Too Little, Too Late for Mississippi River Shippers

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November 30, 2012

(Bloomberg) — Barge traffic on the Mississippi River will be stalled even if the U.S. Army Corps of Engineers decides next week to release more water from a major tributary, according to shippers who are already reducing loads on the drought-shrunken waterway.

“We needed action yesterday,” Debra Colbert, senior vice president of the Waterways Council Inc., an Arlington, Virginia- based industry group that includes shippers and ports. “You still may be looking at a shutdown, certainly a reduction in traffic.”

Water levels on the Mississippi are approaching record lows as the dry season combines with the worst drought in 50 years, creating a choke point off southern Illinois. That’s where submerged rock formations called pinnacles stud the riverbed, preventing cargo-laden barges from passing if the water gets too low.

Under pressure from Midwestern lawmakers, Jo-Ellen Darcy, the Army’s assistant secretary for civil works, yesterday agreed to expedite an analysis of increasing the flow from the Missouri River, which joins the Mississippi near St. Louis. Senators led by Richard Durbin of Illinois, the chamber’s second-ranking Democrat, summoned Darcy, a former Senate aide, to the Capitol to press for swift action.

Durbin said Darcy agreed to respond to the request for an impact assessment within a week and would expedite blasting the pinnacles near the Illinois towns of Thebes and Grand Tower. That project had been scheduled to begin in February.

‘Too Long’

Colbert said that while shippers appreciate the Corps’ expedited review of a water release, “a week is just way too long” to wait, it will take about two weeks for water to flow from the lowest control dam on the Missouri to the Mississippi River. “This should have happened weeks ago,” she said.

Meanwhile, a group of 17 senators led by Tom Harkin, an Iowa Democrat, and Roy Blunt, a Missouri Republican, yesterday sent a letter to President Barack Obama asking him to waive federal contracting rules to expedite the rock blasting by at least 30 days.

“Once the rocks are removed, additional water flows from the Missouri River would be unnecessary or significantly reduced,” the letter said.

The Corps of Engineers projects navigation to be affected by Dec. 11 and the river to reach a record low by Dec. 22. If the impact assessment is complete by Dec. 6 and the Missouri River flow were increased immediately, that would mean the Mississippi may see some relief by the third week of December. Shippers are seeking enough water to lift the river’s level two feet.

$7 Billion

Each day towboats push barges, some as long as 200 yards (183 meters), along the Mississippi, carrying commodities including oil, coal, wheat, iron, chemicals and agricultural goods. Closing the river in December and January would halt 10,600 barges, stopping the movement of about $7 billion worth of goods, according to a Nov. 28 study released by the Waterways Council and The American Waterways Operators.

Such an event would delay the movement of about $2.3 billion worth of farm products and cause 5 million barrels of crude to be replaced by imports, and almost 19,800 cargo-related jobs would be affected, the study said.

The river will still be navigable while blasting occurs near the towns of Thebes and Grand Tower, Illinois, the Corps of Engineers has said.

Lighter Loads

Barges are already starting to carry less cargo due to the low water levels, shippers say. The towboats that push the barges typically require water depths of at least nine feet, according to Ron Zornes, director of corporate operations for Canal Barge Co., a marine transport company in New Orleans.

The company two days ago began reducing loads on its boats so they could operate at depths of eight feet, Zornes said in a phone interview. By mid-December, shippers will have a better idea of how much traffic will actually be affected on the river, he said.

“If they remove these rock formations then there wouldn’t be an issue,” he said.

Low water levels led to a fourth day of declines in the rate shippers pay to use Panamax vessels that carry grains and minerals to foreign ports. Average rates for the ships fell 1.4 percent to $7,815 daily, according to the Baltic Exchange, a London-based assessor of freight costs.

-By Brian Wingfield. Copyright 2012 Bloomberg.
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