[WRE ADVISOR | BUSINESS]
report warned that it might be beaten by the end of January due to continuing cold weather that was preventing both rain and melt along the upper Mississippi. Part of the problem is that the predicting of the January crisis and the expectation of higher levels in February were both based on historical weather patterns. A Bloomberg article from January 9 quoted Army Corps of Engineers spokesman Michael Petersen saying “T e Corps may also release water from reservoirs further north on the Mississippi should rain be less than expected, he said. Still, the situation will need to be monitored as the worst U.S. drought since the 1930s, which created the low water levels, makes historical patterns a less reliable predictor of future fl ows.”
providing a critical link in the transportation infrastructure of the U.S. as a whole.
Locks and dams on the upper Mississippi were constructed in
the 1930’s and much of the equipment along the waterway is built from original components that are way past their projected 50 year shelf life. Current U.S. Army Corps of Engineers budgets pay for operation and maintenance costs, but that is only about a third of what is needed to upgrade the systems and avoid the possibilities of catastrophic spills or unintended closures do to the failure of overworked, outdated equipment. Despite massive-seeming costs, the prospects for a major makeover of the system are actually quite good. T e pending opening of the upgraded Panama Canal locks in April 2015 has industry and governments all along the upper Mississippi scrambling to increase capacity on that section of the river. It’s expected that when Panama’s new system opens, the cost of shipping a bushel of American grain to China will drop by more than $.30. Over time, this will lead to such a spike in river traffi c that current plans propose literally doubling the capacity of the lock chambers from 600 to 1200 feet. In the meantime, shipping on the river continues to trickle. Robert B. Miller and Associates is a barge-operating fi rm outside of St. Louis in Clayton, MO. Wire Rope Exchange spoke with co-owner and dispatcher Gordon Miller in late Feb ruary about conditions on the river and how the drought has aff ected his business.
T e Bloomberg article notes that a typical January can see as much as $2.8 billion in cargo like crude, coal and grain carried on the Mississippi. By 2014 the Obama administration would like to see exports at double 2009 levels, but major commodity exporters like Archer-Daniels-Midland in Decatur, Illinois and coal producer Peabody Energy Corp. of St. Louis both ship on the river, and the recent numbers have them nervous. Grain tonnage on the Mississippi at the end of December, 2012 was down more than 25% from the previous year, having fallen drastically a full 26% from the tonnage at the middle of the month. As they demonstrated in 2011, when the river is high, the locks and dams on the upper Mississippi can be used to control the release of water to mitigate fl ood damage and danger. When the river is low, they can divert fl ows to critical points before traffi c is forced to a standstill. But, like the infrastructure around the country, the system is in need of a makeover and
Agfax.com reported that Iowa Governor Terry Branstad had brought together a wide range of farm commodity groups, community development leaders and environmentalists at the beginning of February, 2013 to talk about the importance of maintaining the resource that gave Mississippi River states in the upper Midwest a competitive shipping advantage, connecting their economies to the world while
“It’s up about fi ve feet,” says Miller. “We’ve been getting just enough to get by.” Like most operators, Miller held his breath at the beginning of January not sure if the shipping channels would remain deep enough to keep traffi c afl oat, but that wasn’t the only problem. “A lot of times the water is so low that even when the channels are navigable, the docks are high and dry way up on shore so there’s no way to unload,” says Miller. “It was really close for a long time, but we’ve been getting some spring rain and we’re pretty optimistic.” T e day we talked to Miller, St. Louis was buried in snow which will add to a healthy spring melt, and while he’s optimistic about the coming water levels this summer, he’s not sure about business bouncing back so soon. “Use of the river has dropped off ,” he says “and that’s not something that comes back right away.” T e same weather that pushed water levels down continues to eff ect agricultural cycles and shipping on the river. Fertilizer shipments would normally keep Miller hopping after the fi rst of the year, but most farmers are foregoing additional fertilizer this year because the lack of rain in 2012 means last year’s applications never washed away. T e mild 2011/2012 winter also means that salt shipments weren’t needed this winter because stockpiles up and down the river were still fl ush. Last year’s harvest shipments were thinned out by the drought and though Miller believes they will move more this fall, profi t margins may not return to normal.
“Retail stores hang their hat on Christmas. We hang out hat on
harvest,” says Miller. “But now there are so many barges available I’m afraid everyone will be undercutting each other and driving the shipping prices down.” And whether its water levels or shipping profi ts, when you make your living on the Mississippi you prefer to see your ships on the rise. ❙
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MARCH-APRIL 2013
WIRE ROPE EXCHANGE
Photo courtesy of U.S. Army Corps of Engineers.
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