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US Gulf barge-loading delays expected to intensify in late August

Friday, 14 August 2015 | 11:00
Barge-loading delays of three to 10 days have become the new normal at some US Gulf Coast marine petroleum product terminals, and the delays are set to intensify in late August, sources said.

Market sources with barges at the Magellan terminal say delays at the Magellan terminal in Galena Park can range from one to 15 days -- and Magellan itself says it expects the delays to worsen later this month.

"The flow of incoming barges to our Galena Park terminal is normal for this time of year," Magellan spokesman Bruce Heine said Wednesday. "Based on past history, we do expect demand for our barge receiving services to increase later this month."

Magellan is not alone in making this forecast.
The recent fall in Gulf Coast gasoline flat prices makes sourcing barge-delivered gasoline more attractive compared to other barrels available for delivery in the Carribean or the Atlantic Coast.

Additionally, some market players prefer selling barge-delivered product due to the relatively greater flexibility in timing on barges compared to Colonial Pipeline cycles.

These two factors add up to more market players opting to send more product via barge, which in turn adds to congestion at the ports.

"[Barge delays] are brutal," a Gulf Coast gasoline trading source said Thursday. "I expect it to persist."

At Kinder Morgan's Galena Park terminal, previously announced maintenance at one barge dock is underway, but otherwise there are "no additional abnormal delays at the terminal," Kinder Morgan spokeswoman Sara Hughes said recently. Kinder Morgan's second location in Pasadena has also not been affected by "abnormal" delays, said Hughes.

However, a spokeswoman for the newly commissioned ITC marine terminal in Pasadena, which operates four barge docks, said there are no current delays to loading barges.

DEMURRAGE BITES

Gasoline trading sources who have fixed vessels loading in Gulf Coast marine terminals say that hefty demurrage fees have begun cutting into their margins -- enough to make them reconsider sending product using this route.

While demurrage fees vary from contract to contract, they typically cost $6,000-$8,000/day, the Gulf Coast gasoline trader said.

When delays extend to the upward end of the typical one to 15 day range, it can begin to cut into the margin.

"My demurrage fees currently cost more than a typical wedding at the moment," a Gulf Coast gasoline trader said Thursday.

The congestion is also causing some to reconsider shipping product on barges or find other options.

A second gasoline trading source said his company could not deliver as much product as it would like due to congestion at marine terminals.
Source: Platts
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