Right now, Campbell Transportation is using some of its upgraded boats to move tank barges the length of the Ohio River for third parties. Stephaich and others at the company felt that with all potential for future ethane crackers in the region, it was critical to position the business as capable of handling that kind of work.
Campbell Transportation also made a move to diversify its customer base by obtaining a long-term coal contract with the Tennessee Valley Authority’s Memphis plant, and acquired a facility that can repair and clean liquid barges.
Make the commitment
Campbell Transportation made the decision to commit to the types of investments it would need because the leadership felt it had no choice if it was in it for the long haul. It also was forward thinking enough to make the necessary moves — unlike many others that are directly or indirectly in the coal industry.
Stephaich says he doesn’t think the coal industry is ever going to come back to what it was as the ripple effects of horizontal drilling widen. That’s why companies need to change.
“We’ve seen a few bankruptcies. We’re going to see more bankruptcies coming up in the next couple of years. And you’re going to see a much smaller market for coal,” he says.
Luckily, Campbell Transportation was in a good position to make the necessary changes, such as bringing in outside talent and investing millions into its people and boats. It had a strong balance sheet and owned most of its equipment.
“This is one of these things that if you don’t have the investment, you won’t do it. You can’t enter the business. So, there’s no choice,” Stephaich says. “Either you do it, and you have to make the commitment, or you don’t do it, because the customers won’t allow someone to move their barges and their product that isn’t qualified.”
Campbell Transportation went ahead and committed, and then gradually moved the company over the last four years, he says.
“It’s not for the faint of heart. We’re differentiating ourselves in the marketplace. We’re the only folks in this part of the country that have made that commitment,” Stephaich says. “And we hope there’s a payoff five or 10 years down the road.
“It’s a gamble. We’re taking a risk. There’s no guarantee that this is going to work.”
Nothing is quick
Stephaich says right now there are too many barges on the river, which is why companies should stop building new ones and scrap the old ones. But the industry moves slowly, so it will take years for the demand and supply to come into a better balance, just like it takes years to reposition and diversify your company.
Nothing is fast, and a lot of it is out of your control.
In fact, he thought the petrochemical plants would have started groundbreaking at this point. Even if Shell backs out of its site, he believes someone else will buy it up and take over.
“It’s just a lot of hard work, and preparation, and investing in your people and your systems. There’s a lot of upfront work that goes into this,” he says. “There really aren’t any shortcuts. You’ve got to make the commitment before you can see the reward, before you start generating revenue.”
