Scrap By Barge

Increasingly, scrap processors and mills are siting facilities on waterways in order to tap into a barge shipping system that is generally both affordable and efficient.


Transportation of materials is a significant cost for both scrap processors and steel mills. While scrap metal and steel are frequently shipped by truck or rail, facilities often have the option of using barges as well. Shipping by water has been a common practice for many years, but over the past decade the barge industry has benefited from the dramatic increase in the number of steel mini-mills, which often locate on waterways and do a great deal of shipping and receiving by barge.

According to the Tennessee-Tombigbee Waterway Development Authority, 41 states are served by more than 25,000 miles of navigable rivers and canals in the United States, of which 12,000 miles are operated and maintained by the federal government as commercial waterways. In many places, locks and dams have been built to create more dependable channel conditions.

The portion of this vast system that is probably most often used for transporting scrap and steel is the inland waterway system, which starts in the South with major shipping ports on the Gulf of Mexico in New Orleans, Mobile, Ala., and Houston. It spans much of the Midwest, including the length of the Mississippi River up through Minneapolis. Branches include the Missouri River, the Illinois River up to Chicago and Lake Michigan, and the Ohio River through Pittsburgh, which connects to the Monongehela and Allegheny Rivers. The system also includes the Arkansas River, the Kanawha River, and the Tennessee and Cumberland Rivers.


Many steel mills and scrap processors find it cost-effective to transport materials by barge due to the large volumes that can be shipped in one unit at one time, says Greg Caldwell, manager of bulk and steel sales for the American Commercial Barge Line (ACBL), Jeffersonville, Ind.

 “Barges can load minimums of 1,500 or 1,700 net tons, depending on if it’s a rake or a box barge, with the box being the larger,” says Caldwell. “For comparative purposes, a railcar holds about 100 tons, so you’ve got about 15 to 16 railcars for every barge, and a truck holds about 26 tons.”

Barges typically move in multiple units, from 15 up to as many as 45, depending on which river segment the barge lines are operating on. Called “tows,” these often carry a variety of commodities rather than a huge amount of one single commodity.

“River transportation is the most fuel-efficient method of transportation,” says Rob Goldstein, president of Alter Trading Co. LC, St. Louis. “But you have to be able to ship in quantities and be able to transport from your yard to the barge, load it effectively, and ship to a consumer that can receive it by barge.”

Although it is optimal for a mill or scrap yard to be located directly on a river, this is actually not essential for river shipping, says Caldwell. “We do have some scrap yard customers that are landlocked and transport scrap by truck or rail to and from the river,” he says. “Intermodal networks are often used.”

For example, he says, Nucor Steel at Crawfordsville, Ind., is technically landlocked, but over the past several years they have received barge to rail tonnage.

Another advantage to shipping by barge is that in many cases, the barges used for inbound shipments of scrap can be cleaned and reloaded with finished product. “The same barge can be used for shipping a variety of commodities,” says Caldwell.

Grossman Iron & Steel Co., St. Louis, is a scrap processor located on the waterfront, but without its own dock. This means that the company has to truck material a short distance to the dock, adding to its handling costs. However, having a dock does not necessarily guarantee ease in shipping, says Cap Grossman, president and CEO. “You may own your own dock and still not be able to get barge equipment because of things like salt barges destined for metropolitan areas that take priority over everything. This is the situation in the Midwest right now.”

It can also be difficult to get the use of barges in the late summer and early fall when there is a great deal of grain being shipped from the Midwest, Grossman adds.


But despite any seasonal challenges in equipment availability, barge shipping is often an excellent option, according to Grossman. “You can move a lot of tons a pretty long distance for not too many dollars a ton,” he says. “We can go easily all the way (from St. Louis) to New Orleans for about the same cost, if not less, than it takes me to get scrap from here to Alton, Ill., to a mill like Laclede Steel which is about 30 to 45 minutes by truck.”

