WJ Annual Review of Waterway EventsView Source
2019: The Annual Review Of Waterway Events
DECEMBER 13, 2019 BY DAVID MURRAY
The two top stories of 2019 were both carry-overs from 2018.
A cascading series of devastating spring floods affected every river system. Dozens of flood records were set or broken, some dating back to the Flood of 1927. The floods shouldered river navigation to the forefront of media awareness for months, as footage of flooded fields and towns and breached levees went viral on the Internet.
The rains and floods hit beleaguered farmers, already reeling from the effects of tariff wars and retaliation by China, twice: by flooding their fields, and by halting or slowing barge traffic on many river systems. Farmers showed their resiliency by bringing in larger-than-predicted crops of both soybeans and corn from reduced acreage despite flooded fields, although prices have remained depressed for soybeans especially.
The floods stretched Corps of Engineers resources to the limits, accelerated damage to aging and crumbling lock and dam infrastructure, and left an already-underfunded inland navigation system with billions of dollars of additional expenses.
Supplementary dredging money is just now coming through the federal pipeline to restore collapsed levees, dredge silted channels and restore damaged infrastructure. The physical consequences from the floods of 2019 will be with us for years and years to come.
(ALSO: Check out the WJ’s Top Photos of 2019!)
2019 began with government dysfunction of a familiar kind. The federal government partially shut down December 22 over a budget impasse in Congress, centering partly on President Trump’s desire to have a southern border wall funded.
This time around, though, some federal agencies had already been funded by a so-called “minibus” bill earlier that fall. The Corps of Engineers was funded, meaning that the navigation industry avoided most direct impacts of the partial shutdown.
But neither the Maritime Administration nor the Coast Guard were funded. This led to embarrassing stories in the national media of Coast Guard personnel working rescue missions without pay and Coast Guard families having to resort to food pantries.
An outcry developed, with prominent Coast Guard supporters saying this should never be allowed to happen again. The bad publicity surrounding the Coast Guard freeze may have contributed, some believe, to increased reluctance in Congress to resort to government shutdowns over budget disputes in the future. Be that as it may, both parties in Congress have been (so far) careful to avoid one this winter, as a temporary omnibus funding bill was passed.
With the effects of the closure on the Coast Guard fresh in the public’s mind, Coast Guard Commandant Karl Schultz warned in his March 15 “State of the Coast Guard” address that the service is reaching a “tipping point” in what it can do with inadequate and aging resources as its mission portfolio continues to increase.
President Trump finally signed a funding bill February 15, averting a second shutdown.
A more immediate consequence for mariners of the partial shutdown was the closure of the National Maritime Center in Martinsburg, W.Va. That meant a huge backlog in merchant mariners documents being processed. On January 8, the NMC said it would extend until March 31 the validity of Merchant Mariner Credentials and medical certificates that expired during the shutdown. As the shutdown continued, more extensions were issued. In May, the NMC was still citing a backlog and posting advice to mariners about extension letters.
The floods of 2019 began at the end of 2018 with higher-than-normal snowfall across the Upper Midwest that had already resulted in a snowpack roughly twice the normal size by the end of the year. On February 11, a National Weather Service report concluded that there has been a 37 percent increase in very heavy precipitation events over the Midwest in the past few decades, giving a sobering picture of what may be a new normal.
In February 2019, more snowfalls broke numerous records across the region. On February 20, the Twin Cities and St. Cloud in Minnesota broke their February snowfall record and added several more inches to the total through the remainder of the month. The total snowfall for the 2018-2019 season in the Twin Cities was 56.8 inches as of February 28; the normal average snowfall for the entire season is 54.4.
On February 7, the Corps announced that all stored 2018 flood waters were evacuated from the Missouri River mainstem reservoir system, and the system was ready for 2019 spring runoff.
Then, in March, came the so-called “bomb cyclone.” This was a powerful low-pressure storm caused by a rare convergence of factors that produced hurricane-strength winds and up to 2 feet of snow in Colorado and across the Upper Midwest. Already-saturated ground sent floodwaters racing across farmland and into swollen rivers. At least one million acres of farmland were flooded in the storm’s immediate aftermath.
Flooding along the Missouri River was described as “catastrophic,” and eight midwestern states through which it flowed declared emergencies. Extensive flooding also occurred in the Missouri’s tributaries such as the Platte and Elkhorn rivers.
