Inland waterway repair shortfalls may boost Pacific ports and hurt Gulf ports

Posted on: October 29th, 2012 by Stas
 

Inland waterway repair shortfalls may boost Pacific ports and hurt Gulf ports

 

By Stas Margaronis, written for the American Journal of Transportation

The failure to invest in the inland system that feeds agricultural exports down the Mississippi River to Gulf Coast ports such as New Orleans may drive more exports to be shipped by rail to West Coast ports such as Vancouver, Washington and Long Beach,California. Both ports are building new grain terminals to accommodate grain exports from Mid-West growers that traditionally ship grain by tug/barges down the Mississippi River to Gulf Coast ports.The failure of Congress to fund repairs to locks on the U.S.inland waterway system coincides with “scheduled and unscheduled delays” reported on 90% of the system, in 2009, according to a new Failure to Act report from the American Society of Civil Engineers (ASCE).

For example, a Port of Long Beach official told the AJOT that a new terminal will export 750,000 to 1.5 million tons of grain per year sourcing grain from Mid-West growers. Also, the facility will help build up Long Beach’s export capability and allow for ships arriving at Long Beach to pick up full containers instead of returning back to Asia with empty containers. As import levels flatten or decline, the bright spot is the improvement in exports that can assure continued growth for ports such as Long Beach. The use of container ships to carry grain cargoes may challenge traditional bulk carrier models creating a new ocean transportation system for the grain trades.

Long Beach is embarking on a $4 billion expansion and modernization project to accommodate mega container ships with up to an 18,000 teu capacity and minimize any challengers from Gulf and East Coasts ports hoping to exploit the new Panama Canal widening. The new Panama locks will only handle vessels up to a 13,000 teu capacity and so may soon be obsolete.

Rick Calhoun, President, Cargo Carriers (a Cargill business), took issue with this assessment telling the AJOT:

“U.S. ag exporters are not in the process of abandoning theMississippi Riverand Gulf ports as a trade lane. Witness last year Cargill acquired all the barges of Alter Barge Line (387 barges) to grow our fleet to its largest size ever. We are also investing dollars in our Gulf elevator assets. The industry is, at the same time, expanding capacity in the Pacific North West (PNW) as with current fuel prices and ocean freight spreads, the PNW ports are benefiting from same. But growth in one area does not necessarily mean reduced overall tonnage in the other range, as we expect overall growth in the decades ahead forUSagriculture and exports. Certainly, with the drought this year — predominately in areas tributary to the (Mississippi) river, the PNW market share will grow at the expense of the Gulf as exports overall will be sharply lower. But over time, the PNW has a finite amount of elevating capacity and a finite amount of rail capacity to serve the facilities. Bottom line–the industry needs both ranges to fulfill the promise ofUSagriculture and serve our customers worldwide. And we need a reliable river system with properly dredged rivers and functional locks and dams to get the job done.”

Calhoun is worried about delays on the locks linking into the Mississippi due to the current rate of disrepair in which 50% of the existing locks are 50-years and older and beyond their effective life. He said that frequent delays due to the growing breakdowns of the locks have a devastating impact because it costs big agricultural shippers like Cargill and other shippers money. This diminishes or eliminates profit margins when agricultural exports and other bulk commodities ship on high volumes on low margins.

During a Washington press conference on September 13th, Andrew W. Herrmann, P.E., president of ASCE, said that increased traffic congestion was one of the negative impacts of the failure to spend money on port and inland waterway repairs:

“Congestion and delays lead to goods waiting on docks and in warehouses for shipment, which in turn leads to higher transportation costs and higher-priced products on store shelves. If we don’t close the investment gaps, everyone is going to feel the negative impacts, because we are on course to lose more than one million jobs and more than $1 trillion in personal income by 2020.”

The result, he said, is an aging infrastructure for marine ports, inland waterways, and airports. ASCE says that between now and 2020, investment needs in the nation’s marine ports and inland waterways sector total $30 billion, while planned expenditures are about $14 billion, leaving a total investment gap of nearly $16 billion.

The United States has 300 commercial ports, 12,000 miles of inland and intra-coastal waterways and about 240 lock chambers, which carry more than 70% of U.S. imports by tonnage and just over half of U.S.imports by value. To remain competitive on a global scale,U.S.marine ports and inland waterways will require investment in the coming decades beyond the $14.4 billion currently expected. ASCE reports that with an additional investment of $15.8 billion between now and 2020, the U.S.can eliminate this drag on economic growth.

The report concludes that unless America’s infrastructure investment gaps are filled, transporting goods will become costlier, prices will rise, and the United States will become less competitive in the global market. As a result, employment, personal income, and GDP will all fall due to inaction.

 

 

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