EconSouth (First Quarter 2008)
The Lower Mississippi River: The Flow of Trade
One of the world's most extensive waterways, the Mississippi River occupies a near-mythical role in the national psyche. The river also plays a very real—and crucial—role in U.S. commerce.
Few if any natural features of the United States have the far-reaching impact of the Mississippi River. With a basin covering more than a million square miles—including all or parts of 31 states and two Canadian provinces—the Mississippi River drains 41 percent of the continental United States. The river's drainage basin is the world's third largest, exceeded in size only by the watersheds of the Amazon and Congo rivers.
The Mississippi plays a central role not only in the U.S. ecosystem but also as a commercial shipping hub. The five ports on the lower Mississippi combine to form the nation's largest port complex, in terms of tonnage. The largest of the five, the Port of South Louisiana, ranked first in the nation (with 225 million short tons) in total (domestic and foreign) trade in 2006. (A short ton is 2,240 pounds.) Its companion ports also ranked high: The Port of New Orleans was eighth (77 million short tons), the Port of Baton Rouge 12th (56.3 million short tons), and the Port of Plaquemines 13th (55.9 million short tons). The St. Bernard Port handled nearly four million short tons in 2006.
Is the mighty Mississippi underused?
The Mississippi River links the heartland of the United States to the rest of the world through its ports. "From our standpoint, we believe the inland waterway system—not just the Mississippi River, but the 14,000 miles of navigable waterway connected to the Mississippi River—are probably the nation's most underutilized natural resource, especially from a transportation perspective," said Robert Landry, director of marketing for the Port Authority of New Orleans.
Landry sees the potential for growth. "As money gets very tight for building highways and bridges, [besides dredging] you don't really have to do anything to the navigable waterway system in the United States," he said. "We can handle big ships. We can handle a lot of barges. I think you're going to see more and more companies look at inland waterway options as a means to moving their cargo. And that bodes very well for the lower Mississippi River and our future."
Statistics from the U.S. Maritime Administration (MARAD) highlight the advantages of shipping on inland waterways. According to MARAD, domestic waterborne shipping for all waterways in the United States moves 14 percent of the national cargo tonnage for less than 2 percent of the freight bill. It also provides an estimated 124,000 direct jobs, generates $10 billion in annual freight revenue, and provides $300 million and $55 million in federal and state tax revenue, respectively.
But even Jim Murphy, the director of MARAD's East Gulf Lower Mississippi Gateway Office, recognizes some of the limitations for inland waterway shipping.
"If you're shipping steel from New Orleans to Pittsburgh, a barge on the Mississippi is a good option," Murphy said. "If you're shipping something from Fort Pope, La., to Fort Carson, Colo., it doesn't make as much sense."
How much can Old Man River carry?
How close those numbers are to reaching the river system's capacity, no one is sure. "One of the things we've not done a good job of is measuring how much capacity our inland waterway system has," Murphy said. "One way to look at capacity is to compare volume over time. If they used to ship five million tons a year on the Missouri River and now they ship one million, then you could say it's at 20 percent capacity. But that assumes there's no change in how the river is managed. The Missouri River is holding water [dammed] now because of endangered species and recreation.
"Even though we haven't measured capacity to four decimal points, we do believe the [Mississippi] river has a much larger capacity. We're still encouraging people to use water transportation when it makes sense," Murphy said.
One way to increase the capacity of the river, Murphy notes, is to increase the amount of cargo barges can carry. Above Baton Rouge, USACE is charged with keeping the water depth at nine feet. Barges are required to have a draft of eight feet, six inches, which leaves six inches for clearance. "Let's say you had a barge with a draft of eight feet, six inches with 12,000 short tons," Murphy said. "If you could give that barge a 12-foot draft, you could increase the load from 12,000 tons to 18,000."
Even without deepening the inland waterway, USACE has its hands full maintaining the river. The biggest challenge lies in dredging the deep shipping channel that runs from Baton Rouge to the Gulf of Mexico. In 1994, USACE deepened this channel from 40 to 45 feet. Since then, USACE has been committed to keeping the river at the same full depth and width all the time, not a cheap or simple task.
