Will a big part of the barge fleet retire soon?

What will be the aging effect on the barge fleet and how will capacity be affected due to company regulations?

In our previous article, 'Barge Capacity Sailing into ARA', we explored the inflow of barge capacity and its potential market implications. We now dive into the opposite, the outflow of barges from the market.

Barges can last a long time and as long as barges meet the OCIMF/BIRE standards, most owners will continue to operate them. This makes sense, as these barges are deemed safe and compliant.

However, it's crucial to note that oil major and trading houses often have their own vetting requirements, which can significantly impact the European barge fleet. These entities account for over 80% of the barge business. Consequently, a barge might be accepted by one party (e.g., the supplier) but rejected by another (e.g., the receiver) due to varying vetting criteria.

The vetting departments of oil companies can manually or automatically verify whether the inspection reports of barges are up to date and whether they meet other requirements, such as age. They accomplish this with the assistance of a barge inspection organisation, where all this data is stored.

Barge inspection organisation

EBIS (1998-2004)

EBIS was developed by the oil and chemical industry as part of a voluntary commitment to enhance the safety of inland tanker usage. The primary objective of EBIS is to manage a system that provides objective data regarding the safety and quality of tankers. This data enables EBIS members to make informed decisions about whether to use a particular vessel or receive it at a terminal.

The European Barge Inspection Scheme (EBIS) was transitioned into OCIMF’s Ship Inspection Report (BIRE) to create a single barge inspection scheme within Europe.

BIRE

The Barge Inspection Report Programme (BIRE) is an inspection regime for barges and inland coastal vessels, aligned with the Oil Companies International Marine Forum's (OCIMF) Ship Inspection Report Programme (SIRE). BIRE provides the marine industry with a comprehensive and standardised vessel risk assessment tool, as well as a database of vessel inspection reports.

Barge age

An important indicator is the age of the barge, as oil majors and trading houses set criteria regarding barge age for barge acceptance.

We found that among the top 15 oil companies in the barge market;

• 20% restrict barges that are 20 years or older
• 33% restrict barges that are 25 years or older
• 20% restrict barges that are 30 years or older
• 26% has no age limit in place

Breakdown barge age / capacity

• 250 barges are 25 years or older – totalling 400,000 tons (400 kt) capacity
• 350 barges are 20 years or older – totalling 650,000 tons (650 kt) capacity
• 625 barges are 15 years or older – totalling 1,500,000 tons (1.5 million kt) capacity
• 1,000 barges are 10 years or older – totalling 2,600,000 tons (2.6 million kt) capacity

This implies that in five years' time, slightly less than half of the barge fleet will be 20 years old or older and in ten years’ time slightly half of the barge fleet will be 25 years or older.

If it transpires that the majority of these barges are no longer permitted by suppliers or receivers of the product, the market could lose at least 1.5 million tons of capacity.

Approximately 70%, or 425 barges, of these 625 barges fall within the 0-3000 tons category, suggesting that they primarily operate on the Rhine River.

   

Older > 30 years # barges restrcited  
Older > 25 years # barges restrcited  
Older > 20 years # barges restrcited    
 
 
 
 
 
 
 
Current 210  
Current 250  
Current 350 In 5 years 250  
In 5 years 250  
In 5 years 625 In 10 years 350  
In 10 years 625  
In 10 years 1000

Technical operator

Technical operators should also be mindful of the age of the barges in their fleet. For instance, if a significant portion of their fleet consists of barges that are 15-20 years old or more, there is a risk that a large number of these vessels may become ineligible to sail in the future. While some clients may still accept these older barges, if a substantial percentage do not, it will be challenging to optimise the fleet, potentially leading to missed opportunities.

Will older barges compete with new-builds?

How will this situation evolve, given that the pool of clients accepting 'older' barges is decreasing with each passing year? Will these older barges compete with one another and, consequently, be able to set time charter (TC) rates lower than new-build barges, or visa versa new-builds set their rates higher than older barges.

This could be a result of their growing scarcity, while new-builds are widely accepted by both suppliers and customers alike.

Tight market

It is, of course, regrettable when a barge is still fit to operate but is no longer accepted by suppliers or customers, rendering it unusable. This situation has consequences; it can lead to a tight market, especially if low water periods recur, resulting in higher freight rates, particularly in the Rhine region.

Opportunity for rhine or 1.5-3kt barges

In the coming years, the refinery in Gelsenkirchen will be scaled back, and the plant in Wesseling will be converted. Over the next five to ten years, there will likely still be diesel demand in the Upper Rhine region. This means that barges will have to sail longer legs, as they will need to load from the Amsterdam-Rotterdam-Antwerp (ARA) area.

Additionally, dedicated sailing due to degassing regulations will create less flexibility and a smaller barge pool. If demand remains roughly the same and approximately 450 barges are unable to sail for these oil companies in five to ten years, there may be a problem. To keep up with the decrease in available barges, at least 40 new Rhine barges would need to be built per year, if of-course these barges will be phased out within these years.

Market input

We spoke withOtto Klohs from the shipping company Stetra. Currently, he doesn't see any immediate issues regarding the aging barge fleet. However, he anticipates potential challenges in the period of 2030-2035, when most barges will be reaching 25-30 years of age.

Herr Klohs also noted several factors that could reduce the demand for barge capacity in the future:

• Larger barges (3kt+) are now allowed in areas such as Karlsruhe and Speyer, decreasing the need for smaller vessels.
• The demand for gasoil is shrinking annually.
• There is uncertainty about the future of some refineries and depots, which may close due to government regulations or lack of profitability.

Additionally, Herr Klohs pointed out that the construction of new Rhine barges is currently relatively expensive. In the past, barges were sometimes sold after 15-20 years of service to African countries or eastern Europe, but it is now more economical to keep them in operation until they are no longer serviceable.

The points noted by Herr Klohs may make barge owners and shipping companies more reserved about investing in new (0-3kt) barges.

Time for a change?

If a barge meets the BIRE requirements and possesses all the necessary certificates proving its suitability to sail, is it still right to reject a barge based solely on its age? This 5-yearly check tests all possible safety concerns including the thickness of steel, and is therefore also a very costly undertaking.

Sometimes, barging is compared to the deep-sea industry, but the waterways here are not subject to saltwater corrosion, and the forces exerted by waves are significantly less than those on the open ocean.

If the goal is to work towards a more sustainable industry, and given that more quality materials are being used and replaced when necessary and investments are higher, perhaps this age-based rule should be reconsidered unless one can demonstrate the added value?