I'm glad I sold off Tidewater (TDW) once I saw its deteriorating fundamentals. Now here's another reason to shy away from inland shippers and offshore servicers for a while. Recent flooding has poured so much silt into the Mississippi River channel that business Brahmins around N'awlins are asking for $95mm worth of dredging. That kind of money is more than double the Army Corps of Engineers' entire dredging budget, but don't think of this as a potential stimulus. Emergency dredging has "broken window fallacy" effects. That money will have to be diverted from something else that's just as urgent while Congress is trying to keep federal spending from triggering defaults (on federal contracts, not debt service payments).
Things are thus worse than I thought on several fronts and I'm notorious for pessimism. It's bad news for barge operators, both captive oil company fleets and independent operators like Kirby (KEX). Barge operators can do the math on how much less cargo they can carry if drafts are maxed at 43 feet. Shippers of bulk grain and petrochemicals will have to calculate how much extra storage space they need dockside while they wait for underutilized barges to make return trips. Excess inventory has a carrying cost. Maybe this is good news for certain railroads whose trestles haven't been washed away by floods.
Full disclosure: No positions in either stock mentioned at this time.
Things are thus worse than I thought on several fronts and I'm notorious for pessimism. It's bad news for barge operators, both captive oil company fleets and independent operators like Kirby (KEX). Barge operators can do the math on how much less cargo they can carry if drafts are maxed at 43 feet. Shippers of bulk grain and petrochemicals will have to calculate how much extra storage space they need dockside while they wait for underutilized barges to make return trips. Excess inventory has a carrying cost. Maybe this is good news for certain railroads whose trestles haven't been washed away by floods.
Full disclosure: No positions in either stock mentioned at this time.
