Towing and Tugboat Services

SIC 4492

Companies in this industry

Industry report:

This classification covers establishments primarily engaged in furnishing marine towing and tugboat services in the performance of auxiliary or terminal services in harbor areas. The vessels used in performing these services do not carry cargo or passengers.

Industry Snapshot

Transportation of freight by water continued on a downward trend in the late 2000s and early 2010s. By 2010, less than 5 percent of all freight transported in the United States (measured by ton-miles) was sent by water, according to the Washington Monthly. In comparison, the European Union moved about 40 percent of its domestic freight by coastal shipping and inland waterways. Operators of tows and tugboats work about 25,000 miles of inland waterways in the United States, providing services such as docking ocean vessels, shifting floating equipment with harbors, marine towing services, tugboat services, and undocking ocean vessels. As of 2010, there were 5,285 towboats in the entire U.S. fleet, more than 60 percent of which operated in the inland waterway trade, according to the Transportation Institute.

Cargo transported along the U.S. inland waterways can be moved by barge or towboat. Barges range from 100 to 300 feet in length, carry a wide variety of cargo, and serve as a floating work station for offshore construction. Some barges certified for coastal and ocean service are capable of transporting liquid cargoes, such as oil. Companies that operate tugs and towboats usually have barges in their fleets. However, barge operations are classified separately under SIC 4449: Water Transportation of Freight, Not Elsewhere Classified.
Many different types of tugs and towboats work the various inland waterways. Towing-supply vessels are from 150 to 222 feet in length and are used for towing drilling rigs, service and supply rigs, and offshore structures from shore. Supply vessels are 160 to 252 feet in length and handle supplies, equipment, and materials. They usually are outfitted with special pneumatic tanks for bulk cargoes and can be adapted to perform research. Utility, production, and line handling vessels are much smaller than the other two types, ranging in length from 65 to 130 feet. They can transport crews, light equipment, and supplies and are often utilized as a general utility vessel. Offshore tugs are for any kind of ocean towing. They tow mobile drilling rigs and service the construction and pipe-laying industry. They also are used for commercial ocean towing. Inland towing vessels range from 400 to 2,000 horsepower and are used for any kind of coastal and river towing. They can tow drilling rigs and barges within various coastal area inland waterway systems, such as lakes and bays. They also are commercial tows, providing service to industrial clients. Crew boats are much smaller than the other types of vessels, ranging in length from 76 to 125 feet; they can transport light cargo and passengers at high speeds.

Background and Development

Establishments that provide marine towing and tugboat services primarily work the inland waterways of the Atlantic, Gulf, and Pacific coasts; the Mississippi River; the Great Lakes; and the domestic ocean. These North American waterways comprise more than 26,000 miles of navigable rivers, canals, lakes, and coastal regions. The largest is the Mississippi River system, which runs more than 8,950 miles through the middle of the United States and intersects with the Missouri and Ohio Rivers.

One of the earliest functions of the tugboat was to tow sailing ships into and out of the harbor and to assist in berthing (docking and undocking). The tug also was used to assist steamships. Although these vessels were able to enter and leave the harbor on their own, they were unmanageable to dock. Even though ships continued to be built with increased power and maneuverability, the tug remained necessary due to the ships' corresponding increase in size and tonnage.

The auxiliary propulsion force of tugs and towboats can serve many purposes. Large ships need tugs to assist in docking operations, to maneuver in confined waters and narrow channels, and to escort to clear waters. Items such as barges, cranes, A-frames, derricks, lighters, tank barges, and railroad floats are towed by tugs. Towing also may be necessary to move a non-self-propelled piece of floating equipment. Such items might include mining equipment, drill rigs, dredges, barges, floating towers, "dead" ships, scrap hulls, and damaged marine equipment.

Tows have been ideal for river trade due to their shallow draft and ability to navigate the upper reaches of the Mississippi, Missouri, Ohio, and Columbia Rivers. Unlike ships, tugs are adaptable to changing needs with a minimum of delay because they do not have to wait until cargo is discharged before moving on to another job. The use of tows and barges historically has been one of the least expensive ways to transport coal, lumber, ore, oil, and bulk cargoes in the river and coastal trades.

