System 'can't take much more'
AgWeb says this year's harvest will be a “test” for the locks and dams that connect the Upper Midwest to world export markets.
Writer Chip Flory says, “About half of this year’s soybean crop, 40% of our wheat and nearly 15% of this year’s corn crop will head beyond our borders to customers in other countries. When they do, the people who run the lock and dam system will be holding their breath that no major weather event or mechanical foul-up will occur. The system can’t take much more.”
Meanwhile in Washington, the Water Resources Development Act of 2016 (WRDA) is apparently still alive and well in a conference committee. Supporters left last month optimistic that it can be passed by the lame duck Congress. But if supporters needed any more data to demonstrate the urgent need for the bill and the investments it calls for, it came recently in a USDA commissioned study by the University of Tennessee.
“Economic Impacts Analysis of Inland Waterways Disruptions on the Transport of Corn and Soybeans,” demonstrates what an interruption of navigation at Lock and Dam 25 on the Mississippi would bring, including more than $3.7 billion lost in labor income and economic activity. In addition 7,000 jobs would be put at risk.
Among the study’s findings, “Corn and soybean exports at Gulf of Mexico Ports are reduced up to 5 million tons, a 9 percent decrease, when Lock 25 is closed for the fall quarter. The reduction in exports increases up to nearly 8 million tons, or 13 percent, when the closing horizon extends to the whole marketing year. Disruptions at La Grange Lock also lower corn and soybean exports at Gulf ports with relative less scale (5 percent).”
(More on this and other studies in the Executive Director's column in this newsletter)
UMWA Officers 2017-18
One of the reasons the Upper Mississippi Waterway Association (UMWA) is still around and effective after 90 years is the hard work and dedication of its volunteer officers. That kind of leadership will continue into UMWA’s 91st year. Here’s who will be leading UMWA in 2017-18:
Paul Freeman, Minnesota Soybean Growers, Chairman;
Taylor Luke, LS Marine, President;
Doug Hosszu, Upper River Services, Vice President;
Scott Dohmen, CF Industries, Secretary; and
Kathryn Sarnecki, Treasurer.
Directors are Mark Caspers, CCI; Al Christopherson, Producer; Greg Genz, Kaposia Marine; Jack Holm, Lafarge-Holcim; David Johnson, Tow Inc.; Mike Noonan, Portable Barge Service, Inc.; Tim Paurus, CHS Inc.; Tom Perrier, N.C. States Regional Council of Carpenters; Rick Voigt, Voigt Consultants; and Mike Wilson, Wilson Oil & Gas Company.
From the Executive Director . . .
One river system, four ways to measure value
In 2007, Congress declared its commitment to modernizing the critical Upper Mississippi River System and restoring its ecosystem by authorizing the Navigation and Ecosystem Sustainability Program, an unprecedented, dual-purpose authority allowing the U.S. Army Corps of Engineers to integrate management of the UMRS navigation system and ecosystem. The NESP program, authorized $1.9 billion for new 1,200-foot locks and $1.7 billion for a 15-year ecosystem restoration program, plus $20.42 million annually for monitoring.
As a reminder, NESP includes construction of seven 1,200-foot locks at the most congested locations: Lock and Dams 20, 21, 22, 24, and 25 on the Upper Mississippi River and La Grange and Peoria on the Illinois Waterway.
Interestingly, a June 2012 Institute for Water Resources report on U.S. Port and Inland Waterway Modernization found that the Upper Mississippi River – Illinois Waterway navigation system has adequate capacity through 2020, but will require maintenance of existing capacity.
Despite that encouraging finding, facts reveal that the System is experiencing some of the longest lockage delays in the country due to single, undersized 600-foot locks trying to accommodate 1,200-foot tows and unexpected downtime for repair of aged gates and machinery. Congress, however, has yet to appropriate funds to the NESP program, even as current lock delays average 4-5 hours and lack of rehabilitation funding increases the risk of more failures and unanticipated closures.
In an effort to elevate the level of congressional attention and raise public awareness of the value of NESP projects, several other reports have been published highlighting the value of that program.
Increased grain demand and new Panama Canal
The Rock Island District, reporting on the previously referenced June 2012 Institute for Water Resources report, also stated that although the UMR-IWW tonnage has decreased over the last decade, this trend is expected to reverse due to increased demand for grain exports and enlargement of the Panama Canal. Under the latter, inland navigation is estimated to save the economy $23.74 per ton compared to overland transport, according to the Planning Center for Expertise for Inland Navigation, January 2012.
The estimated savings for users of the UMR-IWW based on 2010 tonnage values would be $1.4 billion for the UMR and $0.86 billion for the IWW, respectively, for a total of $2.26 billion. Savings that would be passed back to shippers and the environment in the form of lower transportation costs and less harmful green-house gasses.
Enlarging base of beneficiaries
The second study of our review was released this past August and discussed in this column last month. Prepared for the Illinois Chamber of Commerce, and corn, soybean and chemical interests, it redefined navigation and non-navigation beneficiaries located in the 22 counties along the Illinois Waterway. In total 1.7 million jobs were identified producing $102 billion in wages.
