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EDITORIAL

Study Digs Up Cost Of Not Dredging Lower Miss

For what it is worth, examining the pages of a new industry-financed study of inadequate dredging on the Lower Mississippi is like rereading a favorite book in one’s library. The WJ and industry have been waving the same red flag for years. In this case, however, the study puts shockingly large numbers in the blanks where we used to generalize. The bottom line is that the Lower Miss could lose up to $9.2 billion worth of cargo annually without properly funded dredging . (See WJ January 16.)

Dr. Tim Ryan, a nationally recognized economist and former chancellor of the University of New Orleans, titled his study “The Economic Impact of Reduced Dredging of the Mississippi River.” The Big River Coalition, funded by industry, commissioned it. The coalition wants to have all money collected from imports under the Harbor Maintenance Tax used as intended. One of the ballpark comments we’ve repeated over the decades is that the marine industry is responsible for putting upwards of $15 billion annually into the federal coffers, while getting back annually an amount ranging from $4 billion to $5 billion in the civil works budget. The Harbor Maintenance Trust Fund alone collects more than a billion dollars annually, and it is commingled with general revenues. Hyperbole or not, we are saying, as argued for years, that the industry is getting shortchanged.

One vital piece of news reported by Capt. Richard Eberhardt in last week’s WJ is that Rep. Charles Boustany (R-La.) “has offered the Realize America’s Maritime Potential (RAMP) bill in Congress.” It would require that all money collected by the ad valorem tax on the value of imported cargo be used to maintain harbors where the imports come in. Readers can refer to the story in last week’s issue to see specifics about historic and current dredging practices. Currently they are pretty bad. The main point is that big ships need to be able to go up to Mile 236 at Baton Rouge. Due to inadequate dredging, pilots are recommending a 44-foot draft fresh-water limit rather than a normal ship draft of as much as 47 feet.

Ryan’s $9.2 billion total is based upon losing annually nearly 12.4 million tons of exports and 5.9 million tons of imports. The current budget of the U.S. Army Corps of Engineers “will lead to significantly reduced widths and depths on the LMR,” the study said. Dredging-budget cuts amount to $45 million per year under the current government fiscal crisis.

A major problem is that the Corps is dealing with Mother Nature, and a one-plan-fits-all-situations approach does not work. They found that out with the 2011 flooding in the Missouri River basin. There is no reason to believe that the Corps doesn’t receive updated reports about dredging needs and locations, just as they did about gauge readings along the Missouri. They must be capable of flexibility to meet problems as they develop.

Silting usually takes place after high water when river levels recede and currents slow. Unfortunately, if silting takes place at unexpected times during the year, the Corps doesn’t have sufficient funds in its budget to dredge. Considering the kind of financial losses that may result from to inadequate dredging, it is ludicrous not to have sufficient money in an emergency fund to handle the situation. If dredging is not done, pilots associations have little choice but to recommend draft restrictions.

Rep. Boustany reminded his listeners that when the Panama Canal expansion is completed in 2014, states along the Mississippi are positioned to receive much of the additional cargo. “Still, it all depends on the maritime infrastructure,” he said.

Louisiana Commissioner of Agriculture Mike Strain acknowledged the potential impact of failing to dredge and “was able to convince an association of state agriculture commissioners to lobby Congress and the president to fund river maintenance at adequate levels,” Eberhardt wrote.

If dredging continues to be underfunded, the president’s dream of increasing foreign trade will end up as a nightmare.

Weekly News Summary For January 23–29, 2012:

Despite Challenges, Barge Industry Is Holding On

Even despite persistent challenges, from legislative deadlock in the face of on ongoing dredging crisis to crumbling infrastructure and the failure of the world economy to rebound, the inland waterways and its industries held on and made some gains, aided by the fracking boom and some unexpected export opportunities. That’s the picture that emerged from The Waterways Journal’s annual interviews with leading figures in the waterways industry this January.

A national election year offers challenges—but also opportunities—for anyone trying to get things done in Congress, said Jennifer Carpenter, senior vice president-national advocacy for The American Waterways Operators Inc. That’s because many of the towing industry’s signature issues do not draw headlines like other hot-button issues. Paradoxically, that lack of visibility is a “double-edged sword,” said Carpenter. While it’s something the industry always tries to combat, it may also make it easier for congressmen and senators to take action.

Carpenter was encouraged by House action on vessel discharges in the last session. H.R. 2840, the Commercial Vessel Discharges Reform Act of 2011, was passed October 13. It would set a national standard for vessel discharges keyed to the existing international standards of the International Maritime Organization. If passed by the Senate, the bill would supersede state standards that often conflict with each other, include draconian penalties, are more stringent than existing standards, or in some cases call for technology that does not yet exist. Although not acted upon in the Senate, Carpenter said House passage was a result of the strong unity of the industry on this issue.

While the nightmare that is the TWIC (Transportation Worker Identification Credential) program continues to place burdens on mariners far out of proportion to any so-far realized security benefits, AWO and its partners were able to pass several TWIC-related acts in the House and Senate to reduce those burdens.

A bill passed in the House in March required the TWIC processing facility in Huntington, W.Va., to mail cards to mariners living more than 100 miles away. Senate bill S-1966, passed December 8, 2011, directs the Director of Homeland Security to reform the TWIC process so that mariners don’t have to visit an enrollment center more than once….
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Supplemental Dredging Funds Released

The Obama administration released an additional $55 million in supplemental funding to dredge the Mississippi River near Southwest Pass on January 18. The announcement came after two groundings provided a clear demonstration of the economic and safety concerns expressed in lobbying efforts to maintain authorized channel dimensions by the Big River Coalition and Louisiana’s congressional delegation.

