Low water levels said to affect Mississippi barge availability

Washington (Platts)--14Mar2006

Low water levels on the Mississippi River are likely to adversely affect barge availability this year, raise freight rates and mean that barges will not be able to carry full loads, a barge owner warned.

Speaking last week at the SBB Steel Markets North America 2006 conference in Chicago, Thomas Torretti, managing director of Cooper/Consolidated Cooper, said that the Ohio and Missouri rivers have received "zip for snow cover" this winter, which would have a major effect on the Mississippi River.

He said that 65% of the water on the Mississippi at St. Louis came from the Missouri River. This would be the second year running that Mississippi River levels have been affected by a lack of water.

Last year, the Army Corps of Engineers released water from reservoirs to help river levels, but this year "they haven't got the water to do that, so they will not release any," Torretti said. But some of the problem may be alleviated if "we get good spring rainfall."

River levels above St. Louis have been low for the last three months, he said.

Reduced barge availability would have a huge effect on the coal, grain, steel and aluminum industries, with grain being the largest hit. But the impact would hit coal and other raw material imports that had been offloaded from ocean-going ships in New Orleans, Torretti said.

He also warned of a chronic labor shortage that is affecting barge turnaround times. "Before Hurricane Katrina, there were 465,000 people in New Orleans. Now there are just 67,000. You just can't hire them."

Despite higher freight rates, there is no incentive to build more barges, which cost $500,000 each for a covered hopper barge, Torretti said. The price of new barges has more than doubled in the last three years.

The number of covered hopper barges in the Mississippi fell by 2,000 in the last two years to 10,500, he said. This is due to several being scrapped because of high scrap metal prices. "This enabled us to get rid of a lot of junk. Then, the Brazilians came in and started buying 25-year old barges at $100,000 each and we lost some to the hurricanes."

Torretti urged shippers to ensure barge availability when bringing in ocean vessels to transship imported materials onto river barges. Doing so would reduce or eliminate costly demurrage charges, he said. But it will require good planning and co-ordination on the part of shippers.

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