Analyst says salt is a good backhaul cargo for carriers moving aggregate.
An increase in demand for road salt could be beneficial to some shipping companies operating on the Great Lakes.
A research note by BB&T Capital Markets on Rand Logistics said that “demand for road salt remains robust as municipalities continue to rebuild depleted stockpiles following the 2013-2014 harsh winter.”
For Rand, BB&T said “salt is typically a high-margin backhaul opportunity,” adding “we remain optimistic that we could be in the midst of a multiyear restocking opportunity given how depleted inventory levels are heading into 2015.” BB&T also said that Rand could move more aggregate in the coming year if a road funding bill in Michigan is passed.
According to the Lake Carrier Association, salt carried by U.S.-flag dry bulk carriers though November was 1,281,682 net tons, compared to 1,004,837 in all of 2013 and 1,020,157 in 2012.
“Following the unseasonably harsh 2013-2014 Polar Vortex winter, municipalities across the country continue to look to rebuild their largely depleted stockpiles. According to a recent report from the Wall Street Journal, the Wisconsin Department of Transportation has contracted for approximately 560K tons of road salt this winter, ~12 percent more than the state’s average annual requirements, with nearly 141,000 tons extra in reserve,” BB&T said. “According to Compass Minerals, salt operations have been working nearly nonstop in an effort to keep pace with demand, as the company recently noted ‘we and our customers started with essentially zero inventory this season.'”
Salt shipments up this year on Great Lakes
