The Annual Review Of Waterway Events: 2020
In the top story of 2020, an invisible virus has, to date, caused more than a million and a half deaths worldwide, sickened tens of millions more, overwhelmed the health care facilities of many countries at times, and upended the global economy, completely reshaping some industries. It is a story that is far from over, but whose end may be in sight.
After crash development by an emergency team under the aegis of Operation Warp Speed, two vaccines have been developed, one by Pfizer-BioNTech and the other by Moderna. Pfizer’s has been approved by the Food and Drug Administration after encouraging testing indicating an effectiveness of more than 90 percent. Moderna’s vaccine was awaiting approval at press time, with 6 million doses ready for immediate allocation.
The vaccine arrives in the middle of a second (or possibly third) wave of outbreaks around the world that has once again strained medical facilities. According to the Johns Hopkins COVID-19 Dashboard, the number of global recorded cases of COVID-19 is approaching 80 million, with more than 1.5 million deaths worldwide so far. Many industries most affected by the coronavirus could be changed forever, especially energy.
Meeting the many challenges of coping with the effects of the coronavirus, the towing industry forged ahead. Safety procedures were quickly put in place and shared. Cargoes were delivered, vessels were built, facilities were expanded, and companies made progress toward Tier 4 and the full certification of towing vessels under Subchapter M. The Coast Guard adjusted inspection requirements and extended license renewal periods as in-person offices shut down.
Major waterways projects were undertaken and completed. A complex, challenging shutdown and rehab of Illinois Waterway locks and dams was successfully concluded. Two major, long-envisioned channel deepening projects were officially begun.
Aftermath Of Floods
If not for the coronavirus and the election, the aftereffects of the floods of 2019 might have been one of the major stories of 2020. By the middle of 2019, it was clear that the rains, flooding and silting of that year would have long-lasting effects, extending well into 2020 and beyond. As 2019 ended, owners and CEOs of dredging companies convened in Washington, D.C., for three days of meetings with top Corps officials.
The floods left many times the amount of silt normally moved during an average year. The Corps dredge Hurley alone dredged more than 12.5 million cubic yards during the 2019 season.
Existing dredging equipment, both Corps-owned and privately contracted, continues to operate at or near capacity on the Missouri River and the McClellan-Kerr Arkansas River Navigation System. On the Gulf Coast, this year’s run of named storms and hurricanes also left dredging challenges.
The Kansas City and Omaha engineer districts, aided by emergency appropriations, were busy repairing and restoring flood-damaged levees along the Missouri River. The ongoing silting and damage to levees from the 2019 floods meant that demand for dredging services would be guaranteed at levels beyond normal for years to come.
In September, 10 members of Congress from districts bordering the Missouri River sent a letter to the Corps of Engineers urging more work to restore navigability to the Missouri River, which has been experiencing shoaling after training structures were buried or washed away during the 2019 floods, damaging the river’s ability to self-scour. Barges have had to light-load, and towboat captains have been reporting shoal areas.
Deepening Projects Advance
The year 2020 saw the commencement of two major channel deepening projects and progress made toward another one. Mobile Engineer District Commander Col. Sebastien Joly and John Driscoll, director and CEO of the Alabama State Port Authority, met June 17 to sign the project partnership agreement for the deepening and widening of the Mobile Harbor Ship Channel, envisioned since 1986.
The project will deepen the bar, bay and river channels in Mobile Harbor to 50 feet and include bend easing at the double bends of the bar channel. It will widen the bay channel from 400 feet to 500 feet from the mouth of Mobile Bay northward for three miles and expand the Choctaw Pass Turning Basin by 250 feet to the south at a 50-foot depth. It’s a six-phase project, with anticipated completion by late 2024 or early 2025. Total estimated cost for the project is $365.7 million.
The long-sought deepening of the Lower Mississippi River from 45 to 50 feet was approved in July. Weeks Marine’s cutterhead dredge Captain Frank officially began the deepening in September.
“No single agency can undertake a project of this level, magnitude and importance without great partners,” said Col. Stephen Murphy, commander of the New Orleans Engineer District. “The Corps is privileged to have such a partner in the Louisiana Department of Transportation. Together we look forward to delivering a project that will have immense benefits, not only for Louisiana, but across the nation.”
In April, the Corps of Engineers awarded a $97.9 million contract to Callan Marine Ltd. for Phase 2 of the Corpus Christi Ship Channel Improvement Project.