Nebraska Gov. Pete Ricketts said the storm had caused “the most extensive damage our state has ever experienced.” Offutt Airbase in Omaha, which houses the Strategic Air Command, had more than 130 structures damaged by Missouri River flooding. It was reported that 60 of those structures were damaged beyond repair and would be demolished. The March storm generated tornadoes as far south as Kentucky.
On May 7, the Corps reported that runoff into the upper Missouri River basin in April was 7.8 million acre-feet, the third-highest April runoff in 121 years of record-keeping and more than 2-1/2 times the normal runoff.
On July 2, Tom Brady, deputy director of readiness and contingency operations for the Northwest Engineer Division, which manages the upper reaches of the Missouri River, said a preliminary estimate of the cost of repairing damaged levees along the Platte and Missouri rivers alone stood at $1.15 billion.
The Corps reported that July runoff into the upper Missouri River was 7 million acre-feet—213 percent of normal for that month. The Missouri River was to see more flood surges; as this issue goes to press, the Missouri River has been reported below flood stage for the first time since March.
Rain On Top Of Rain
But Mother Nature wasn’t done yet. The January-to-May period of 2019 was the wettest on record for the entire U.S., with multiple severe weather outbreaks through May in the Midwest, high plains, and south exacerbating the flooding and causing additional damage. Saturated soils sent water and tons of silt racing down already-swollen rivers.
Throughout late May and early June, rains in Iowa, Illinois, and Missouri caused every gauge on the Mississippi River to record a top-five-ever flood crest.
As heavier than normal rains continued during the spring and summer, two more waves of flooding hit the Missouri River. By September, parts of the Missouri had registered flood-stage waters for seven months.
On the Upper Mississippi, hopes that navigation could resume were dashed in early April when fresh floodwaters poured down. The mv. Aaron F. Barrett reached Upper Mississippi River Lock and Dam 2 April 24, but the first tow from below the Upper Mississippi locks—the traditional marker of the opening of the navigation season—wouldn’t make it for weeks more, due to flooding.
In early May, Upper Mississippi River locks that had been briefly open were closed again as new rainfall raised river levels again. The St. Paul Engineer District was operating the river in an “open river state,” meaning all dam gates were raised. The guideline for opening the gates is a flow rate of 63,000 cubic feet of water per second.
In the Quad Cities, the river approached levels matching their highest-ever levels of 1993. On May 1, a temporary levee failed, allowing the river to flood 15 square blocks of downtown Davenport, Iowa with up to 6 feet of water. Those images also went viral on the internet.
The next day, the downbound towboat Legacy struck the Eads Bridge in St. Louis, demolishing its pilothouse.
On June 4, the Rock Island Engineer District said the dam gates at Upper Mississippi Lock and Dam 15 had been out of the water for 81 consecutive days, smashing the previous record of 37 consecutive days.
The St. Louis Engineer District activated its Emergency Operation Center, which operated seven days a week from 7 a.m. to 7 p.m. However, by this time Ohio River levels were lower and not contributing further to Lower Mississippi river flooding.
On July 3, six barges were sucked through a levee breach near Alexander County, Ill., and wound up in a farm field, where they remain.
Communities along the Arkansas River all experienced extensive flooding throughout the spring, with numerous levee breaches. The river ports of Van Buren and Fort Smith received extensive flooding and damage.
On May 23, two barges broke away from mooring on the Arkansas River and drifted downriver into Webbers Fall Lock and Dam. Their progress was followed with intense anxiety, as it was feared that the dam could collapse, leading to even more catastrophic flooding to the surrounding area. The barges did strike the dam gates and sank within minutes, but damage was not as serious as feared; news helicopter images of the sinking also went viral.
On May 29, the Arkansas River crested at 40 feet, breaking a record of 39 feet that had been set in 1945.
Commercial navigation was shut down on the Arkansas River for a total of 57 days. On June 10, the New York Times wrote, “Water, the very thing that makes barge shipping possible in normal times, has been present in such alarming overabundance this spring that it has rendered river transportation impossible in much of the United States.”
Although the Missouri River and Arkansas River may have been the hardest hit, no river system was immune. On the Illinois River, the pilothouse of the mv. Zeus was sheared off after it made contact with the Peoria & Pekin Union Bridge.
