Barge Line Raising Funds to Expand Mexico Service
This story appears in the Oct. 4 print edition of Transport Topics.
SeaBridge Freight Corp., which moves containers by barge from the U.S.-Mexico border to Florida, is expanding via an unusual route — a “reverse merger” and an injection of federal funds to double its current one-barge operation and add heavy-weight container capacity.
A reverse merger allows privately held companies such as SeaBridge to take over an already public company, thus speeding the process of going public.
In this case, SeaBridge took over Trinity Care Senior Living, a small chain of retirement homes that had earlier gone public through a reverse merger with a barbecue restaurant.
SeaBridge took over Trinity for an undisclosed price on Sept. 7, and Trinity’s name was changed to SeaBridge; the company’s retirement-home assets were spun off and it is operating as a privately held company, its president, Donald Sapaugh, said.
On Sept. 20, SeaBridge gained $3.34 million in federal funding to expand its service as part of a $7 million Transportation Department “marine highways” program intended to reduce highway congestion by encouraging freight movement by water instead of road.
SeaBridge bills itself as an alternative to longhaul trucks by barging international and domestic freight across the Gulf of Mexico between the Port of Brownsville, Texas, on the U.S.-Mexico border and Port Manatee, near Tampa, Fla., eliminating a 1,300-mile highway trip over interstates 35, 10 and 75. DOT said the plan could replace about 13,500 trucks a year.
While its approach to growth may differ from other freight companies, SeaBridge President Hank Hoffman told Transport Topics on Sept. 27 that his company has a straightforward mission: to provide a lower-cost alternative means of moving freight.
“We are in business to complement what trucks do. We don’t compete with trucks, intermodal companies, or [third-party logistics companies],” he said. “We want to work together with them.”
Hoffman emphasized that the barge service is operated in concert with trucks, which carry freight from the barge terminal in the Tampa area to the Carolinas, Georgia and Florida. He declined to discuss cost savings from the barge service over a highway move.
SeaBridge’s service now runs once every 10 days, with four days of travel in each direction and a day for unloading at each port. A single driver typically can make the highway run in three days.
The goal, Hoffman said, is to begin service on a fixed day of the week in each direction after it acquires a second barge with the federal funds. The expanded service is slated to begin in February.
SeaBridge, which was founded in 2007, made its first trip in December 2008 and has since made 44 round trips.
SeaBridge’s plan calls for equipment that can handle 600 20-foot containers to carry mostly eastbound freight that originates in Mexico and is trucked across the border to Brownsville.
Using the federal funds, SeaBridge intends to modify its existing barge to handle approximately 25% more weight to serve the heavyweight container market and add the second barge. The rest of the funds will be used to upgrade loading and unloading equipment.
Heavyweight containers exceed the national 80,000-pound weight limit, but are allowed on intrastate moves because Florida law allows 88,000-pound loads within the state, Hoffman said.
Besides heavyweight cargo, SeaBridge tries to attract consumer goods and other products made in Mexico and destined for Florida, Georgia or the Carolinas.
DOT said the SeaBridge service would save nearly 70,000 gallons of fuel per one-way trip and 2.7 million gallons annually, as well as reducing highway miles traveled by 18 million.
“This grant is a significant milestone for the company, and the confidence shown by the Maritime Administration in granting the award for our benefit reflects continued support for the marine highway,” Hoffman said.
SeaBridge’s route to becoming a public company actually began in February 2008, when Fort Smith, Ark., businessman Jerry Neel, whose family operates a barbecue restaurant in that city, created a company called J-Kan Inc. that sold shares to the public.
In 2009, Trinity Care, a private company, took over J-Kan and became a public company with the stock-trading symbol TCSR.
SeaBridge is taking control by acquiring a 91% interest in Trinity Care, according to a regulatory filing.
A reverse merger “is just another way of becoming a public entity,” Hoffman said. “A public company is the best way to finance a pretty capital-intensive operation like a transportation company.”
Other freight companies that have gone public in the past 12 months — such as Roadrunner Transportation Systems Inc. and Echo Global Logistics Inc. — have taken about a year to complete the process instead of the approximately two months for SeaBridge to progress this far.
Hoffman, a 25-year trucking veteran who held positions at Tri-State Motor Transit, Schneider National Inc. and Viking Freight, said SeaBridge doesn’t yet know when it can begin selling stock to the public. He said the Securities and Exchange Commission must first approve the stock issue.