Having recently completed a channel improvement and deepening project that brought its existing ship channel from 47 feet to 54 feet from the Gulf of Mexico through the Inner Harbor, the Port of Corpus Christi is headed toward further improvements. A project to construct a channel with the capability to accomodate the transit of fully laden Very Large Crude Carriers (VLCCs) from multiple locations on Harbor Island, Texas, and into the Gulf of Mexico is currently undergoing environmental review, expected to be complete by April 2022.
To meet current and future dredging needs, the dredging industry is making major investments. This year saw construction begun on major dredge projects by Weeks Marine, Great Lakes Dredge & Dock and Manson Construction.
Reflecting the importance of the Gulf Coast to future dredging needs, Great Lakes Dredge & Dock announced October 22 that it was moving its headquarters from Oak Brook, Ill., to Houston, Texas, while continuing to maintain the Oak Brook office.
ACBL Restructures Debt
On February 4, American Commercial Lines announced it had entered into a Restructuring Support Agreement under Chapter 11 with its term loan lenders on a prepackaged plan to recapitalize the business and significantly reduce the company’s debt. The restructuring effort was led by CEO Mark Knoy, who detailed it in a series of communications and interviews.
The company announced April 30 that it had successfully completed its recapitalization and emerged from Chapter 11 protection. “Having quickly completed our recapitalization, we are a stronger company with the financial flexibility to build on our decades-long legacy of industry leadership,” Knoy said. “Looking ahead, we will be able to devote our available resources to competing in today’s market.” He said business remained steady through the reorganization.
In July, Knoy announced his retirement from ACBL after a long career of service to the inland waterways. Mike Ellis was named CEO, the company announced August 17. Prior to joining ACBL, Ellis was executive vice president and marine group leader for Savage Services Corporation.
Women Lead The Way
On January 1, Jennifer Carpenter became CEO of The American Waterways Operators, after long service in other roles in the organization. She succeeded Tom Allegretti, who had served the industry in that position for 23 years.
In February, Debra Calhoun became interim president and CEO of Waterways Council Inc., while it looked for a permanent president, which it found in July in Tracy Zea, vice president of government relations. Zea assumed his new duties immediately, with Calhoun remaining as senior vice president.
The appointments were part of a growing trend of women taking leadership positions in the major associations and organizations that serve the inland industry. The National Waterways Conference’s president is Julie Ufner, who has been in that post for just over a year, while Aimee Andres is executive director of Inland Rivers, Ports & Terminals.
In March, the Western Kentucky chapter of Women in Maritime Operations (WIMOs), one of the nation’s largest chapters, celebrated its first anniversary, with 75 members representing 12 companies.
In May, Maj. Gen. Diana Holland, former commander of the U.S. Army Corps of Engineers’ South Atlantic Division, was named the first-ever female commander of the Mississippi Valley Division in Vicksburg, Miss. She was sworn in during a change of command ceremony June 30 that was streamed over the division’s Facebook page. She also serves as president-designate of the Mississippi River Commission.
Towing Industry Responds To Virus
By March, the coronavirus was making itself felt across the economy, with movement restrictions, business closures and lockdowns that brought much of daily life ashore to a halt. But halting wasn’t an option for the maritime industry. On the inland waterways, the virus had both direct and secondary effects.
Under guidance from the Coast Guard and the Centers for Disease Control and Prevention, the industry put systems in place to prevent or minimize the spread of the coronavirus among its ranks. Each company developed its own protocols, taking direction from the CDC guidelines. Inland waterways towboat crews and towing company workers were quickly recognized, along with other transportation workers, as essential personnel.
On March 19, the AWO held a webinar with industry speakers sharing information on combatting the disease. Speakers included AWO’s Caitlyn Stewart, Marino Hwang of McAllister Towing, Patrick Smith from American Commercial Barge Line (ACBL) and Ketra Anderson of Crowley Marine Corporation. Later that month, AWO released extensive guidelines for towing operators for limiting interactions between shoreside and vessel crews, for cleaning vessels and for identifying symptoms of COVID-19.Best practices included regular sanitizing of quarters, regular testing of crewmembers, keeping social distance as much as possible and requiring crewmembers to get tested at home and to avoid vessels if they tested positive. Some vessels held crew-change meetings outdoors. Towing companies asked onshore employees to work remotely.