On February 22, the Chicago Board of Trade declared a “force majeure’ condition along the entire length of the Illinois River, meaning that barge delivery contracts could no longer be legally enforced.
The Ohio River—having experienced its worst flooding in 20 years in 2018—also saw higher than normal rainfalls and flooding in 2019. The high water contributed to several high-profile incidents. On Christmas Day, 2018, the tow of the mv. Debbie Graham struck the George Rogers Clark Memorial Bridge in Louisville, Ky., and broke apart. Nine of its 15 barges lodged against the McAlpine Dam. Although their positions didn’t threaten the channel or prevent the operation of the lock, persistent high water slowed and interrupted removal efforts. The last barge was finally removed on May 16. Even then, five of the damaged barges remained on the right bank of the Ohio River for later removal.
On the Monongahela River, the tow of the mv. Brenda L. Murray II broke up January 21 in high currents, scattering its 12 barges, some of which later allided with Pittsburgh-area bridges. On February 8, the Ed McLaughlin sank in the Ohio River near Cheshire, Ohio.
By February 21, the Tennessee and Cumberland river valleys had already received 50 percent more rain than normal since the year’s beginning and were bracing for flash floods because of more rain. In March, every member of Tennessee’s congressional delegation urged President Trump to approve disaster funding for the state.
On the Ohio River, persistent high water delayed the demolition of Locks and Dams 52 and 53, rendered obsolete by the completion of Olmsted Lock and Dam the previous year. Doug Harman, chief of quality assurance with the Corps in Olmsted, Ill., said a formal survey isn’t complete, but he estimated that about 65 percent of the first phase work was complete. A contract for Phase 2 is expected to be awarded in May or June 2020, subject to funding.
On the Tennessee-Tombigbee Waterway, a gauge at Bigbee, Miss., saw a rise of 20 feet over a one-week period. At Aberdeen Lock and Dam, the Tennessee River jumped from 15 feet on February 8 to 37 feet on February 24. By early March, the high water and the silt it brought led to never-before-seen levels of shoaling on the Tennessee-Tombigbee Waterway.
By March 3, the river was back down to 16 feet, but meanwhile the silt it left behind—an estimated 400,000 cubic yards—had formed a giant sandbar that, in some places, protruded from the water’s surface like an exposed spine. Extending almost a mile downriver, the sandbar halted navigation. It wasn’t until May 21 that the Corps announced that a pilot channel 150 feet wide had been cleared below Aberdeen Lock, reopening the waterway. The Corps said that even after a temporary channel was dredged, a more permanent fix could take five or six years.
On March 21, Ed Clark, director of the National Oceanic and Atmospheric Administration’s Water Center in Tuscaloosa, Ala., warned, “This is shaping up to be a potentially unprecedented flood season, with more than 200 million people at risk for flooding in their communities.”
The upper portion of the McClellan-Kerr Arkansas River Navigation System was finally declared reopened September 30, 140 days after the two barges sank at Webbers Falls Lock and Dam. Tow sizes were restricted, and the Coast Guard’s river survey work was supplemented by barge industry reports of shoaled areas.
Lower Mississippi River
On the Mississippi River, the flood was the longest-lasting since the Flood of 1927—just one melancholy instance of records that were broken or set anew.
In May, the National Weather Service reported that eight states along the Mississippi River had seen the longest period of flooding since the 1927 flood. At Baton Rouge, the river had been at flood stage since January as snowmelt and rainfall waters made their way downstream.
Although the navigation industry did a remarkable job of coping with the flooding in coordination with the Coast Guard and Corps of Engineers, incidents did occur due to the extreme high water. Near New Orleans, for example, the tows of the mvs. D&R Boney and Miss Dixie collided near New Orleans, leading to a barge breakaway.
The Corps of Engineers opened the Bonnet Carré Spillway on February, the first of what was to prove two openings in one year: the first from February 27 through April, then again from May 10 through July 27.
The spillway, which before this year had been used only 12 times in its more than 80-year history and never twice in the same year, was open for a total of 123 days. The extra surge of fresh water into oyster fisheries caused a precipitous drop in oyster catches. In October, Mississippi’s attorney general announced that the state would file suit against the Corps over the openings, on behalf of Mississippi’s fishermen whose livelihood was allegedly damaged.