"For the whole Mississippi River deep draft project, we dredge about 30 million cubic yards. The total project budget is an average of about $55 million a year," said Michelle Ulm, USACE's operations manager of the Lower Mississippi River project. "The Mississippi River Navigation Project is the largest navigation project in the Corps of Engineers."
The flow must go on
"One of the things people don't like to talk about is reliability," Murphy noted. "Whenever there's a flood or a drought, it has an impact on the reliability of the system."
Even so, USACE has done a good job of keeping the lower Mississippi River open, even when confronted with the challenge of Hurricane Katrina.
"The channel was affected down at the jetty reach, which is at the end of the southwest pass [22 miles from the Gulf of Mexico]," Ulm said. "Within one week after Katrina, we were able to receive bids from hopper dredge contractors. We awarded a contract and had that part of the channel dredged out within one week. They dredged about 300,000 cubic yards. That was extremely fast. The total recovery was about two weeks, and that included getting everything surveyed so there weren't obstructions in the channel. That survey effort had to go from Baton Rouge to the Gulf of Mexico." Ulm said Hurricane Katrina has had no lasting effects on the lower Mississippi.
The cargo changes with the economy
In 2007, traffic in the Port of New Orleans' single largest commodity—steel—was considerably down from previous years, Landry said. On the positive side, he notes a big increase in the volume of containerized cargo, which usually represents only about 30 percent of the port's business.
Containerized cargo traffic has grown this year by double digits, Landry said, to a large extent because of the economic slowdown and the weak U.S. dollar. "It made exports a lot more attractive to foreign buyers. They're buying food products; they're buying chemicals and all of the things that go in containers. There's definitely been a market shift in our cargo base," he said.
Moving from the kinds of commodities that are shipped in bulk (such as petrochemicals, coal, and steel) to containers is a good thing, according to Gene Schrieber of the World Trade Center in New Orleans, an organization that promotes regional trade and commerce.
Schrieber said the containers commonly called TEUs—or 20-foot equivalent units, with a capacity of 20 feet by eight feet—are an especially desirable type of business to ports. "The reason you want containers is because that's when you get a Wal-Mart distribution center, a Target distribution center, or a Circuit City distribution center. That's the kind of stuff that goes in containers. And that leads to even more jobs."
Regarding containerized cargo, the lower Mississippi River ports are playing catch-up. According to 2005 statistics on container freight from the American Association of Port Authorities, the Port of New Orleans ranked 25th nationally with 176,000 TEUs, Baton Rouge ranked 45th with 1,826 TEUs, and none of the other three ranked in the top 50. (This volume lagged far behind the two leading U.S. cities in TEU traffic in 2005: Los Angeles, ranked 10th globally with 7.5 million TEUs, and Long Beach, Calif., 11th globally with 6.7 million TEUs.)
"We don't have a lot of containers, and that's not good," said Schrieber. "I'm not complaining about the cargo we have. Any port director is going to say, 'Look, my job is to fill ships. I don't care what it is. I just want a lot of heavy stuff.' " But as he noted, different kinds of containers have different economic impacts.
Employment goes ashore
"What you really want is an auto assembly plant or something, but only certain places get those, and it's not usually ports anyway," Schrieber said. "But you can still carry a lot of cargo going to those places. Mobile [Ala.] just beat out New Orleans in a national competition to get a [ThyssenKrupp] steel mill from Germany. The steel mill wouldn't have been in New Orleans. It would have been upriver. But it would have meant a huge amount of raw steel coming into the Port of New Orleans going up there. As it is, New Orleans is the biggest steel port in the country because of the auto plants in Kentucky and Tennessee."
So while some view the information superhighway as the key to the future, the lower Mississippi River region still looks at the untapped potential of a natural resource that predates civilization. Whether it's enhancing commerce or supporting distribution and manufacturing jobs, the lower Mississippi River will no doubt play a key role in the country's economic vitality.
This article was written by staff writer Ed English.