Canal tugs operate on the canals of inland waterway and intracoastal systems and are designed to pass under low bridges covering most waterways. Railroad tugs haul car floats that transport railroad freight cars. The railroad tug must maintain a tight schedule and therefore has been specially designed for maneuverability, power, and visibility.

Coastal tugs are heavier than harbor tugs and consequently have greater horsepower, larger all-around dimensions, and increased fuel capacity. American ocean tugs have been among the largest towing vessels utilized worldwide, second only to the enormous river towboats. Actually, the ocean tug is similar to a small ship. It has a large fuel capacity, includes quarters for a crew, and stores provisions for extended operations. Rescue and salvage tugs are at least as large as ocean tugs and contain extensive equipment for diving and salvage work. These vessels usually operate on short notice.

In the 1980s, inland waterway commerce rose slowly. However, the towing and tugboat services industry, especially the inland towing sector, was slowed by "the effects of overcapacity and slower-than-expected growth in markets for grain and other bulk materials," according to American Shipper. The Midwest flooding of 1993 further hindered the industry; tugboat and towing operations came to a complete halt on the Mississippi River at the height of the shipping season. Widespread economic growth in 1993, however, indicated that tugboat and towing services would be in high demand for the next several years.

Environmental concerns, especially relating to the prevention of oil spills, led to increased competition among tug service operators on the West Coast. As the state laws regarding tanker movement in the San Francisco Bay area were tightened, some tug operators began to purchase specially equipped vessels to use as escorts in the area. More specifically, California's Office of Oil Spill Prevention and Response established new rules that required tankers to have a tug escort when moving in and out of the San Francisco Bay. The ruling mandated that tankers carrying a minimum of 5,000 tons of oil must have enough tugs on hand to provide 1 horsepower of pulling power for every deadweight ton. The bay area was home to several major oil terminals and bulk ports and had at least 1,000 tankers travel into the area annually.

Hoping to take advantage of the new oil-spill prevention laws, Crowley Maritime Corp. spent nearly $100 million on a fleet of these specialized tugs. "This is the Swiss Army knife of tugboats," Crowley's engineering manager, Ed Schluter, told interviewers in Popular Science. The article featured the two 153-foot, 10,200 horsepower tractor tugs built by Crowley and delivered to Alaska's Alyeska Pipeline Company in early 1999.

The U.S. inland towing industry spent the 1980s recovering from the boom in shipbuilding during the 1960s and 1970s. However, many vessels in the tug and towing industry had reached the end of their economic life span--approximately 20 years--and some operators began to update their fleets. National Marine, for instance, spent more than $10 million annually from 1988 to 1992 on new vessels. National's efforts to improve its fleet included a purchase of three 6,800-horsepower line haul towboats. Such new models incorporated the latest technology and were built to operate in an increasingly restrictive regulatory environment.

The National Transportation Safety Board (NTSB), the Coast Guard, and the tugboat industry explored increased requirements for towboat pilot licensing in the 1990s, mainly resulting from major incidents that had occurred. A 47-death accident occurred in 1993 when barges being pushed by a tug in heavy fog conditions hit and damaged a bridge. The result was an Amtrak train plunged into an Alabama river. The NTSB's recommendations were drafted into new rules by the U.S. Department of Transportation and included increased proficiency requirements for towboat pilots, as well as regular performance evaluations, plus mandates that towboats be equipped with current radar systems and appropriate charts and compasses. In January 1996 near Rhode Island, a Scandia tugboat was pulling a barge carrying 4 million gallons of fuel oil. The Scandia became disabled by fire resulting in the barge leaking 800,000 gallons of oil. A representative of Soundwaters Environmental Group, Stephen Tarrant, said, "This incident is just a reminder that something like that can happen at any point." In fact, between 1986 and 1994 tugboats and barges were accountable for 23 percent of all oil spills, compared with tankers, which comprised 60 percent, and 8 percent were attributable to oil drilling rigs, according to Coast Guard statistics.

