The barge industry depends on water to do its work, but too much of it along the inland system since the end of last year has caused enormous operational challenges, personal sacrifices and big financial losses.
Some are calling it the “Great Flood of 2019,” while others prefer to label it as a Top 10 flood event that hasn’t matched records set in 1927 and 1993. But everyone agrees that this year’s flooding and high water event is unique for its longevity and geographic reach throughout the river network.
“In my 45 years in this industry, this is the longest period of sustained high water that we’ve experienced,” said Walter E. Blessey Jr., chairman and CEO of Blessey Marine Services Inc., a large inland tank barge operator based in Harahan, La. “We have also had to deal with unprecedented river velocities. For the first time ever, I have been told by our vessel captains that they are experiencing anxiety when operating on the Mississippi, Ohio and Illinois rivers. The floodwaters from the Missouri River and Arkansas River systems are putting a strain on our industry.”
Flooding and high water, caused by a quickening snow melt and persistent rain, have touched just about every part of the inland system, creating a backlog of hundreds of barges sitting for months with their cargoes, clogging swollen rivers that are critical for transporting grain, petroleum, chemicals and other essential commodities.
BAD WEATHER, RIVER CLOSURES
The U.S. endured the wettest January-May period on record since 1895, according to NOAA’s National Centers for Environmental Information in Asheville, N.C. There was heavy snow in the Midwest and Great Plains that melted and saturated the ground, NOAA said, and then a bomb cyclone hit Iowa and Nebraska with record rain and snow in March, pushing the Missouri River over its banks.
The bad weather forced closure of the Upper Mississippi River (locks from St. Louis to Bellevue, Iowa), St. Louis harbor and the Arkansas River. On June 8, the National Weather Service reported that the Mississippi River at St. Louis had crested at 46′. Tow size restrictions were imposed along the Lower Mississippi from Cairo, Ill., to the Gulf Coast due to high water, while passage under bridges in Memphis, Tenn., Vicksburg, Miss., and Baton Rouge, La., were limited to daylight hours.
Congestion plagued the Lower Miss and Gulf Coast, with 24- to 72-hour delays getting in and out of fleets with reduced shuttle tow sizes. Heavy currents there required helper boats at certain points. At press time, many closures remained in force, although the situation had begun to improve and river segments were expected to be reopened by the end of June.
“There has been commerce disruption, a shutdown of a large part of the system, equipment idled and revenue idled. Some (vessels) have not operated for months or weeks,” said Thomas Allegretti, president and CEO of the American Waterways Operators, the national association of the barge industry. “But there’s also the human dimension that stands out — the workers that haven’t been paid, the farmers who can’t plant their crops. This is a big deal with commerce and a big deal for families and communities.”
Barge operators are used to dealing with weather events — adjusting their operations to floods, drought, high water, swift currents, blinding rain, thick ice and snow. Since the beginning of barging in the U.S., this has always been a part of the inland business. But this year, many barge lines have had to take extraordinary steps to avoid damage to their fleets and injuries to crews, keep their cargoes protected, and meet customer-driven delivery schedules.
“The duration of high water on the Lower Mississippi River and in the Gulf fleets and terminals (which began in mid-December) has had the most significant impact to us, making local Gulf deliveries very difficult,” said Mark Knoy, president and CEO of American Commercial Barge Line, one of the country’s largest carriers. He added that “tow size reductions and daylight running restrictions at some bridges between St. Louis and the Gulf have really hurt production and run up costs. Our 40-barge boats have been limited to 25, which is 60 percent capacity, for six months now.”
ACBL has added more than 20 boats to help combat the bad conditions. In the Gulf, it deployed larger horsepower boats, doubling the Gulf boat fleet, to assure product delivery.
“Our business planning changes daily due to river conditions,” Knoy said. “We’re very good at responding to these challenges. Other than missing revenue opportunities due to restricted navigation, we’ll pick up where we left off and continue to deliver contracted affreightment.”
He estimates losses to the barge industry to be in the couple of hundred million range, based on what ACBL has experienced in lost revenues. “To some extent we are able to reduce crewing and fuel costs when not running, but that has its limits too.”
At Blessey Marine, operations have continued using the company’s most experienced wheelmen, and at times an extra boat is added to help safely dock barges. “Additionally, we try to light load our barges so that our horsepower-to-tonnage ratio is safer for our voyages,” Blessey said. “So far, we have been fortunate to not have experienced any incidents related to high water.”
Kirby Corp., the nation’s largest tank barge operator, reported that high water conditions on the Mississippi, combined with persistent fog along the Gulf Coast and extended periods of ice on the Illinois River, cut into its first quarter revenues in 2019. “Our inland marine transportation quarter’s results were heavily impacted by unusually poor operating conditions throughout the U.S. waterways network which negatively impacted our earnings by approximately 5 cents per share,” David Grzebinski, Kirby president and CEO, said in its first quarter earnings report in March.