Beginning June 10 and extending into September, AWO held a regular series of webinars, called the “Virtual Summer of Safety,” with experts giving presentations on many safety issues, including but not limited to topics connected with fighting the coronavirus. Presenters spoke on how to prepare crews to wear masks, practice distancing and deal with the frustrations of preventive practices.
AWO’s efforts were not limited to webinars and education. Carpenter reported June 1 that AWO, working with the Federal Emergency Management Agency, had helped collect 229,000 face masks for critical maritime employees.
IMX Goes Virtual
Across America, employers began an unprecedented experiment in remote employment. Professional meetings and conferences were canceled, postponed or moved online.
The Inland Marine Expo, too, moved online and became a successful first-ever virtual event, with online meetings and a complete virtual trade show experience. Originally scheduled to take place May 18–20, the event was moved to September 29 through October 1. R.D. James, assistant secretary of the Army-civil works, kicked off the IMX event with a keynote video on the value of the waterways to the U.S. Other discussions covered the state of the industry in a pandemic year, new developments in propulsion, hiring and retaining women and millennials, diving best practices and many more topics.
River Towns’ Revenues Hit
The revenues of Mississippi River towns and cities, many dependent on seasonal tourism or events, were hit hard by the coronavirus pandemic. Vicksburg, Miss., experienced a surge of COVID-19 cases from 400 to 1,600 per day. The revenue hit came on the heels of the 2019 floods, whose costs still affect riverfront infrastructure.On July 28, a media call-in by the Mississippi River Cities and Towns Initiative asked members of Congress to include relief for river towns and cities in any upcoming stimulus bills. The river towns most affected have been those that have a larger proportion of revenues depend on casinos or tourism rather property taxes.
New Statistical Port District
On October 9, the Corps of Engineers’ Navigation and Civil Works Decision Support Center approved three Port Statistical Areas (PSAs) in the heart of the Corn Belt: the Illinois Waterway Ports and Terminals PSA, the Mississippi River Ports of Eastern Iowa and Western Illinois PSA and the Mid-America PSA.
The recognition followed years of work by Robert Sinkler, former commander of the Rock Island District and now chief operating officer of consulting firm Streamside Systems Inc., who has been working with partners in local cities and towns, ports and economic development organizations.
Illinois Waterways Lock Rehabs Completed
One of the year’s biggest stories on the inland waterways had been long anticipated. The closure by the Rock Island Engineer District of six Illinois River locks and dams began July 1, with the full closure of LaGrange Lock and Dam and Starved Rock Lock and Dam. They were followed by the full closures of Peoria Lock and Dam and Marseilles Lock and Dam July 6. The closures and repairs extended through the end of October.
The Corps had worked closely with industry over several years to consolidate the closures to lessen the impact to commercial navigation, as well as to schedule the work to avoid the worst of potential spring high water and heavy fall harvest traffic.
Work at the sites included dewatering LaGrange Lock to replace severely worn lock gate machinery and make significant repairs to crumbling concrete and steel; dewatering Peoria Lock to perform inspections and maintenance of areas usually submerged; dewatering Starved Rock and Marseilles locks to reconstruct miter gate sills and replace anchorages in preparation for new miter gate installation and installing bulkhead recesses at Dresden Island Lock to allow for future maintenance and dewaterings.
The simultaneous closures and rehabs stretched the district’s resources to the limit.
“The LaGrange Major Rehab/Major Maintenance is the single largest construction contract ever executed by the Rock Island District,” district commander Col. Steven Sattinger said. “In the last 20 years, only one other Rock Island project exceeded the magnitude of the LaGrange project, but that project was split into multiple contracts and took nearly 10 years to execute, unlike LaGrange, which was substantially completed in a single construction season.”
Tom Heinold, the Rock Island District’s operations chief, celebrated the district’s achievement during a symposium at the Inland Marine Expo, where he detailed both the expected and unexpected challenges facing the multi-faceted project.
Cruise Industry Hit By Virus
For oceangoing passenger cruise companies, the coronavirus was a unique catastrophe. The cruise industry was the most visible venue of early reports of coronavirus, before most people understood its scope. Several cruises reported outbreaks in which almost the entire passenger list was affected. Cruises were quickly canceled. After the initial restrictions eased, a few companies tried to resume cruising, but more outbreaks were reported and the trend was halted.
