Alter Logistics Co. remains a constant force in the inland waterways transportation industry through transparency with customers and strategic business moves.
Transporting a product from its point of origin to its final destination is one of the biggest challenges that any company producing goods faces. A scrap metal recycling company is no exception.
Alter Co. was founded in 1898 in Davenport, Iowa, as a metal recycling company. It soon expanded into the nearby cities of Bettendorf, Iowa, and Rock Island and Moline, Ill., known collectively as the Quad Cities. The Mississippi River runs directly through the area, offering a convenient method for moving scrap metal.
In 1960, Alter decided to invest in barges to ship scrap metal to markets in St. Louis and Pittsburgh and to bring coal back to the Quad Cities. The venture proved successful and Alter Barge Line was formed to handle not only Alter’s transportation needs but also those of other businesses in the area.
Larry Daily, president of what is now Alter Logistics Co., says the subsidiary was created to “use the talent, experience and industry connections that we had built up over 50 years.”
Alter Barge Line started out with four barges and a tugboat. After a few years Daily says, “We determined that there was more corn in Iowa than there was scrap metal and switched to moving farm products as our major business.”
Alter Logistics now operates bulk terminal facilities in Rock Island, Ill.; St. Paul, Minn.; Quincy, Ill.; Bettendorf and Buffalo, Iowa. Daily is involved with the marketing and operations of each location. Alter Logistics ships grain, scrap, steel, fertilizer and other products by barge, truck and rail. The company also provides third party logistics services for grain elevators, fertilizer companies, steel producers, metal recyclers and cement companies among others. It operates fertilizer and general cargo terminals in St. Paul, Minn., and Rock Island and a grain handling facility in Bettendorf.
In addition, Alter has 43 metal recycling yards in the Midwest and South with trading offices in St. Louis and China. The Goldstein family, which owns Alter, is involved in every aspect of the company, according to Daily.
Jeff Goldstein, the oldest of three brothers of the generation currently leading the company, runs the transportation, terminals and grain businesses. Rob Goldstein is president and CEO of the scrap metals business and Richard Goldstein is involved in developing the alternative energy business.
“They are a fairly diverse family. We try to keep everything integrated and don’t do things we don’t understand,” Daily says. “We try very hard and talk a lot internally and make sure we don’t go out on a limb and try to tackle something that we don’t know what we are doing.”
Alter also owns land in Quincy, Ill., and Davenport that Daily says is ready for future terminal development.
“The family has a longstanding habit of when they find a piece of land that has access to the river, access to the railroads, is pretty close to major highways and is priced right, they like to grab it up.” Daily adds, “It’s worked out pretty well for them.”
Seizing The Opportunity
The Goldstein family also knows an opportunity when it sees one. In September 2011, Alter Logistics sold all 400 of its barges to Cargill, Minneapolis, and all 13 of its boats to Marquette Transportation, Paducah, Ky. In January of 2012, Alter Barge Line changed its name to Alter Logistics Co. to reflect the greater range of services offered to the customer base.
The company saw the fleet sale as a way to capitalize on its investment. “We bought a lot of barges when they were cheaper than they are today,” explains Daily. A lack of barge inventory drove up the price for the vessels, and high steel prices and skilled labor costs were driving up the prices for towboats.
“Shipyards were back-ordered for up to 24 months and our fleet was one of the youngest barge fleets in the country,” Daily recalls. “With a backdrop of a strong metal recycling business and other investments, the family that privately owned the barge line decided it was time to sell.”
With the profits from the sale of the barges and boats, Alter has been able to reinvest into its terminals and scrap and alternative energy businesses, according to Daily. The company has begun work on an $8 million facility at its Rock Island location. Once complete, the facility is expected to handle approximately 200,000 tons of fertilizer.
“It is a big statement for our family and our belief in the economics of the river and the agricultural sector of the Midwest,” Daily says. “It will be a good play for us for the next 40 years.”
Daily began his career with Alter Logistics 15 years ago. He says he grew up on the river. His father was a riverboat captain.
“Admittedly, while I was going to college, I didn’t plan on working on the river, but it ended up working out that way,” he jokes.
Prior to joining Alter, Daily worked for Canal Barge Co., New Orleans, where he held positions in nearly every aspect of the business: as deckhand, tankerman, dispatcher, salesman and eventually as vice president of marketing and transportation services.
