Bloomberg News

Barge Owners Say Drought May Wipe Out Mississippi Gains

January 08, 2013

Mississippi Barge Operators Boost Cargoes as Work Deepens River

Boats remove rocks on Monday to deepen the Mississippi River shipping channel to avert a shutdown of barge traffic. Photographer: Paul Newton/Pool via Bloomberg

Barge operators on the Mississippi River say the worst drought in 80 years may put at risk gains from emergency dredging and rock removal aimed at keeping the nation’s busiest waterway open at least for this month.

“The only way that we could maintain a navigable channel would be releases from the Missouri River system” if Mississippi conditions worsen, Scott Noble, a senior vice president for Ingram Barge Co., said yesterday at a meeting in southern Illinois. That option is “probably not very likely,” he said later in an interview.

Shipping company officials joined the U.S. Coast Guard, the Army Corps of Engineers and lawmakers including Senator Richard Durbin, an Illinois Democrat, yesterday in Thebes, a hamlet on the eastern bank of the Mississippi where rocks pose the greatest hazard to river traffic. Emergency dredging and excavation work will keep the river navigable for most towboats at least through this month, Corps of Engineers officials said.

The Mississippi River in a typical January carries as much as $2.8 billion in cargo, including grain, coal and crude oil, according to the American Waterways Operators, an Arlington, Virginia-based industry group. The worst drought since the 1930s has exposed submerged rock formations and shrunk the river to levels that may become too shallow for navigation.

Assurances Sought

“We are not out of the woods, and further assurances are needed to provide industry with certainty that is needed for sound business and transportation planning beyond January,” Tom Allegretti, chief executive officer of the waterways group, said today in a statement. River depths less than 9 feet may impede tow boats needed to move barges, the operators have said.

The Army’s engineers declined to forecast navigation conditions for next month or beyond. While precipitation typically increases during the U.S. spring, the past isn’t always an accurate indication of the future, said officials including Noble of Nashville, Tennessee-based Ingram.

“We’re not sure what to expect anymore, and that’s why we’re probably being a little more cautious and a little more anxious,” Noble said.

The Mississippi River has dropped to about half its normal level for early January, according to data from the Corps.

Options Assessed

AEP River Operations LLC, which owns barges and tow boats that ply the river, has a customer that next month plans to move cargo from New Orleans to Chicago, and closing the waterway might force the shipment onto rail, a more costly option, Martin Hettel, senior manager of bulk sales at the St. Louis-based company, said at the briefing.

“Right now we can’t tell them” how their goods will need to be moved, said Hettel, who declined to name the company or the product. A decision must be made by Jan. 20-25, “when they load the vessel,” he said.

Just north of Thebes, about 128 miles (206 kilometers) south of St. Louis, dredging boats operating from 6 a.m. to 10 p.m. cluster the river, which the drought has turned into a creek. Tractors on board the vessels scoop mud from the riverbed. Exposed bedrock pokes through the surface of the river, creeping up its banks.

A single tow boat with cargo-laden barges, waiting to pass through the work site, is visible beyond the dredging vessels. Other boats wait to negotiate a bend in the river, said Mike Petersen, a Corps spokesman. At night, the river is open for barges, said Thebes Mayor John Kennedy, a Lowe’s Co. manager.

‘Pretty Smoothly’

“It seems like it’s running pretty smoothly in the evenings,” though he’s never seen the river as low as it is currently, Kennedy said in an interview.

Commodity exporters including Archer-Daniels-Midland Co. (ADM:US) of Decatur, Illinois, and St. Louis-based Peabody Energy Corp. (BTU:US), the largest U.S. coal producer, ship on the river. A disruption might upend U.S. exports, which the Obama administration plans to double by 2014 from 2009 levels.

Shippers were at odds with the Corps last week after a National Weather Service forecast showed the river may drop below 9 feet this week, and become hazardous for most towboats by the middle of the month. The Mississippi River at Thebes is now at 11 feet, a reading that will be unchanged at least through this month because contractors will deepen the channel by at least 2 feet this week, Major General John Peabody, commander of the Corps’ Mississippi Valley region, said yesterday.

10.5 Feet

That means barges, which have been carrying less cargo due to shallow waters, can begin increasing their loads again.

At St. Louis, the river was a bit less than 10.5 feet deep yesterday, still higher than the 9 feet needed.

In normal conditions, a tow boat needs 12 feet of water to operate and can haul 25 barges, each weighing about 2,000 tons, according to Noble. A 10-foot channel reduces the load to about 15 barges of 1,500 tons each. Noble said in 9 feet of water, there are eight or nine barges per towboat at about 1,300 tons each, or 35 percent less than in typical conditions.

The drought has heightened awareness of the need to upgrade the infrastructure of the nation’s waterways, said Noble. “We can only put this off for so long,” he said.

AEP River Operations is carrying about 45 percent of its typical capacity, Hettel said. Operators have limited loads to avoid having barges scraping the river bottom.

Thebes Channel

“When you start talking about loading barges even lighter, at what point in time does it just not make economic sense to load?” Hettel said. The answer, he said, depends on river conditions. With a deeper channel at Thebes, the company will be able to move as much as 350,000 tons of additional cargo downriver from St. Louis in the coming weeks, he said.

Officials aren’t declaring their mission as accomplished.

“The mission is really never accomplished with the river,” said Representative William Enyart, a first-term Illinois Democrat, who is optimistic. “I think we’re going to weather this storm,” he said in an interview on the riverbank.

President Barack Obama has been closely monitoring the river situation, according to Durbin.

“The message I got from the White House is they’ve ruled out nothing,” he said at the Thebes courthouse, an antebellum structure where an Obama idol, Abraham Lincoln, is said to have practiced law. “Everything is on the table.”

Not all options are available. Durbin said a release from the Missouri River, which shippers have sought for months, would likely trigger a legal challenge from officials in states that rely on the tributary for drinking and irrigation supplies. .

The current work is “going to be adequate,” he said.

To contact the reporter on this story: Brian Wingfield in Washington at bwingfield3@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net


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