The New Orleans Engineer District began closing bays of the Bonnet Carré Spillway after its second opening on May 23. On May 29, the district said it planned to operate the Morganza Flood Control Structure on June 6, but later reversed itself.
The record length of the openings left the spillway structures covered in sand and sediment.
Planting, Harvesting Delays
The widespread flooding added to farmers’ pain in another way: by delaying the barging of fertilizer during planting season. The flooding contributed to spring fertilizer price spikes, which were already being reported in December 2018. All types of fertilizer experienced price rises.
The flooding delayed the movement of fertilizer to many farms, although some of them were already flooded and would have delayed planting anyway. Late plantings and fertilizer delays meant late harvests. In mid-October, the national soybean harvest was reported at 46 percent, compared with an average pace of 64 percent by then. Iowa’s corn crop was only 15 percent harvested by mid-October, well behind the five-year average of 34 percent.
Farm Bankruptcies Increase
At the Inland Marine Expo held in St. Louis in May, longtime IMX presenter Ken Eriksen—senior vice president at commodities consulting firm IEG Vantage, formerly Informa Economics—noted that farm bankruptcies are dramatically increasing and said the effects of the U.S.-China trade talks and devastation to U.S. agricultural production wrought by the Floods of 2019 may last for years.
But although the triple whammy of continued and unprecedented high water, disrupted commodity flows due to the trade dispute between the U.S. and China, and China’s swine flu epidemic have hurt U.S. farmers, Eriksen said he remained “cautiously optimistic” overall about the barge industry itself. One bright spot, said Eriksen: barged coal exports got a temporary boost this year. But the coal barge fleet will soon need to be reduced further, he said.
Disaster Aid Bill Finally Signed
On June 6, President Trump signed the $19.1 Additional Supplemental Appropriations for Disaster Relief Act, 2019; it had been held up for months in Congress because of disputes over how much aid Puerto Rico, still recovering from Hurricane Maria in 2017, should receive.
Even after the bill was signed, it would be more months before dredging money the bill included would make its way through the federal financing system. On August 12, the Rock Island Engineer District told members of the River Industry Executive Task Force that it would have to start removing dredges because it had not received promised dredging money. A temporary fix was reached on August 16, when the St. Louis District transferred $1.8 million to the Rock Island District to keep dredges running until August 15.
In September, the Corps identified short-term disaster recovery projects it would fund with emergency money.
In October, Todd Semonite, Chief of Engineers, told the Senate Environment and Public Works Committee that the Corps is considering a pilot program that would allow dredging for several port at once to be put on one contract, a move that should speed dredging work.
Finally, on November 14, three members of Congress announced the release of $100 million in supplementary dredging funds targeted for the Upper Mississippi. The members had sent a letter to the Office of Management and Budget September 17 urging that the money be released. The members noted that statutory language requires the OMB to report to Congress on the status of the funds within 60 days, or by August 11. That deadline passed with no report.
M&A Activity In 2019
Despite the floods and trade uncertainty and its hits to farmers, the year saw several important mergers and consolidations, as smaller companies were bought by bigger players or well-placed independent operators. Some purchases involved very well-known names on the rivers.
Mergers and sales of companies are always driven by a variety of factors. A family founder may near retirement with no obvious successors, or a business downturn in one niche may convince an operator to sell. A company may decide to exit one part of the navigation business while focusing on another part. In addition, some maritime transportation assets continue to be attractive to outside investors who know the industry.
Some of 2019’s consolidation was driven by compliance with Subchapter M, as some smaller companies decided compliance costs are too much for them. Other companies have expanded by seeing in Sub M compliance service offerings an opportunity to specialize. Subchapter M compliance is also at least part of the story behind a healthy pace of new vessel construction.
On May 10, Inland Marine Service (IMS) and James Marine announced they had formed a new joint venture to assist vessel owners in complying with Subchapter M requirements. The venture, called Mavericks Towboat Solutions, was announced May 10 by Jeff James, president of James Marine, and Dave Hammond, president of IMS.
Mavericks will help vessel owners comply by refurbishing/repairing vessels to ensure they meet the new standards, or replace vessels with a new-construction program, and assisting with the sale of the non-compliant vessels.
