Shipping
2:57 pm
Tue December 4, 2012

Water Fight: Drought, Farming, Fracking And The Midwest's Tense Shipping Situation

Politicians across the Midwest are continuing to press the President to declare a state of emergency on the Mississippi River to allow barge traffic to keep flowing.

Every year roughly $180 billion worth of freight makes its way up and down the river.

Now, a record shortage of water on the nation’s major inland waterways is expected to put upward pressure on everything from food items to electricity.

The drought effect

Fresh on the heels of the worst drought in half a century, people whose livelihoods depend on the river were hoping to recoup some small profits later in the fall, but no such luck.

Barges need at least 9 feet of channel to operate.  Current projections from the National Oceanic and Atmospheric Administration (NOAA) show the St. Louis river gauge at Eads Bridge approached roughly 8 feet on New Year’s Day.  Standing on the deck of the Coast Guard Cutter Cheyenne, Lieutenant Colin Fogarty of the U.S. Coast Guard points out just a few examples of the products that move past St. Louis every day.

“We are looking at a hopper barge right there that’s probably pushing grain,” Fogarty says. “Those are two petro barges right there, and looking at the top, they’re either pushing refined diesel, or some other kind of petro product.”

Fogarty says the Coast Guard has deployed four additional cutters to St. Louis to help set and reset navigation markers to designate the ever-shrinking shipping channel.  Even though the Coast Guard will make the call on whether the shipping channel remain opens, it is ultimately the U.S. Army Corps of Engineers which controls the fate of river commerce.

The Corps' decision to hold back water in reservoirs upstream on the Missouri River is based on a seasonal timetable designed to conserve water for the spring shipping season, as well as recreational use. 

A possible 'economic catastrophe'

But cities, farmers and manufacturers downstream on the Mississippi need that water right now. 

“We estimate that $7 billion in cargo will stop moving on the Mississippi River if a nine-foot channel cannot be maintained through the winter months,” says Craig Philip, CEO of Ingram Barge Company, based in Tennessee.

Cutting the flow from dams in South Dakota will reduce water levels in St. Louis by 3 to 4 feet. Realizing that this might effectively kill shipping on the Mississippi over the near term, a group of Midwest politicians including Illinois Senator Dick Durbin are asking President Obama to declare an economic emergency and authorize the Army Corps to reopen the dams.

“This could be an economic catastrophe,” Durbin says.  “Let me be specific, by early spring we need to be moving chemicals up the Mississippi River from Louisiana, so farmers have them for their spring planting.  Remember, they just went through a tough tough year in Illinois, so many of them are anxious for a comeback.”

Upstream pushback

Predictably many upstream states are crying foul and vowing to fight any policy which lays claim to their water.   South Dakota, for example, is already earmarked millions of gallons of Missouri River water for use in the states oil-fracking boom.

Even Senator Durbin admits that asking the President to settle what amounts to a water-war between states is a difficult prospect.

“We may be in a zero-sum situation,” says Durbin . “We may be able to help our commerce downstream, but if we do it at the expense of those communities and states upstream, you can understand, they’re not going to stand by for this and I’m not sure I would either.”

Nature and the marketplace

For the time being, many barge operators claim they might be able to limp along with reduced load sizes and smaller shipping lanes, but ultimately if the weather doesn’t sort this problem out, the marketplace will.

“We need rain, that’s the bottom line,” says Major General John Peabody of the  U.S. Army Corps of Engineers Mississippi Valley Division. “We’ve got to have rain if we’re going to sustain the type of reliable navigation that you’re accustomed to, or we’re going to have to take other measures.”

Peabody says those other measures could include other methods of transportation, such as rail or trucks.  The good news, says Peabody, is that historical trends say river levels typically bottom out in January before rising in February.  The Army Corps also recently announced plans to help shippers by blasting rock formations from the river bottom near the town of Thebes, Illinois, in early January.

But with the Mississippi River moving roughly 60 percent of the nation's grain exports and 20 percent of the coal heading to power plants, if river levels don't bounce back soon it's a safe bet that costs to consumers will likely be headed up, at the same time the river level is heading down.

Follow Adam Allington on Twitter: @aallington