On the other hand, he adds, trucking can be more efficient for short hauls. “I can run a truck every day, and I can afford to own the truck. I can’t afford to own a dock or a towboat or a fleet of empty barges.” Also, the cost to get scrap several miles south to the docks and loaded onto barges – not to mention any costs associated with unloading barges at mills – often makes long hauls more affordable than short ones because of the economies of scale.

But for longer hauls, the barge system is very efficient. “From here in St. Louis, we can go down the Mississippi and then back up the Ohio, and get into Pennsylvania and West Virginia, and you’re still going to beat the rail rates considerably,” says Grossman. “We can also get up the Illinois River.”

And although sending scrap by barge may take longer than sending it some other way, this not always the case, according to Rick Badeusz, manager of distribution services for Cozzi Iron & Metal, Chicago.

“It’s easy, if scrap is prepared, to just put it along the river,” says Badeusz. “You can load barges quickly. I argue with rail companies all the time – I say that I can call at 3:00 in the afternoon and I’ll have a barge at my dock the next morning. If I place an order with the railroad, it’s less certain when I’ll get a railcar. If you take the total time into account, from the time you place the order to the time the material is delivered, barges are really not that slow.”

Overall, Badeusz says that the barge system is a good way for his company to move scrap. “We use the river system extensively – we go down to all the major players. We have loaded as many as 60 barges a month. One of Al Cozzi’s main criteria for putting in yards is that they are served by the water, along with rail.”


The trend of mini-mills locating on rivers and using the barge system to both receive scrap and ship finished steel has really boosted barge industry utilization rates, according to Caldwell. “It’s a case of a new industry coming to an old form of transportation. Most mini-mills utilize the river systems, which provide them a competitive advantage over landlocked facilities.”

As a result of this increased demand, the barge industry has had to become even more efficient and effective, both in terms of cost and utilization, for short hauls as well as the longer hauls they handled traditionally. 

Prior to the last decade, ACBL participated in some scrap shipments to integrated mills, but rail and truck were the preferred mode of transportation. “As more mini-mills developed, traditional boundaries on scrap shipments changed, creating a market for long haul shipments of scrap by the barge companies as well as the rail companies,” says Caldwell. 

For historical perspective, Badeusz points out that mills have always located in areas that make sense in terms of transportation costs. “The integrated mills located where they did because of specific transportation reasons that made sense 75 or 100 years ago,” he says. “A lot of them are on the Great Lakes, or they’re close to sources of coal, and now that’s all changed. Now it’s more attractive to be located on the river system.”


North Star Steel, Minneapolis, is one steel company that makes use of the inland waterway system, according to Greg Lauser, a public relations official for Cargill, North Star’s parent company. “About 15 or 20 barges a month of scrap are transported from our scrap facility in Tampa to a North Star steel mill in Beaumont, Texas,” he says. “More scrap than finished product goes by barge, although some wire rod goes from the Beaumont mill to Illinois, Tennessee, Kentucky and Pennsylvania.”

In addition, pig iron and hot briquetted iron (HBI) are shipped by barge into Cincinnati and then transferred into railcars to reach the North Star-BHP joint venture in Delta, Ohio. “The Beaumont, Texas, mill also uses the inland waterways to receive scrap from Nashville, Memphis, Louisville, and Pittsburgh,” says Lauser. “We also use barges to transport billets from Youngstown, Ohio, and St. Paul, Minn., to Calvert City, Ky., where we have a rolling mill.”

North Star uses three different barge carriers, according to Jim Fisher, general manager of logistics for North Star. The company’s main carrier is ACBL. Other carriers are CCI, Cargill’s in-house barge company, and Ore Gulf/Midland Marine, which services the Gulf area. For the Tampa-Beaumont haul, North Star often works with Ore Gulf. Cargill originally got into the barge business in order to service some of its other bulk commodity businesses, including salt and grain.

“Overall, our experience with barge shipping has been quite good,” says Fisher. “It’s certainly less expensive, and that’s why we use it, since it’s not more expeditious than rail or truck. It also enables us to penetrate some more distant markets and be competitive with some companies that are closer to those markets.”