“Once I got to see the business from the office side,” Daily says, “I realized how it’s constantly changing, it’s very dynamic, it’s interesting and you realize how important it is.”
He has experienced much of that change and dynamics during his time at Alter. Some changes were internal but plenty have taken place externally. One of those external changes has been the growth of corn-based ethanol. There also has been an increased need for fertilizer because of less crop rotation from corn to soybeans. The growth of the export coal industry from a 1.5 million tons per year industry to one of more than 10 million tons per year had an indirect impact on the business and the company’s decision to sell its fleet.
“That drove up the price that people were willing to pay for boats and barges,” explains Daily. “If you don’t sell when you have the opportunity, it has to be because you think you’ll make more money over the next 10 years than you could have by selling them.”
According to Daily, “The prices we were offered were like a bird in the hand versus two in the bush.” He adds, “It was a very nice bird in the hand.”
The sale has given Alter the leverage to grow its current businesses and branch out into others, such as alternative energy.
A Tough Year
This year has proven challenging for the transportation of agricultural products on the inland waterways. The cost of doing business is higher because of the drought and high energy costs. Low water has restricted barge drafts and tow sizes while increasing transit times due to daylight hour and other restrictions, according to Daily.
“Until this year, the agricultural business has been really good,” describes Daily. “There has been lots of corn and soybeans to export and that has kept demand for barges up in the Midwest.”
The low water levels on the Mississippi River have raised prices by almost 50 percent, according to Daily. “Some of that is seasonal, but it is still a very sizable increase over what it would be if we had normal operating conditions. It just slows the system down so you can’t get barges up here to get loaded in time to meet the harvest.”
Daily points out the importance of the inland waterways system to global trade. “We are so attached to the world as a market, and that is what the river system allows us to do,” he says. “We can get a bushel of corn from Iowa to Japan or Korea incredibly cheaply compared to them getting it out of the South American continent where they have a much less efficient transportation system than we have.”
Daily says he hopes the situation stays that way, but the river systems face major budgetary and infrastructure challenges.
“Our infrastructure is beginning to fail and we need the government to prioritize the replacement and enhancement of the lock and dam system,” Daily says. “We need money for dredging channels during low water events and after high water events.”
Daily currently serves as chairman of the Inland Waterway User Board, an advisory board to Congress and the U.S. Army Corps of Engineers. He has a history of involvement with associations that he says has kept him in contact with a wide spectrum of people.
Of his role as chairman of the Inland Waterway User Board in particular, he says, “It gives me insight into what the national [infrastructure] problems are.”
Daily points to the recent closure of Lock 27 in St. Louis for five days. More than 60 boats and 500 barges were waiting to go through the lock. At a little more than 50 years old, Daily says this is a newer lock.
“It just brings home the fact that if we don’t fix this infrastructure, we are going to lose that benefit we have for the Midwestern Ohio Valley farmers, manufacturers, power producers and just the whole Midwest economy,” says Daily.
Alter has been able to weather the ups and downs and seize business opportunities. Daily says, “Our success has been built on trust and an honest transaction that benefits both parties. No secrets.” He adds, “We feel like we owe our customers a fair day’s work and a fair price, and that is what we try to do.”
Alter prioritizes repeat customers. “It makes it easier on us and easier on the customer if they can trust who they are dealing with and know that even though there are problems—because of the situation on the river and the weather and everything else—we are going to work out the best way we can to get their products to market,” Daily says.
An Industry Advocate
Larry Daily, president of Alter Logistics, Bettendorf, Iowa, has represented the inland towboat and barge industry in several national and local organizations including serving as chairman of the Southern Region (1994-1996) and the Midwest Region (2000-2002) of the American Waterways Operators where he also served as chairman of the Inland Dry Sector Committee (2009-2010) and sat on the Executive Committee (2009-2010).
Daily serves on the board of directors of the Waterways Council Inc. and has served on the board of the National Waterways Conference. From April of 2000 until 2003, Daily was appointed to the Inland Waterways User Board and was again appointed in 2009 to 2011 and serves as chairman in 2012.
Daily has been active in regional and state waterway organizations including MidWest Area Coalition 2000, Gulf Intracoastal Canal Association, Louisiana Association of Watercarriers and Shipyards, Texas Waterways Association and the Upper Mississippi River Basin Association. Daily also served on the Board of Governors of the Propeller Club of the Quad Cities.
The author is managing editor of Waterways Today and can be reached at firstname.lastname@example.org.