“Mavericks is a unique collaboration that offers our clients the best of our companies combined,” explained Jeff James. “We are able to consult one-on-one with each client to meet their needs individually. Some clients simply need advice on how to quickly and effectively meet Sub M requirements. Others may prefer to sell non-compliant vessels for us to maintain. Regardless of an owner’s specific needs, we are able to provide help along the way.”
On December 3, 2018, Muscle Shoals Marine Service Inc., a fleeting and harbor service with locations at Florence, Ala., and Iuka (Yellow Creek), Miss., was bought by Mark Burchfield, a former towboat captain with American Commercial Barge Line. Burchfield purchased the company from Mike McDonald after he heard of the latter’s plan to retire from the river business. Burchfield renamed the company RMB Marine Services LLC, and the new company said it hopes to expand both fleets.
On December 28, Savage Inland Marine announced that it had bought the assets of Progressive Barge Line, including seven towboats and 12 tank barges.
Kirby Corporation announced on January 31 that it had signed an agreement to purchase the maritime transportation fleet of Cenac Marine Services for $244 million in cash. The fleet included sixty-two 30,000-barrel inland tank barges, 34 inland towboats and two offshore tugs.
The acquisition action continued in February, with Upper Bay Infrastructure Partners announcing the acquisition of Tidewater Transportation and Terminals from Stonepeak Infrastructure Partners. Auxo Investment Partner announcing February 21 that it had acquired Great Lakes shipping firm Andrie LLC.
On April 26, Bruce Oakley Inc., Arkansas-based distributor and transporter of bulk commodities, said it had signed a definitive agreement to purchase the Lange-Stegmann Company. Lange-Stegmann was founded in St. Louis as a fertilizer wholesaler and owned a 60-acre site at Upper Mississippi Mile 182.7 that includes a barge dock.
CC Industries acquired Southern Towing Company, one of the best-known names in the river industry, from Trive Capital and McCombs Partners.
On June 4, Inland Marine Service announced that it will manage all of Apex Oil company’s vessels and tank barges. Inland Marine Service also agreed on September 19 to manage all of Tennessee Valley Towing’s 20 towboats.
On October 1, Pine Bluff Sand & Gravel Company and Canal Barge Company announced an agreement for Pine Bluff to sell five line-haul towboats to Canal, although Pine Bluff will retain its barge assets and its remaining harbor/tender boat fleet.
In an agreement that was finalized October 30 but was only disclosed in early December, American River Transportation Company (ARTCO) agreed to operate all the assets of TPG Mt. Vernon Marine LLC. The agreement was described as a five-year lease with an option to buy.
The TPG assets to be managed include 13 towboats and operations in Jeffersonville, Mt. Vernon and West Franklin, Ind.; Louisville and Uniontown and along the Green River in Kentucky; and Chicago, Ill. The Mt. Vernon shipyard includes two drydocks and two Sennebogen cranes, and the Chicago yard includes three drydocks.
Roots Of Trade War
After the floods, the other top story of the year for inland navigation interests is the ongoing trade uncertainty unleashed by President Donald Trump’s tariff wars. Trump used the threat of tariffs again and again, not only against China but against other countries as well, including some allies.
The trade dispute with China began in earnest in early 2018, but the underlying issues had simmered for years. China’s membership in the World Trade Organization in 2001 was hailed as a victory for open markets and free trade, but many companies doing business in China had since complained that China was not observing the terms and rules of its membership. Foreign and especially U.S. companies complained of punitive and restrictive Chinese trade practices. A special grievance was the Chinese practice of forcing foreign companies to hand over proprietary intellectual property that was then used by the Chinese government to help its own companies to compete against foreign rivals.
Prior to Trump, U.S. governments had reacted only on a case-by-case basis—for example, by responding with steel tariffs to Chinese behind-the-scenes subsidizing of steel exports, a violation of WTO rules—but had not responded to the whole range of troublesome Chinese trade practices.
No End In Sight
Trump campaigned against unfair trade treatment by China and had already threatened the use of tariffs in his campaign. After he was elected, he was able to declare unilateral tariffs under authority granted to the president by Congress under a law that allowed him to invoke “national security.” Trump announced tariffs on all imports of steel and aluminum in March 2018, including those from China, but also those from Mexico and Canada. Bilateral negotiations eventually lifted the last two.