The report also identified five improvement options to the Waterway, including the construction of new 1200-foot structures and/or rehabilitation of all locks instead of upgrades. Cost savings to shippers and the economy were estimated to range from $51.56 million to $137.97 million depending on option.
Portions of the cost savings are annualized wages and increased employment; other portions are year-related based upon volume and freight rates of commodity shipped. The take-away is that this study expressed the value of the waterway as cost savings to users of the Illinois Waterway System as a result of infrastructure improvements, as opposed to lower costs due to enlargement of the Panama Canal as revealed in the above COE data. Both are accurate, but from a different perspective.
Impact of long term lock closure
The third study of our comparison is an analysis of the economic impacts on the Upper Mississippi River-Illinois Waterway and U.S. corn and soybean stakeholders, if long-duration disruptions were to occur because of lock closures for major unanticipated repairs.
This report was conducted by the University of Tennessee under contract with U.S. Department of Agriculture and analyzes hypothetical lock closures at Mississippi River Lock 25 and Illinois River La Grange Lock, since these two locks are the only two considered for improvement under NESP and because they are good representatives of the other locks used on the UMR-IWW.
This study analyzed L&D 25 and the La Grange lock separately using potential grain markets in the next decade, using two closure times: (1) the fall harvest season and (2) the entire marketing year of 2024/2025.
Using the worst possible scenario for both locks (full season closure with rail rates increasing by 15 percent), this study found that the closure of Lock 25 would result in a reduction of more than 7,000 jobs, $1.3 billion in labor income and a $ 2.4 billion decrease in economic activity.
Similarly, closure of La Grange would result in a loss of 5,500 jobs, $900 million in employment income and $1.8 billion loss in total industry output.
This U.S. Department of Agriculture study expresses waterway value as the combined UMR-IWW system in terms of job and wage loss and reduced total industry output.
A healthy river supports economic growth
The fourth and final study is an on-going effort by the Upper Mississippi River Basin Association. A recent draft report explores the multiple benefits from a healthy river and how investments in infrastructure for navigation, flood risk management and water supply/energy must consider how these uses impact ecosystems. It also discusses the flip side of that same coin: The Upper Mississippi River's ecosystem is the foundation for its many economic benefits.
The nine economic sectors profiled by the report and their regional revenue include Manufacturing ($282.5 billion), Tourism ($20.6 billion), Agriculture ($25 billion), Energy Production ($8 billion), Mineral Extraction ($4.8 billion), Outdoor Recreation ($4 billion), Commercial Navigation ($673 million), Water Supply ($320 million) and Commercial Harvest ($21.7 million), totaling $349 billion over the 133 counties flanking the UMR in the five states from the headwaters in Minnesota to Cairo, Illinois.
This study is being developed in collaboration with the U.S. Fish and Wildlife Service Division of Economics (to provide analytical support), the UMRBA, the Nature Conservancy, and the Mississippi River Cities and Towns Initiative. This UMR partnership plans to expand its analysis to include the Illinois River as well as the economic value that river provides. The final report is expected to be available in 2017. This initial study focuses on the value-added of the nine waterway sectors profiled in the draft report.
By any measure the above studies highlight the economic advantages of an efficient and well maintained lock and dam system. While contemporary legislative trends focus on infrastructure projects for their recreational and aesthetic values, transportation, economic and ecosystem needs continue to be the foundation which supports all other river-dependent uses.
The challenge to lawmakers and the Corps of Engineers is to implement current NESP legislation so that selected projects are being carried out at a “comparable rate”, while honoring a WRDA 2007 ranking system which gives greater weight to projects that restore natural river processes.
Unfortunately, nothing will happen until Congress appropriates NESP funding.
Disclaimer: Thoughts and opinions express in this column are those of its author and not necessarily of the Upper Mississippi Waterway Association or its members.
Other items of interest...
* One of the newest members of Congress has locks and dams high on his priority list. Kentucky’s James Comer was sworn in Monday. He says, “I’m excited about (Pres. Elect) Trump’s desire to invest in infrastructure. There are a considerable number of very important infrastructure projects for west Kentucky…(including) the upgrade of the locks and dams along the river system — that's very important in west Kentucky.”
* The M-55/M-35 Container on Barge (COB) Project has been awarded $96,000 by the Maritime Administration to help planning efforts for containerized shipping on the Mississippi and Illinois rivers from New Orleans northward. The award points out that more than three million people live on these Marine Highway Routes.
* Chinese business people continue to see economic potential in America’s Asian Carp. An employee of the U.S. Embassy in Beijing last month brought four food manufacturers and two professors to Vicksburg to sample the fish. The group said it enjoyed the fish and were surprised by the quality of the meat.
* Still another amazing map showing the vast network of rivers and streams in U.S. river basins. The new map highlights the many river basins which feed the Mississippi. The graphic representation uses variously weighted lines to indicate stream volume.
* Delta Queen Steamboat Company remains optimistic that Congress will grant an exemption to the Safety of Life at Sea Act allowing overnight passenger service on the Delta Queen. The company has opened a new restaurant and corporate offices in Kimmswick, Mo., where the Queen will be home-based.