The American Bureau of Shipping is an industry regulatory organization that conducts annual inspections of larger tugs, such as the Scandia. However, coastal tugs usually are small enough to be prohibited from requiring inspection by the Coast Guard. Oil companies, which charter tugs, frequently have their own inspections. Jack Morgan of American Waterways Operators claimed Coast Guard and industry studies indicated that "two-thirds of the accidents are human error rather than equipment failure." Fires and electrical failures accounted for 1.7 percent of towing vessel accidents, according to Coast Guard statistics. After the Amtrak derailment, the Coast Guard increased requirements for licensure of tugboat skippers, including formal training in the use of radar. Federal regulations already mandated that the captain and pilot have firefighting training and equipment. In addition, towing firms and the industry association agreed to improve training and equipment.

A few maritime events during 1998 and 1999 were illustrative of the versatile applications of tow boat and tugboat services. When two Carnival cruise ships caught fire in two separate incidents (July 1998 and September 1999), tow boats pulled the damaged ships safely back into harbor. Elsewhere, on an historic December 31, 1999, the government of Panama assumed control of the massive Panama Canal. In the late 1990s, tugboats were often called upon to assist super-sized Panamax vessels into the lock chambers by maneuvering the vessels into position and pushing on the stem of the vessels. Even though this assistance facilitated the passage of such wide-berthed ships (with less than 12 inches separating the ships' sides and the Canal walls) through the Canal, the vibratory damage to the concrete lock walls became increasingly alarming to the U.S. government. A project to widen the canal and allow the largest ocean-going vessels to pass through more easily was scheduled for completion in 2015.

A boon to private industry came in the late 1990s when the U.S. Navy began chartering tugs instead of replacing its fleet. Not only did this move buoy the industry, but it also saved an estimated $18 million annually in taxpayer money. By 2003, companies such as Moran Towing and Transportation that provided tugs to the Navy had upgraded to required technologies through the latest tractor-tugs. These state-of-the-art tugs replaced the standard Navy yard tugs, which were low-horsepower, single-screw tugs.

As a consequence of the Navy contracts, demand for the latest and greatest tugs went up in other markets as well. From 1997 to 2003, 89 cycloidal-drive and ASD tugs were built in the United States, 10 more than had been built in the preceding three decades. The move industry-wide toward tractor tugs was a trend that was expected to continue.

Current Conditions

As of mid-2010, parts of the water transportation industry were still reeling from the effects of the largest oil spill in history, which occurred in the Gulf of Mexico off the coast of Louisiana in April that year. An explosion on the offshore drilling rig Deepwater Horizon, leased by oil company BP, had left the oil well gushing an estimated 1.5 million to 2.5 million gallons of crude oil a day into the ocean. It took almost three months to cap the well, by which time hundreds of millions of gallons of oil had spilled into the ocean, causing severe damage to marine life and wildlife habitats, as well as the Gulf Shore's fishing and tourism industries. The explosion was caused by defective construction on the oil rig.

The leak had barely been contained when, in late July, a tugboat pushing a barge hit an oil platform in the Louisiana marsh area, adding more oil to waters that were already contaminated by the Gulf oil spill. Although much smaller in magnitude, several other oil-spill incidents in 2010 involving tugboats marred the industry, including an accident in the Petaluma River in California in September that caused a tugboat to leak up to 600 gallons of oil into the surrounding waters and a March collision between a tugboat and an oil tanker that caused the largest oil spill in Texas in 15 years. Ironically, just a few months earlier in December 2009, a tugboat that was working to prevent oil spills and was a part of the Ship Escort Response Vessel System created after the Exxon Valdez spill ran aground on the same reef as the Exxon Valdez, leaving a 3-mile sheen of diesel fuel on the water.

Amid the negative press that occurred in the wake of these accidents, the tugboat and towing industry worked to emphasize the benefits of the transportation of freight by water. For example, in a 2010 article in the Washington Monthly, Henry Hoffman of SeaBridge Freight estimated that a freight-carrying barge traveling from Brownsville, Texas, to Tampa Bay, Florida, consumed about 9,000 gallons of diesel fuel. According to Hoffman, trucks making the same run would use more than 53,000 gallons of fuel. Pollution was also a factor. According to the article, "A tugboat plying inland waters can typically move a ton of freight more than 51,000 miles before emitting one ton of greenhouse gas. A truck, by contrast, releases nearly three times as much greenhouse gas over the same distance."