A letter dated January 5 from the Louisiana congressional delegation specifically pointed to Public Laws 112-74 and 112-77, passed by Congress and signed into law by the president on December 23, 2011, “for navigation and operational maintenance which can be used for coastal and deep-draft navigation projects.”

The day before the supplemental funding was released, the deep-draft bulker Rondeau with a load of coal went aground at Mile 3.3 Above Head of Passes (AHP), while transiting outbound with a draft of 44 feet. Pilots’ associations had instituted a 44-foot draft restriction, three feet less than normal, because of the shoaling. It was the second grounding at the location known as Cubit’s Gap in two weeks.

After the grounding, the pilots’ associations recommended the draft restriction be further reduced to 42 feet.

The Rondeau grounding was in soft silt, and initial assessments by the Coast Guard and the Resolve Marine Group showed only “a few centimeters of difference between draft at the grounding site and the draft when the ship was initially loaded. There certainly was not 44 feet of water there,” said Matthew Hahne, Resolve’s director of regulatory affairs.

The Dee White, a ship docking tug from E.N. Bisso, pulled the Rondeau free very quickly….
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Indiana Ports Report Tonnage Gains

The Ports of Indiana handled 8.1 million tons of cargo in 2011, the largest annual tonnage since 2006. New ethanol and dried distillers grains (DDGs) shipments combined with gains in limestone, salt and steel cargoes fueled a 5 percent increase in total shipments moving through Indiana’s three ports, the state port agency announced January 18.

“Despite continued economic uncertainties, this was the fourth consecutive year our ports experienced growth,” said Rich Cooper, Ports of Indiana chief executive officer. “Our 2011 shipments were nearly a million tons higher than the five-year average. We’ve also seen a significant increase in capital investments by our port companies as they prepare for future growth. This is a good sign for things to come.”

The Port of Indiana-Mount Vernon handled its largest annual tonnage since 1994 and the third-highest in the port’s 36-year history. The port handled 4.7 million tons in 2011, an increase of 12 percent over 2010 figures. Ethanol-related shipments played the biggest role in the increase, with Aventine Renewable Energy operating in its first full year at the port and other ethanol producers taking advantage of the port’s new rail-to-barge transloading facility. Ethanol shipments were five times the previous year’s total, and DDGs were 10 times greater than 2010.

“This past year represented a diversification of cargoes moving through the port,” said Phil Wilzbacher, port director at the Port of Indiana-Mount Vernon. “Coal and grain remain our highest volume commodities, but with Aventine’s ethanol facility reaching full production, DDGs and ethanol rocketed from minimal numbers in 2010 to the port’s third- and fourth-highest-volume cargoes in 2011.”

In addition, Mount Vernon steel shipments were seven times greater than the 2010 total and the port experienced gains in shipments of coke (188 percent), fertilizer (6 percent) and soy products (4 percent)….
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Tulsa Port Gets End-of Year Boost

The Tulsa Port of Catoosa reported on January 19 total shipping figures for December 2011 that were the highest seen all year, pushing the annual total to more than 2.1 million tons.

The December total was 260,924 tons, carried in 137 barges. The higher volumes came from substantial increases in outbound shipments of wheat, petroleum products and asphalt. The second highest barge shipping month came in January of last year, when 228,604 tons were shipped through the port.

For all of 2011, a total of 2,160,624 tons of cargo were shipped through Catoosa in 1,249 barges. Except for 2005, annual average barge shipping volumes have been over 2 million tons per year.

“We’re pleased to see such positive numbers in December, and that 2011 was another successful year for barge shipping through the port,” said David Page, chairman of the City of Tulsa-Rogers County Port Authority. “As a regional transportation hub for the central states area, it is gratifying to note that, despite expected swings in the economy, the port continues to be a stable transportation service provider. As the economic recovery continues in 2012, we anticipate even higher tonnage figures for the port, as well as additional hiring by the industries located within our 2,500-acre industrial complex.”

Total shipping on the McClellan-Kerr Arkansas River Navigation System in 2011 was 10,580,754 tons. In December, the monthly system-wide total was 770,229 tons. Oklahoma’s share of that total was 452,700 tons. Of the freight shipped through Oklahoma, the port handled 53 percent….
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Budget Uncertainty Continues To Affect Orion

Orion Marine Group Inc., Houston, Texas, issued a “mid-period update” for its investors January 17, expressing cautious optimism that the federal budgetary gridlock might be easing, with the recent passage of a full-year budget for the Corps of Engineers.

“During 2011, the company’s end markets experienced uncertain and difficult times that were attributable in substantial part to the inaction of the U.S. federal government in funding important infrastructure programs such as a new highway bill and the Army Corps of Engineers’ budget,” the Orion statement said. “The general economic conditions, including anemic Gross Domestic Product growth and delays in federal spending, have and will likely continue to put pressure on the company’s margins for the foreseeable future. The company has and continues to implement its cost containment programs which should help offset some of the pressure on its margins.”

Orion noted that during the fourth quarter, it had bid on $352 million worth of opportunities and was successful on $80 million. Meanwhile, the company’s market tracking database continues to grow, and it expects that growth to continue for several years.

“We are pleased with the solid win rate the company achieved during the fourth quarter, which demonstrates we are finding the correct price points in order to continue to build backlog for 2012,” said Mike Pearson, Orion Marine Group’s president and chief executive officer….
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