In July 2018, he announced 25 percent tariffs on $50 billion worth of Chinese goods. In 2017, soybeans were the top U.S. agricultural export to China; in 2018, as the trade war heated up, U.S. soy exports to China declined by 98 percent, according to one business publication.
China retaliated, targeting farmers, a core Trump constituency, with tariffs against soybean exports, among other goods. The Chinese market had become the single most important export market for U.S. soybeans in recent years. It wasn’t just a matter of tariffs, though; Chinese state agricultural buying organs were under orders not to buy American soybeans, even when their price remained competitive despite the added tariffs.
As the tariff war dragged on, a pattern emerged. One or both sides would announce new talks with great fanfare, and news would be leaked to media outlets of alleged Chinese promises to make massive purchases of U.S. soybeans and/or other agricultural goods. Some small purchases might take place, but the talks would stall and the cycle would begin again.
As this issue goes to press, China and the U.S. are again having talks, seeking to delay a new round of tariffs kicking in December 15, this time on $165 billion worth of Chinese goods. The Trump administration is again conditioning progress in the talks on massive Chinese purchases of U.S. farm goods. Meanwhile, some economists and trade experts are speculating about a permanent “decoupling” of Chinese and American trade flows.
At the beginning of 2019, some observers thought the trade dispute with China might still be resolved in time to restore the Chinese market for U.S. soybeans. Few, if any, observers are looking for that now. Despite participating in talks, China is widely reported to be waiting out the results of the 2020 election before making any significant trade moves.
The tariff wars have become part of a larger geopolitical struggle. Other issues have become caught up in the trade disupute, such as a U.S. resolution supporting protestors in Hong Kong, or the Trump administration’s ban on doing business with Chinese telecom giant Huawei, although the concerns there have to do with national security rather than trade per se.
Swine Flu Factor
Not to be overlooked is the devastating Chinese and Asian swine flu outbreak, which likely would have resulted in decreased buys of U.S. soybeans even in the absence of a trade war. The swine flu is deadly to pigs but does not affect humans, and is very contagious and easily spread. There is no cure. So far, it has not reached U.S. herds.
The total extent of the swine flu’s impact is difficult to gauge, esepcially since Chinese figures are not always reliable, but it is huge. Estimates have speculated that anywhere from 20 to 70 percent of China’s swine herd may be affected.
China is the world’s largest consumer of pork, and much of the soy crop it imported from the U.S. went to soymeal to feed poultry and hogs. Out of a total herd of about 360 million animals, one international bank estimated that anywhere from 150 million to 200 million may die from the disease or have to be culled.
In June, China admitted it has culled 1.1 million pigs to date and said swine flu had been found in 32 areas of the country. The disease has also spread to other southeast Asian countries such as Vietnam and Indonesia, which have also culled herds. Experts say it could take years to develop a vaccine, since the virus is one of the most complex known.
Ag Groups Diversify Exports
In the face of the collapse of the Chinese soy market, U.S. agricultural marketing and export trade groups are doing their best to diversify American soy exports, and soybean farmers are hunkering down.
Many, not surprisingly, are switching their crops. By November, the USDA was forecasting that soybean-planted acreage will drop by 6.6 million acres to 82.5 million in 2019. The American Farm Bureau Federation noted that “if realized, this would be the third-largest acreage decline of all time and the largest year-over-year decline in soybean plantings since … 2007.”
President Trump has authorized billions of dollars’ worth of relief payments in several rounds to farmers affected by his tariff wars, to the point where those payments constituted a substantial part of many farmer’s incomes for 2019. Those payments can only be made to repair tariff damage, however, not flood damage.
The trade war has had fallout across the economy. The Port of Los Angeles reported December 7 it moved 728,918 TEUs in November, a decrease of 12.4 percent compared to last year. After 11 months of 2019, however, total volumes at Los Angeles have increased 0.4 percent compared to 2018, the busiest year on record. However, exports declined by 9.2 percent to 138,545 TEUs. This makes the 13th consecutive month of declining exports at the port. Empty containers also declined 14.8 percent to 219,024 TEUs.
“As we expected, 2019 winds down with volumes weakening, due largely to the U.S.-China trade war which continues to negatively impact American consumers, manufacturers and U.S. supply chain jobs,” said Port of Los Angeles Executive Director Gene Seroka. “Although we anticipate tariffs will linger well into 2020, we will continue to aggressively invest in our physical and digital infrastructure through this economic cycle.”
