Riverport Authority sees aluminum train shipments rise as tariff tensions ease

Doug Stallings of the Owensboro Riverport Authority loads up pallets of bundled aluminum ingot with a forklift into a semi-trailer on Thursday at the Riverport.

With the signing of the United States-Mexico-Canada Agreement, the Owensboro Riverport Authority is seeing a rebound in the amount of aluminum coming into the port and officials are feeling confident about the future.

USMCA is an updated version of the North American Free Trade Agreement.

While the amount of aluminum that traditionally comes into the port is still lower than it has traditionally been, the riverport has seen growth in aluminum transported via rail, said Brian Wright, president and CEO of the authority.

“The nuts and bolts is that, for international metal, there will be limited amounts that we see coming into Owensboro via barge,” he said. “Right now, it makes more sense for metal coming in from Canada via rail.”

Near the end of January, Wright visited the authority’s clients to gain an understanding of the state of aluminum and what its passage through the port would look like moving forward into 2020.

“We had roughly 22 meetings and each one has a different plan,” he said. “It gets down to whether or not they are contracted with the end-users or just trading metal. They all have different strategies. Our goal is to make sure that we are prepared for the service that they need at any given time. Our rail volume has continued to grow through all of the fourth quarter of 2019 and into January 2020. We have seen a decent amount of metal coming in via rail. Beyond February and March it will be contingent on what the market does and the perception of if there is enough. So it is a little bit wait to see on our side.”

In December, the authority’s inbound aluminum via rail exceeded its barge flow three-to-one, he said.

“We saw roughly 5,000 tons in barge and 15,000 tons in rail,” he said. “All together that is roughly 20,000, when historically we have seen, pre-tariff, 30,000 to 40,000 tons a month. The unknown is the overall economy. The tariffs automatically put a 10% cost to it whether the trader, bank or end-user. There is automatically that add on. Now that the Canadian tariff is lifted, that 10% does not apply so that changes the dynamics.”

Despite the ongoing international tariff issues, the authority, due to diversity of services and conservative planning, is currently 17% over budget in total revenue and is estimating that by the end of the fiscal year in June should reach about $15 million in revenue, he said.

“Part of that is how strong inbound metal was as well as our warehousing, handling, storage and sulfate,” he said. “We trimmed roughly $15,000 a month off of our aluminum. We are cautiously optimistic there will be a flow. We have coils from Japan feeding the auto industry that go south. We have grains being transported that potentially feed the distilleries. We have aluminum that feeds a 150- to 200-mile radius of many consumers that produce aluminum parts; the list goes on. We are confident that we will be good for the year.”

Jacob Mulliken, 270-228-2837, jmulliken@messenger-inquirer.com

Jacob Mulliken, 270-228-2837, jmulliken@messenger-inquirer.com

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