2022: The Annual Review of Waterway Events

December 16, 2022 The Waterways Journal

For the river industry, 2022 was defined by an unprecedented global drought and heat wave. The summer broke records for heat and drought all over the northern hemisphere and stopped river traffic in most major commercial waterways. Mississippi River water levels began dropping in later summer amid record-breaking drought, lower storm activity brought less rain than usual into the basins that feed the river, and the result was a historic low-water season. Although loads and tow sizes were reduced, a valiant coordinated response by the barge industry, Corps of Engineers and Coast Guard kept cargoes moving.

Global Drought Hits Mississippi River

This summer provided a brutal reminder of the importance of river transportation to the world’s economies. It was Europe’s worst drought in 500 years, according to the Global Drought Observatory. By August, the GDO was reporting that drought hazard had increased in Italy, Spain, Portugal, France, Germany, the Netherlands, Belgium, Luxembourg, Romania, Hungary, northern Serbia, Ukraine, Moldova, Ireland and the United Kingdom. The Rhine River, one of Europe’s most important commercial waterways, fell to historic levels and halted river traffic repeatedly, exposing “hunger stones,” poignant markers that recorded low water from previous famine years. Economists estimated that economic losses from low water on the Rhine and the resulting cargo restrictions could knock off half a percentage point of growth from the German economy alone.

In China, the drying up of rivers in the country’s southwest had even more catastrophic effects, shutting down hydroelectric plants and drastically slowing industry. Households and factories saw rolling blackouts as electricity output was reduced. Chinese cities recorded record-breaking levels of heat. Parts of the Yangtze were at their lowest recorded levels since 1865, and oceangoing ships could no longer reach normally accessible ports on the lower Yangtze River.

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By harvest season, it was the turn of the Mississippi River and its two major contributors, the Ohio and Missouri rivers. An official with the National Weather Service reported in October that the June-to-October period was the eleventh driest such five-month stretch in 128 years for the Upper Missouri and Upper Mississippi basins. According to some measures, parts of the American West experienced their most extreme drought conditions in 1,200 years. About 80 percent of the entire United States was experiencing abnormally dry conditions.

As low-water gages began breaking records at key ports and junctions, the Corps of Engineers concentrated its own and contract dredges in the Mississippi River to quickly dredge hot spots. The Corps and industry had learned lessons from the 1988 low water, when tows were restricted to 16 barges at 9-foot depths. This time, the navigation industry safely operated with 25-barge tows at the same depths. This was partly thanks to improved river training structures put in place by the Corps since 1988—revetments and dikes that help the river self-scour by channeling its flow, thus widening the channel and reducing (but not eliminating) the need for spot dredging.

The low water got a lot of attention in the national and world press as sunken vessels and artifacts were exposed, and stretches of river were temporarily dry enough to allow foot traffic to some islands. Hikers were able to walk to Tower Rock, also known as Grand Tower, a landmark small island in the Mississippi River, near Wittenberg, Mo. On the Lower Miss, the low water exposed the wreck of the steamer Brookhill, a wooden-hulled ferry dating to the late 1800s that sank at its mooring on September 29, 1915.

Coming right at harvest time, the low water was tough on farmers. At its worst in October, more than 3,000 barges were halted. Barge rates soared. The U.S. Department of Agriculture reported that the cost of sending a ton of corn, soybeans or other grains southbound from St. Louis to southern Louisiana reached $105.85 on October 11, compared to $49.88 on September 27 and $28.45 on October 5, 2021. Along the Ohio River, prices for corn and soybeans were lower in river terminal areas—a reversal of the normal price pattern.

Finally, some timely rains began to raise water levels. Cargoes returned to full loads and tow sizes by mid-December.

Rail Difficulties

Meanwhile, a threatened rail strike made the shipping situation worse for customers. Strike threats reached a crescendo in September, capping years of discontent among rail workers. Railroads had been strained and operating at or above capacity for years. From 2018 through 2021, the railroads lost 40,000 workers and tried to address the gap with “precision scheduling,” using algorithms to coordinate tight schedules. Customer complaints about rail service shortfalls had led the Surface Transportation Board to require weekly reports from the top four railroads about their plans to address them.