In fact, there are times when barge rates are low enough that North Star can buy scrap in Pittsburgh and transport it to Beaumont, Texas, for less money than it would take to buy scrap locally. “This is sometimes possible because the price of scrap in the Gulf is high and the cost of transportation short distances is high,” he explains. “But with all the mini-mills going up on the river system, that’s getting tougher to do.”

Another mini-mill operator that ships frequently by barge is Nucor. The company’s three largest mini-mills are located on water, according to Steve Pienaar, shipping manager at Nucor’s Hickman, Ark., mill. “After we discovered what a value the water was at our Nucor-Yamato mill, which was our first water-served plant, every one since then has been built on the water,” he says.

About 85% of the inbound scrap at the Hickman plant comes in by barge, says Pienaar, and about 20% of outbound finished steel goes by barge. Given a choice, he says, river shipping is his preferred method. “I’d much rather load my finished product in one barge than in 75 trucks.”


River shipping can be affected by seasonal weather conditions, Grossman points out. “You have flood situations in the spring and the fall, and low water situations in the dead of summer which can be just as bad,” he says. “And then there are situations like we’ve got now where there’s a lot of ice in the river.”

There are sections of the river system that have seasonable navigational problems, Goldstein agrees. Generally the Mississippi River closes for shipping around the Twin Cities area around Thanksgiving, and the Quad Cities area around Davenport, Iowa, closes around Christmas. These segments of river open again in March or early April.

“At those times companies ship by a different method, or do what the grain shippers do and start loading barges in Peoria because the Illinois River generally stays open, and the Ohio River generally stays open because there’s more traffic, which keeps it stirred up,” he says.

In early January of this year, weather conditions were fairly severe in the Midwest, and the Illinois River was closed for shipping for several weeks, according to Badeusz. But this is not standard. “Last year we had no problems at all,” he says. “Normally there’s a period of a couple or three or four weeks where for various days the river’s going to be shut down, but not for very long.”

It is also a changing transportation market, with rail companies merging and barge companies merging, resulting in less competition in both markets. Fisher is concerned, but says that additional regulations are not the solution. “The market will always take care of itself,” he says. “And if there gets to be too much of a monopoly somewhere, the government will step in and fix that problem. What you have to hope for is that you’re positioned well enough that you’re not the one that will suffer the most until they do step in.”


Alter Trading Co. is one of the few scrap processors that has actually gotten involved in the barge business. The company has an affiliated barge company based in Davenport, Iowa, which started in the 1960s when the Interstate Commerce Commission (ICC) controlled barge rates.

“At that time, we couldn’t get decent rates to ship our scrap from Davenport, Iowa, to Pittsburgh – the barge lines wouldn’t do it,” Rob Goldstein explains. “But you could ship your own materials on barges that you owned. So we bought a boat and four old barges and started taking scrap from the Quad City area to Pittsburgh, and then we’d pick up coal and bring it back to power plants in the Midwest.”

Eventually the company decided that shipping grain from Iowa made sense, since there was more grain than scrap in the region, and the separate shipping business was born. “It’s our family, but it’s a separate corporation,” he says. “Now they’re running 400 barges with a bunch of boats.”

Very few other scrap companies have invested in their own barges, with the possible exception of some international scrap shippers on the West Coast, says Goldstein.

Cozzi Iron & Metal, for example, is unlikely to invest in its own barge fleet, according to Badeusz. “That’s a tremendous expense, and unless you had something that complemented it, it would be difficult to justify,” he says

“Until a year or two ago, the barge business was a tough business. It’s a huge capital investment, and the returns were not very attractive. In the last couple of years, the rates have gone up quite a bit, and it’s become more of an attractive industry. But even so, companies like Alter that own barges use them more for grain than scrap.”

Isaacs of American Iron & Supply says he would consider owning a fleet of barges, if it ever made sense economically. “We’ve looked at it before,” he says. “But I don’t know that it’s economical in today’s world, since there seems to be an adequate supply.” 

The author is a freelance writer and the former editor of Recycling Today.