In July, Carnival Corporation announced it would be scrapping 13 ships. By October, cruise industry blogs were reporting that as many as 34 passenger vessels worldwide, many of recent construction, had been sold or scrapped in overseas ship-breaking yards.
River Cruising Looking Ahead
On the rivers, the Passenger Vessel Association, which represents inland cruise operators, asked the White House in March to be included in the administration’s economic relief plans in response to the coronavirus crisis. The plea came shortly after the American Queen Steamboat Company and American Cruise Lines announced they were suspending operations through April due to concerns about the coronavirus. At first, both companies planned to resume cruises in mid-summer. But in September, American Queen suspended cruises through the end of the year and notified states of plans to lay off 250 crew starting September 24. Both companies are booking future seasons, however.
Denied its peak season by coronavirus restrictions, the Belle of Louisville appealed to supporters in April for donations and gift certificate purchases to help it keep operating. At the end of the year, the Belle made an unusual trip 300 miles up the Ohio River for its five-year drydock inspection and other repairs at the Amherst Madison repair facility in Gallipolis, Ohio.
Cruise operator Viking Cruises announced March 20 that it would begin offering river cruises in the United States beginning in 2022 and contracted with Edison Chouest Offshore shipyard in Louisiana to build its first U.S. passenger vessel, the Viking Mississippi. The 386-passenger vessel will be the company’s first custom-built vessel.
After five years of waiting for Viking to become river-ready, the St. Paul, Minn., Parks and Recreation Commission approved a docking licensing agreement with Viking on October 8. The contract allows Viking River Cruises to use Lambert’s Landing on specified dates in 2022 and 2023. The company is planning to offer an “America’s Great River” cruise between St. Paul, Minn., and New Orleans, La., including stops in Memphis, Tenn.; Vicksburg, Miss.; Natchez, Miss.; and Baton Rouge, La.
Oil Price Tumbles
As employers sent their employees to work remotely from home and some small businesses closed, demand for gasoline plummeted, sending the oil industry into a tailspin as the COVID-19 crisis was layered on top of a punishing price war between Russia and the oil-exporting countries, led by Saudi Arabia.
Saudi Arabia launched the price war in early March following the breakdown of informal pricing agreements between the Organization of Petroleum Exporting Countries (OPEC) and Russia. What drove the price war was growing Russian concern about U.S. shale dominance due to fracking that within a few years had made America a global swing producer once again. Saudi Arabia shared those concerns but continued to argue for production cuts.
The price war came just as the coronavirus shock hit, with air travel dropping by 40 percent. Within a week, global oil prices had crashed by 22 percent, the single greatest drop since the 1991 Gulf War. Total crude oil production fell by as much as 3.4 million barrels daily within months. On April 12, Saudi Arabia, Russia and the United States agreed to oil production cuts to stabilize prices. Demand recovered somewhat as some summer driving resumed.
Oil industry observers differed on the likely effects of the coronavirus crisis. Oil analyst Robert Rapier wrote April 1 in Forbes, “This pandemic seems destined to change our world in a number of ways, and some of those ways involve lower oil demand.” In June, accounting firm Deloitte reported, “Shale oil … could see its heyday come to an end in the U.S. before it ever made a profit.”
The virus crash exposed weaknesses in the debt-laden U.S. shale oil sector and contributed to a wave of bankruptcies and consolidations. In October, Deloitte reported that the oil industry had lost 117,000 jobs during the year, few of which are expected to return soon. By November, IHS Markit was reporting that about 3 million barrels per day, or about 3 percent of global production, would be shut down due to demand drop.
Since the coronavirus hit, nine U.S. refineries were scheduled to be closed and six more are reportedly being looked at for possible closure, IHS said. In the first week of November, Royal Dutch Shell announced it was closing its Convent, La., refinery following decades of operation after failing to find a buyer. The Convent facility was the first Gulf Coast plant and is the largest U.S. refinery to shut down so far.
On November 28, a story in Bloomberg proclaimed, “Years of breakneck [U.S.] growth, at the expense of crude [oil] kingpins in the Middle East and Russia, have come to an end.” Bill Thomas, CEO of the biggest independent shale producer by market value, said, “In the future … OPEC will be the swing producer—really, totally in control of oil prices.”
