing drove revenue in the more lucrative liquid-bulk segment up, while also encouraging larger companies to expand their segment presence through acquisitions. Nevertheless, the decline in industry revenue reduced both profit and employment.
In the five years to 2018 industry revenue growth is forecast to rise, driven by economic expansion, rising exports and demand from downstream industries. However, the poor state of inland waterway infrastructure will make industry operators less competitive with other modes of transportation, such as railroads. Consequently, the increasing attractiveness of railroad transportation will temper revenue growth.
The Inland Water Transportation industry is heavily concentrated. The vast majority of industry participants are sole proprietorships that operate just one boat (sometimes only part time) for passenger travel, specialized cargo transportation or subcontracting to larger operators.
In the five years to 2013, industry concentration has significantly increased. A large portion of this consolidation has come from liquid bulk transporters. Increased refining activity, combined with the pipeline infrastructure's inability to cope with increased production of shale oil and gas has led to higher demand for tank barges that can carry petroleum and petrochemicals. As a result, liquid bulk carriers have expanded operations, with large players like Kirby acquiring smaller operators and purchasing more vessels. Furthermore, many of the industry's smaller enterprises have exited the industry because of weak demand during the recession.
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IBISWorld industry Report Key Topics
The Inland Water Transportation industry comprises establishments that provide inland water transportation for passengers and cargo on lakes, rivers and intracoastal waterways (except on the Great Lakes system).
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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