By Brandon Ross
Barges make their way down the Mississippi River with corn and soybeans, coal, chemicals, steel and other commodities destined for foreign shores. Whether originating along the river’s 2,320-mile stem or entering from arteries like the Ohio and Missouri rivers, the cargo—including 60 percent of all U.S. grain exports—heads for container ships docked in Louisiana.
But from the Gulf of Mexico to Baton Rouge, the Mississippi River isn’t dredged adequately, and the sediment buildup means large ships can’t count on consistent navigable depths, according to port operators and business groups. They say it is a problem that might lead foreign countries to look elsewhere for their products.
“If the global marketplace views the mouth of the river as unreliable, it could impact all of the over 40 countries around the world that import grain from the Port of South Louisiana,” Paul Aucoin, executive director of the port, told Bloomberg BNA. “If we don’t maintain the mouth of the river, it could be more economically advantageous for countries around the world to import their grains from South America.”
The Port of South Louisiana, the nation’s leading port in total throughput by tonnage, snakes 54 miles between other major shipping hubs in Baton Rouge and New Orleans.
Should confidence in the shipping channel wane, the countries most likely to take their business elsewhere include China, Japan, Korea, Mexico and Colombia, Sean Duffy, executive director of the Big River Coalition, told Bloomberg BNA.
The coalition represents port operators, food processing companies like Archer Daniels Midland, inland shipping companies like Ingram Marine Group, grain exporters like Zen-Noh Grain Corp., oil companies like ExxonMobil Refining and Supply Co., food suppliers like Bunge Limited and maritime interest groups like The Mississippi Valley Trade & Transport Council.
“All buyers compare the cost of commodity which includes ocean freight,” Duffy said, adding that China is the top customer for U.S. soybeans and Japan is the biggest foreign buyer of U.S. corn.
The Mississippi shipping channel’s standard depth is 45 feet from the Gulf to Baton Rouge, but that depth isn’t consistently maintained all along the stretch, forcing some ships to make unintended stops along the sprawling port system. That can mean unexpected loading costs, scheduling problems and other inefficiencies.
What’s more, river interests say the channel must be deepened to 50 feet to accommodate the largest ships now able to travel through the recently expanded Panama Canal.
“[A] crisis looms as the Mississippi River Ship Channel is not adequately maintained as ships have become larger,” Duffy said. “[T]he Panama Canal expansion means 50 feet is an important industry standard.”
Congress in 1986 established the Harbor Maintenance Tax, which funds Army Corps of Engineers projects like dredging the Mississippi. The revenue, collected on U.S. imports and domestic shipments that move by water, goes into the Harbor Maintenance Trust Fund, which has risen steadily over the years and now stands at over $9 billion.
The money can only be released by Congress, and lawmakers have been slow to spend it on waterway upkeep. For years, some lawmakers in both parties have unsuccessfully sought changes in the law to guarantee that all fund revenues are spent on harbor-related projects.
“Because the revenues and expenditures of the Harbor Maintenance Trust Fund are part of the overall budget, if the trust fund does not spend all of its revenues, the surplus goes toward offsetting and unrelated spending. Many see this as an abuse of a dedicated funding stream,” said then-Rep. Charles Boustany (R-La.) at a House Ways and Means subcommittee hearing in 2012.
According to Jeff Davis, senior fellow at the Eno Center for Transportation, the overall spending restrictions imposed by the Budget Control Act of 2011 are key to why Congress wants the flexibility afforded by keeping the fund subject to the appropriations process.
The reasons for maintaining the status quo include “institutional dislike for the Corps water program by the White House budget office, the need to balance competing interests for scarce federal dollars, but most importantly the post-2011 spending caps under the Budget Control Act,” Davis wrote on the Washington think tank’s website in September.
Duffy said a gap between the amount the fund collected and the amount Congress appropriated began growing around 2003, and that funding for the Mississippi became more problematic in 2011 when the Corps stopped shifting funds from other projects to keep the Mississippi dredged sufficiently.
“[T]he problem became worse in 2011 and since then we have more draft restrictions than ever,” Duffy said. A ship’s draft is the distance from the waterline to the bottom of the hull.
Just $1.263 billion of the harbor trust fund was appropriated in fiscal 2016, according to the American Association of Port Authorities, despite the tax generating about $1.8 billion in revenue that year.
The Big River Coalition says $185 million a year is needed to dredge the Mississippi’s shipping channel to 50 feet and keep it that way. About $90 million to $100 million is spent annually now, as the Corps tries to maintain the 45-foot depth.
Bigger appropriations could be on the horizon, as the Water Resources Reform and Development Act of 2014 set forth a long-term spending scheme. The law calls for incremental increases in the rate of spending from the trust fund until 2025, at which point annual spending would match annual receipts. However, the law is merely an authorization measure, and actual spending remains subject to year-to-year decisions by congressional appropriators.
Although keeping the mouth of the river sufficiently dredged is important, it isn’t the only challenge on the river, according to Chuck Spencer, executive director of corporate and government relations with Growmark Inc., a cooperative that helps farmers stay supplied with day-to-day operational products.
For example, old locks—essentially mid-river elevators for vessels—throughout the whole Mississippi system are a constant threat to dependability of commerce, Spencer told Bloomberg BNA. Some of those locks have been in service since the 1930s and 1940s, with parts so old they are no longer manufactured, he said.
Some hope President Donald Trump’s promise of a $1 trillion infrastructure package means the Corps will see more money for river maintenance—and sooner than under the scheme envisioned in the 2014 law.
If that happens, Trump could claim victory in fulfilling his campaign pledge to create blue-collar jobs, funding advocates say. River improvements might mean that factories open along its stem or tributaries all through the nation’s heartland, they say.
“The president campaigned on rebuilding our nation’s economic engine,” said Aucoin, the Port of South Louisiana executive director.
Aucoin and Duffy say Louisiana’s deep-water channel is important not only for trade but for the local economy as well.
Duffy said a study by the Big River Coalition and the Louisiana Department of Transportation “indicated the deepening of the Mississippi River Ship Channel to 50 feet would create nearly 17,000 new and permanent jobs.”
To contact the reporter on this story: Brandon Ross in Washington at bRoss@bna.com
To contact the editor responsible for this story: Paul Hendrie at pHendrie@bna.com
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
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