Industry Leaders

Crowley Maritime Corp.
Crowley Maritime was not only the domestic industry leader but was one of the largest companies in this industry worldwide as of 2010. Headquartered in Jacksonville, Florida, Crowley had approximately 4,300 employees and a fleet of 210 vessels. A family-owned operation since its founding in 1892, the company had sales of more than $1.9 billion in 2009. Crowley Maritime Corp. was founded when Thomas Crowley, Sr. began a ferry service with an 18-foot Whitehall rowboat. Working in the San Francisco bay, Crowley hauled transport crews, merchants, supplies, and equipment from the docks to cargo ships anchored in the bay. In latter 1999, the company decided to divest its interest in South American operations, which produced two-thirds of its revenues in the 2000s.

Crowley Maritime has also been an industry leader in instituting computer technologies. Crowley utilizes automated tariff retrieval systems, electronic data exchange, data communications, and electronic imaging. More than 150 users work with Crowley's automated tariff retrieval system to produce rate quotations, billings, audits, and other tariff-related functions. Crowley also participated in the Foreign Trade Information System to exchange information in the maritime industry. The group works with ports and government agencies to streamline electronic data exchange (EDI) standards on a global basis.

In the late 2000s and early 2010s, Crowley Maritime was investing heavily in new tugboats and other vessels to secure its hold in the industry. In July 2010 the firm contracted for construction of two more 10,880-horsepower tugboats, bringing its total to four and adding to the more than $1 billion the company had invested in new tugs, high-capacity barges, and articulated tug barge tank vessels (ATBs). According to Tom Crowley Jr. of Crowley Maritime, "These new boats will be workhorses for our valued upstream energy customers and for companies and government entities needing long-range, high-capacity, ocean towing along with salvage and emergency response support." In addition, in August 2010 the firm christened the ninth in a series of ten new 185,000 barrel ATBs, designed to transport petroleum products in the Gulf of Mexico. All of the new vessels meet the criteria for the ABS SafeHull program for environmental protection, according to the firm's web site, which involves an extensive review of the vessel's design to ensure structural loads and structure strength, factors that had become especially important after the Gulf oil spill in April 2010.

Tidewater, Inc.
A New Orleans-based public company, Tidewater owns and operates marine vessels used by the international offshore energy market, particularly oil. Founded in 1956, the company had 7,900 employees and generated $1.1 billion in annual revenue in 2009. By 2003, Tidewater boasted a fleet of about 400 vessels. The firm provides a full range of marine services including the transportation of supplies, materials, and personnel; towing of mobile drilling rigs and construction barges; positioning and anchor handling of drilling rigs and construction and pipe-laying barges; standby services; and diving and marine maintenance support. About 60 percent of the company's revenues came from international sales in more than 60 countries.

Research and Technology

The environment was a major concern in research and development in the industry in the early 2010s. One way the industry was seeking to lessen its "carbon footprint" was to convert diesel-fueled tugboats into those that run on natural gas. An advantage of the vessels was that they could carry their own fuel tanks and did not require a major infrastructure change to support the conversion.

In 2009 Foss Maritime Corp. of Seattle launched the world's first hybrid tugboat, the Carolyn Dorothy, and in August 2010 the company announced plans to introduce a second hybrid vessel, called the Campbell Foss, thanks in part to a $1 million grant from the California Air Resources Board. The tugboat will save 100,000 gallons of diesel fuel a year, according to a company press release, as well as reduce carbon and other pollutant emissions. Whereas the Carolyn Dorothy was newly built as a hybrid, the Campbell Foss was to be "retrofitted with hybrid technology comprising motor generators, batteries, and control systems and will help improve fuel efficiency and operational capabilities," according to Susan Hayman of Foss Maritime.

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