Getting back to normal operations won’t be quick and easy, observers say. Barge lines will be busy once the rivers open dealing with pent up demand and delivering a backlog of cargo to customers, but they’ll still have to deal with some hazards to navigation caused by high water and flooding.
“It won’t be like flipping a switch,” AWO’s Allegretti said. “We anticipate lots of shoaling on the river system due to the high velocity of water, so dredging will be necessary.”
With the exception of some lower segments, the Ohio River was largely spared of high water and remained operational, said Mike Monahan, president of Campbell Transportation Co. Inc., a barge and marine services company that operates on the upper Ohio River. “We were very fortunate this year. Last year we had extremely difficult operational conditions. The upper Ohio had ice and high water and there were numerous barge breakaways. This year it’s different, and we are able operate most of the year.”
RETURNING TO NORMAL
Port facilities that were submerged in water will need repair, and sediment buildup and shoaling will have to be addressed throughout the inland system. All of this carries huge costs. Dredging the Mississippi River Ship Channel from Baton Rouge to the Gulf of Mexico, for example, is expected to cost $75 million. As of June 27, the Corps was continuing to respond to active shoaling in Southwest Pass (SWP) at the mouth of the Mississippi. There were only three hopper dredges working in the area of SWP, two industry hoppers and one government hopper.
“It’s going to take a tremendous amount of coordination between industry, the Corps of Engineers and the Coast Guard to make sure we have clear operational channels for barges and resetting buoys for navigation,” Monahan said. “There’s also the practical issue of deploying the dredge equipment and buoy tenders as there’s not enough of them to take care of the whole system all at once. Once the water comes within the banks, we’ll have months of coordination to get back to traditional operating.”
Monahan said dry barge operators will also face the challenge of anticipating demand for this fall’s and next season’s barged grain, as farmers haven’t been able to plant much this spring due to flooded fields and the inability to get delivery of barged fertilizer. The U.S. Department of Agriculture estimates that just 30% of the U.S. corn crop was seeded as of early May, well below the five-year average of 66% by early May. June is a critical planting month.
This could have long-term impacts on barging, he said, while also affecting other parts of the economy. “There’s the cost of raw materials,” Monahan said. “There’s the effect on the maintenance of the system, the need for dredging, the homes, farms and facilities that were under water for a month. We’re just beginning to grasp the total implications and potential economic impact into 2020.”
Allegretti said that there is a concern that customers might begin to question the reliability of the waterways after all these disruptions, especially if they could move their products using other modes. “Our members will try to provide good service so these concerns are fleeting and don’t become part of logistical decisions of the customers. It just goes with the business and you’ve got to adapt and plan for (the disruptions) and be responsive (to customers) when it passes.”
Knoy of ACBL thinks barge customers won’t switch to other modes. “I’m sure some shippers are concerned about reliable transportation going forward with such frequent flooding since 2000, but it’s really unnatural to have this much water over such a wide geographic area and most shippers are pretty understanding. We find more discontent from shippers over unplanned lock outages than weather.”
Before the bad weather hit and backlogs developed, the barge industry was enjoying the benefits of an ongoing inland market recovery. The barge supply and demand situation had much improved, and commodity movements in many sectors were strong.
While coal remained challenged by closures of coal-fired utility plants and soybean exports dropped due to the ongoing trade war with China, barges were busy moving steel, crude oil, refined petroleum products, salt and biofuels, and benefited from strong domestic energy production, according to River Transport News.
Growing volumes from petrochemicals, fueled by the oil and gas production increase, pushed Kirby’s barge utilization to the mid-90% range earlier this year, and the company expects this to continue once operational conditions return to normal on the Mississippi.
Congress was also good to the waterways, appropriating record funding for lock and dam improvements, which allowed completion of the much-delayed $3 billion Olmsted project on the Ohio River, which was 30 years in the works, and the restart of several other stalled inland projects.
Opening of the new state-of-the-art locks and dam at Olmsted has improved navigational efficiencies along an important part of the waterways system, said Michael Toohey, president and CEO of the Waterways Council Inc. Tows are moving through twice as fast, but he said removal of the old dam structures has been slowed by high water and become more difficult. It will require an additional $60 million appropriation from Congress to finish.
New investment in maintenance of waterways infrastructure has led to fewer unscheduled closures for emergency repairs, Toohey added, which means fewer disruptions to barging across the waterways network. Instead of dealing with last minute closures, the industry can now work closely with the Corps to develop schedules for when locks and dams will be out of service, which gives barge lines more certainty in planning their operations.
“Overall I’d say the health of the industry is very, very good and there is a lot of optimism in our business,” Allegretti said. Waterways infrastructure is being modernized, “the new Subchapter M will make us a safer industry, and companies are making long-term investments in their fleets and in training people to remain for entire careers.”