Stacked Decks: Port of Brownsville barge traffic spikes, leaving officials tight on space

When dock space at the Port of Brownsville ran short, acting harbormaster Tommy Alvarez began stacking barges two deep.

And when more barges arrived, he stacked the boats three deep.

However, if traffic continues at its current pace, Alvarez will have to start thinking of creative ways to make them all fit.

"It's a good problem to have," Alvarez said, "but it is a problem because I don't have room for them all."

The glut of barges at the port hit an all-time high during June, said German Rico, director of business development at the Port of Brownsville.

During a typical month, approximately 30 barges offload at the port. In May, there were 34.

Then in June, traffic surged to 85 barges, mostly from states in the northeast, dropping off products destined for Mexico. On the scale, total inventory arriving at the port through the end of May surpassed last year's total for the same period by 368,704 metric tons.

The traffic is unlike anything he's ever seen, Rico says, and activity doesn't look like it's going to slow any time soon.

"It does make some sense," Rico said. "Barge transport is so much cheaper than truck or rail."

Barge businesses are fond of saying that where a gallon of diesel will get you 60 miles over land, the same gallon will take you 600 miles on water.

With the high cost of fuel, and iron and steel mills in Chicago and Pittsburgh looking for ways to cut transportation costs, barges are an attractive alternative, Rico said.

Although transportation time for a barge heading from those cities to the Port of Brownsville can take as long as a month, a single barge has the cargo capacity of 15 jumbo hopper cars and 58 large semis.

Still, fuel costs and load capacity don't entirely explain a 150 percent increase from one month to the next.

What's being sent is just as important.

Roughly 65 percent of what passes through the Port of Brownsville is steel, according to Rico, and nearly all of it is headed for Mexico.

Alejandro Espino is the purchasing manager for Fortacero, a metal stamping operation based in Monterey, Mexico. The company, which has nine facilities throughout the country, buys the steel beams, coils and plates used in commercial construction.

The company has no particular loyalty and buys where it can get the best price. Lately, that has been from the United States.

The weak dollar coupled with the relative strength of the Mexican peso, currently at 10.35 to the dollar, make American steel appealing to Mexican factories.

Over the last five years, iron and steel exports to Mexico have nearly doubled from $891 billion in 2003 to $1,763 trillion in 2007.

"In the past, we bought more from China," Espino said. "Because the pricing in the U.S. is cheaper now, that's changed over the last couple years."

As recently as 2006, approximately 40 percent of the steel the company imported was from the United States. Now, the figure is close to 85 percent.

And Espino estimates that 60 percent of what Fortacero imports goes through the Port of Brownsville.

As long as demand for cheaper U.S. steel sends inventory through its facility, the increased barge traffic means additional revenue for the port.

The Port of Brownsville charges each barge a $150 harbor fee, between 9 and 15 cent dockage fee and a $1 per ton wharfage fee for steel. But there is only so much dock space: 10 docks for bulk cargo and five for liquid cargo.

If the additional barges weren't enough of a problem, housing their inventory is proving an equally challenging task.

A common practice for the port is to house inventories for its clients indefinitely. However, if this trend of barge traffic continues, the practice might need revisiting, Alvarez said.

For now, he's too busy trying to find space for new arrivals.

"Somehow I have to make magic," he said.