Kirby Takes Double Oil Hit
The oil industry downturn was reflected in earnings reports by Kirby Corporation, the major liquids barge carrier that is also an important provider of midstream and oil field services. The oil crash hit directly at its oil services businesses, and also reduced barge utilization rates. On October 28, Kirby reported that reduced demand from the ongoing COVID-19 restrictions combined with the effects of hurricanes to drop barge utilization rates to the low 70 precent range and lower inland revenues by 22 percent, compared with the low 90 percent utilization range of a year ago.
However, lower barge revenues were partly offset by Kirby’s acquisition of Savage Inland Marine’s assets, which closed April 1. David Grzebinski, Kirby’s president and CEO, said that while he believes the economic crisis driven by the COVID-19 restrictions has bottomed out, continuing uncertainty will keep the company’s barge revenues flat through 2021.
Waterways Consolidation
It wasn’t just the oil industry that saw consolidation. The extra costs of complying with Subchapter M and the shift to Tier 4 engines had already been driving some acquisitions and consolidation on the rivers. The COVID-19 virus has added to the financial pressures many river companies were already facing. For some, the pressures added up to one answer: sell out.
On January 21, Turn Services announced it had acquired Michoud Fleet in eastern New Orleans, the same day that Associated Terminals announced the acquisition of New Orleans Bulk Terminal. On January 30, Kirby Corporation announced the Savage Inland Marine acquisition. O’Rourke Petroleum acquired J.A.M. Distribution Company. Zen-Noh Grain Corporation bought 35 inland elevators from Bunge Corporation. Stone Point Materials acquired River Aggregates. And in November, Ingram Barge Company announced that its wholly owned subsidiary, Houston Fleeting Services, was acquiring the assets of Cheryl K LLC and San Jacinto River Fleet LLC.
Coal Decline Continues
In March and April, the opening months of the coronavirus pandemic, more than 6,000 coal mining jobs were lost.
Even though coal still provides as much as 24 percent of American power generation, about 500 coal-fired power plants have been closed over the past five years, and no new coal plants are under construction. A recent U.S. Energy Administration Information report projected that more electricity would be produced in 2020 by renewable energy than coal for the first time ever.
Robert Murray, coal pioneer and one of the inventors of longwall mining, died October 25, shortly after announcing his retirement as chairman of the board of the company whose predecessor he founded. He was 80 years old and was known for a lifetime as a fighter for coal, unafraid to thrust himself into the public eye.
Murray’s company, Murray Energy, had recently emerged from a Chapter 11 reorganization and was renamed American Consolidated Natural Resources. It remains the largest privately owned U.S. coal operator, with active mines in several states. Among its assets is Murray American Transportation, which currently operates 250 barges and 14 towboats.
However, exports of metallurgical coal continued to drive some barge cargoes. In 2019, before the virus hit, the United States exported about 93 million short tons of coal—equal to about 13 percent of U.S. coal production—to 71 countries; and 53 percent of U.S. coal exports went to five countries, according to the EIA. Barges moved much of this export coal.
In October, a bulk carrier loaded 146,479 short tons in Mobile of Alabama metallurgical coal bound for Asia. The load set a new export coal shipment record for the Port of Mobile.
Grain Exports Recover
One bright spot at the end of the year was the recovery of grain exports. Each time the U.S. Department of Agriculture released its World Agricultural Supply and Demand Estimates (WASDE), it revised projected export numbers and prices for both corn and soybeans upward and revised ending stocks downward. Barged grain movements benefitted especially from an uptick in U.S. corn and soy exports.
While some of those export grains went to markets like Pakistan, Egypt and Bangladesh, most went to Asia. One big reason: China, the world’s largest consumer of pork, has been rapidly rebuilding its swine herd from the devastation of African swine flu, when millions of head had to be slaughtered. The country is not just rebuilding but restructuring; the Chinese are closing the old “wet markets” where livestock were bought and sold, and are replacing an inefficient patchwork of older, smaller pig farms with modern, large, American-style feedlots and processing centers. This requires clean, grain-based feeds instead of the backyard scraps and swill feeds of the past.
Corn prices went from $3 a bushel in midsummer to near $4 a bushel. Soybean prices reached heights not seen since 2013. Commodity analysts speculated that China may continue to rely on the U.S. for soybeans during the bridge period until March, when the Argentine harvest begins.
As 2020 draws to a close, the transportation, industrial and agricultural sectors are looking forward to the end of the coronavirus pandemic and the other changes that the new year will bring.