Energy Coast Progress
While the floods generated headlines, 2019 saw continued growth and investment in the “Energy Coast,” as natural gas and oil released by hydraulic fracturing contributed to an ongoing energy boom. The boom has drawn billions of dollars in investment to the Gulf Coast.
In March, the port of Corpus Christi approved an agreement with Lone Star Ports to develop 200 acres on Harbor Island into a petroleum export terminal.
The West Texas Permian Basin produces about 14.5 billion cubic feet per day of natural gas. The Haynesville Shale natural gas production in North Louisiana has been growing over the past three years, from 5.8 billion cubic feet in 2016 to 11 billion this year. Eagle Ford natural gas production has been flat over the past two years at 6.5 billion cubic feet. Gulf Coast natural gas production is expected to hit 42 billion cubic feet per day by 2020 and may grow to 43.8 billion by 2022.
In November, the U.S. officially became a net exporter of both crude and refined oil products for the first time in decades.
Ship Channel Deepening
In September, Port of Houston Authority Chairman Ric Campo unveiled a new website to help market the ambitious expansion project of the Houston Ship channel, a top goal for the port. If expanded, the waterway would be able to accommodate two-way traffic with container ships that are nearly 200 feet wide and 1,300 feet long sharing the route with tankers hauling growing shipments of crude oil, gasoline, diesel and petrochemicals.
The port hopes to have a $10.6 million feasibility study by the Corps of Engineers completed and approved by Congress in 2020, allowing the port to begin construction soon after. To hasten the process, the port is looking to secure funding for the $1 billion project while the engineering study is under way. It is hoping that port and channel stakeholders—including private businesses—contribute funds to help accelerate construction work, he said. The port announced in July that it had already raised $300,000 to contribute to the feasibility study.
Under the proposed plan, the channel would be widened from 530 feet to 700 feet along Galveston Bay to the Fred Hartman Bridge in Baytown. The channel also would be deepened to a uniform 45 deep all way from Galveston Bay to City Docks, just inside Loop 610. Campos has called widening the channel the port’s “moonshot.”
With partisan animosity especially high, Washington in 2019 was a difficult place for any group to pursue its objectives.
On September 24, Democrats in the House of Representatives decided to move ahead with impeachment proceedings against Trump. As another budget deadline loomed, an agreement was quickly reached on another temporary spending bill. Both parties have reason to avoid another government shutdown.
Industry groups like The American Waterways Operators and Waterways Council Inc. continued their mission of working, in season and out, with both parties to secure the interests of brown-water navigation. Yet despite the circus atmosphere of the impeachment coverage, there were signs of hope that Congress would continue to support waterways infrastructure.
In September, WCI praised Congress for passage of the FY2019 Conference Report to Accompany H.R. 5895 that combines appropriations bills for the legislative branch, military construction and veteran affairs, and energy and water development that funds the Army Corps of Engineers. The Conference Report was passed in the House by a vote of 377 to 20, and in the Senate on September 12 by a vote of 92 to 5.
“This is the first time in many years that a number of appropriations bills have been finalized before the start of the new fiscal year,” WCI said on its website. “In the case of Energy & Water Appropriations, this means the Corps of Engineers will receive its full funding rather than operate from a continuing resolution that provides the previous fiscal year’s funding level.”
Jones Act Defense
A study released in July by PricewaterhouseCoopers, commissioned for the Transportation Institute, showed that the Jones Act continues to fuel a strong maritime industry throughout the Great Lakes region, where the PwC report shows 123,670 Jones Act-related jobs–or 20 percent of the national total–are based. Between 2011 and 2016, maritime employment in the region increased by 25,400 jobs. The industry generates $30 billion of economic activity and $8.45 billion in worker income in the eight Great Lakes states.
Studies like this remain important, because attacks on the Jones Act were also a feature of 2019. Many of these come from libertarian think tanks funded by oil companies, which would like to remove Jones Act restrictions on offshore vessels, or with ties to Puerto Rico or Hawaii, both of which believe the Jones Act burdens their economies—even though an earlier study showed no significant contributions to Puerto Rico’s cost of living by the Jones Act.
Despite weather, floods and trade uncertainties, the inland maritime industry continued to be a key contributor to an overall strong national economy.