In his office in Troy, New York, at the head of navigation of the Hudson River, Rob Goldman discusses what every marine shipper dreams about: booming business.

“We’re at capacity right now,” Goldman said. “We have plenty of horsepower, but we’re fighting for empties all the time.”

Goldman is president and co-owner of New York State Marine Highway Corporation (NYSMH), one of the leading commercial shipping companies serving New York State’s canal system.

That’s right: commercial activity on New York’s Erie and Champlain canals, two of America’s original superhighways, is on the rise. Both canals were built 200 years ago to provide open trade between the Atlantic Ocean and the Great Lakes, but commercial shipping had been declining for decades.

“We’re seeing the highest tonnage on the canals in 30 years,” Goldman added. “We’ll move about half a million [500,000] tons of stone this year.”

Goldman’s company, which does over 90% of commercial shipping on New York’s canals, has experienced big growth in the last three years: NYSMH went from regularly operating with three tugs and 20 employees to operating nine tugs and 23 barges with a staff of 70.

New York's canal shipping in tons since 1972. Commercial shipping in 2018 will likely exceed 500,000 tons, an amount last seen in the mid-1980s. Data source: New York State Canal CorporationThe United States will not likely ever embrace its existing canals in a similar way to Europe, which benefits from centuries of canal history and a unique, centralized geography that makes them ripe for moving goods. Most U.S. canals were built during the Industrial Revolution to transport coal, ore, grain and supplies, and are now used only for irrigation or recreation. By the late 19th century, railroads and roads quickly became much cheaper to build, leading to a steep decline in canal shipping.

New York’s canals were once a hotbed for commercial shipping. Shippers moved over 3 million tons per year as recently as the late 1960s, but annual tonnage gradually fell until it leveled to under 50,000 tons starting in the mid-1990s. Aside from annual spikes due to spot uses, tonnage remained at around that level until 2016.

A Canal Shipping Renaissance?

The Canal System saw over 415,000 tons shipped in 2017, almost a hundred times that of 2009’s 50-year low of just over 4,000 tons.

Upticks in canal shipping are sometimes influenced by high oil (and by extension diesel fuel) prices.

Towing barges on inland waterways often is the most fuel-efficient means of shipping. Bulk materials like coal, stone and corn are transported by barge on large rivers throughout the U.S., totaling hundreds of millions of tons each year.

According to a 2014 Texas A&M report, inland towing averages 647 ton-miles per gallon of fuel. That compares with 477 for rail and 145 for trucks. A single barge may replace 100 trucks, so when fuel costs spike, canals are often the most cost-effective way to ship between the eastern and midwestern United States.

Rob Goldman disagrees with the fuel-efficiency argument for shipping large quantities of bulk material like stone, however, citing barge shipping’s high logistics costs. For example, 30 tons hauled by truck is more efficient, because it can go right to the customer’s door. By contrast, freight hauled by barge needs to be loaded, handled, re-handled and trucked.

New York's canal shipping in tons since 2000. NYSMH's stone contract provided a boost starting in 2016. Data source: New York State Canal Corporation

“If we got to smaller tonnages, diesel fuel costs would surely make sense,” Goldman said. He says that in Europe, where diesel can cost $8 a gallon, barges move 500 tons. In the U.S., “we can’t be efficient unless we’re moving 1,600 to 3,000 tons.”

And that fits well with Goldman’s primary business of moving friction stone and bluestone from quarries in northern New York State to New York City. NYSMH’s growth was sparked in 2016 when the firm secured a five-year contract with Azzil Granite Materials.

Azzil quarries its own friction stone near Whitehall, a town located on the Champlain Canal. Goldman’s barges move the stone down the canal to the Hudson River and on to New York City, where it is used for paving.

“The five boroughs of New York require friction stone for all paving,” Goldman explained.

Aside from bulk shipping, inland waterways have long been used for “project cargo,” which includes freight that simply is too big to transport by truck or train. According to the New York State Canal Corporation, inland waterways are widely used to transport rebar caissons, radar dome materials, commercial paper dryers, turbines, boilers, transformers and other oversized items.

The Erie Canal, which connects Lake Erie in the western part of the state with the Hudson in the east, bore witness to this use in 2017. As part of a $49-million eco-brewery project, Rochester-based Genessee Brewing Company required 12 beer tanks, each of which is 60-feet high and holds 2,000 barrels of beer. The tanks were built in China, shipped through the Panama Canal, then passed through the port of New York where they were transferred to a barge for the journey up the Hudson River to the Erie Canal. Because the tanks were too big to be easily transported by rail or truck, the canal provided an efficient means of transport.

Inland waterways also see one-off uses, often in times of turmoil. In late 2012, the U.S. Army Corps of Engineers moved tens of thousands of tons of debris caused by Hurricane Sandy out of New York City by floating barges 150 miles up the Hudson River. The trash was then transferred to trucks and hauled to two different landfills.

In 2013, a U.S. drought and a bumper crop of wheat in southern Ontario, Canada, resulted in an agricultural spot use on the Erie Canal. Rob Goldman’s barges were already moving corn between Canada and upstate New York, and on one trip they moved tons of high-protein wheat into the United States. Moving grain and corn is an infrequent use case, but the high value of agricultural cargo tantalizes shippers like Goldman.

“That’s always in the back of our minds, to go back and develop a seasonal agriculture product,” Goldman said. That’s because stone is worth around $30 per ton, but high-protein wheat could be worth $450 per ton. “As a percentage, it’s better for the shipper,” he said.

The Benefits and Drawbacks of Barge Shipping

Like other methods, barge shipping has advantages and disadvantages. Aside from superior fuel economy, moving shipments off roads and onto barges reduces road congestion. And if modal container shipping by barge took off, dock operations could be streamlined by eliminating some truck traffic. As Goldman mentioned, however, shipping by canal is often much more logistically complicated and costly, depending on the quantity of shipped material.

Inland waterway shipping in the northern United States is also hampered by a short operating season. New York’s canals generally operate from May 1 to November 15 and freeze over in the winter, although the state has extended the operating season during years of heavy commercial traffic. By contrast, the 2018 operating season was shortened to May 18 through October 10 to accommodate canal system repairs, costing operators six weeks of business.

The New York State Canal System comprises four canals. The Erie Canal connects the Hudson River and the Great Lakes, while the Champlain (right) links the Hudson River, Lake Champlain and the St. Lawrence Seaway. Source: New York State Department of Transportation

The costs of operating hundreds of miles of waterway must also be weighed against the commercial benefits. The New York State Canal System costs around $87 million annually to operate, an amount often viewed as an albatross for whichever state agency must absorb it. The Canal System became a subsidiary of the New York Power Authority in early 2017, a move that caused some controversy and concern over the welfare of the Power Authority’s existing programs.

The Future of America’s Original Superhighway

The 2010 Modern Freightway report on the commercial potential of the New York State Canal System suggests that a major adopter is necessary for barge shipping to become mainstream once again. A significant, long-term commercial use for the canal is much more effective for spurring development than limited, specialized contracts.

Rob Goldman believes the Canal System may have already found its major adopter in moving stone downstate. Other potential uses include regularly moving New York City trash to upstate landfills.

Still, commercial shipping on New York’s canals could provide a major lift for a local economy that has struggled for almost half a century, as well as provide revenue for the Canal System’s steep operating costs.

Goldman points out that most U.S. stone quarries are accessible by water, so shipping bulk stone by barge remains an option. To him, an enduring use like shipping stone may well be the savior of trade on New York’s original marine superhighways.

“At this rate, plugging a new barge into our system isn’t going to cost that much more,” he said. “And this synergy starts to make other opportunities possible.”