The main worker complaint was lack of paid time off for sick leave, combined with increased stress due to being on-call 24/7. The federal government normally requires all federal contractors to offer employees seven days off with paid sick leave, but railroads were exempted from this Obama-era rule. The Biden administration used its powers under the Railway Labor Act of 1926 to compel talks in September between the parties under a special presidential board, which recommended a 24 percent pay increase partly retroactive to 2020 but didn’t address the main complaint about paid sick days. When four of the 12 rail unions rejected it and again threatened a strike in December, Congress quickly acted to impose the September settlement against the unions’ objections, in a bill that Biden signed, ending the strike threat.

Infrastructure Funding: ‘Riding A Good News Wave’

Much of the IIJA funds were not earmarked, so industry waited to see how they would be allocated. When the administration released its spending plan on January 19, Waterways Council Inc. (WCI) declared that the industry was “riding a good news wave.”

The IIJA provided funding that at the time were expected to fund to completion: Kentucky Lock on the Tennessee River; Montgomery Lock on the Ohio River; Lock and Dam 25 on the Mississippi River (as well as the first-ever funding for the Navigation and Sustainability Program, a long-held towing industry goal); the Three Rivers project on the Arkansas River; and the T.J. O’Brien Major Rehabilitation on the Little Calumet River. “To provide historical context,” WCI said, “this is the same number of construction and major rehabilitation projects that have been funded to completion in the last 13 years.”

The funding news was so good that industry had to caution that while very welcome, the funding was belatedly making up for decades of neglect, and work remained to be done. Updated cost estimates later determined some projects, including the Kentucky Lock Addition Project, would need additional funding because of increased materials and labor costs. River advocates are focusing on urging government to continue the full use of the Inland Waterways Trust Fund to complete outstanding projects, including Dashields and Emsworth locks on the Upper Ohio River; six further NESP locks on the Upper Mississippi River and Illinois Waterway; the McClellan-Kerr Arkansas River Navigation System; and Gulf Intracoastal Waterways Projects, especially the Brazos River Floodgates and the Colorado River Locks.

Port Development

Among the IIJA authorizations for $16.67 billion for new and existing programs were $1.25 billion for the Maritime Administration’s Port Infrastructure Development Program. The money was released in several waves throughout the year. On February 23, the Maritime Administration announced nearly $450 million in grants for port-related projects through the PIDP.

On May 9, the Maritime Administration announced that another $234 million had been added to the PIDP, bringing the program to a record $684 million in 2022. The latest tranche of PIDP grants, announced October 28, sent $703 million to port projects across the country on all coasts, the inland river system and Great Lakes.

On May 27, the Corps of Engineers and New Orleans officials celebrated the completion of the Greater New Orleans Hurricane and Storm Damage Reduction System. This was not part of IIJA, but the culmination of a 10-year project to strengthen the defenses of the Greater New Orleans area against hurricanes and destructive storms that was authorized following Hurricanes Katrina and Rita in 2005. The system had already proven its worth against Hurricane Ida in 2021.

The 2022 hurricane season saw a below-average incidence of major storms and named hurricanes; Hurricane Ian, while causing devastation in central Florida, missed New Orleans completely, while Puerto Rico received the worst of Fiona, which knocked out the island’s power. The low incidence of storms was double-edged, however; late-season storms usually bring welcome rain to basins that feed the Mississippi River, but that didn’t happen this year.

States Fund Ports

States also did their share in funding ports and infrastructure. The state of Illinois’ Port Facilities Capital Grant Program awarded three grants totaling $40 million to the Mid-America Intermodal Port Authority, the Upper Mississippi River Intermodal Port District and Ottawa Port District in late January.

In July, the Arkansas Waterways Commission awarded grants totaling $1,952,102.55 to three Arkansas ports through its Arkansas Port, Intermodal, and Waterway Development Grant Program. Helena-West Helena/Phillips County Port Authority was awarded $535,000 to build a truck staging lane, part of a $12 million phased expansion at Helena Harbor. Osceola Port Authority was awarded $417,102 to replace aging cargo handling equipment, and West Memphis–Crittenden County Port Authority was awarded $1 million to remove metal dolphins and replace a mooring pylon, to mitigate/remove upstream debris and to strengthen the dock substructure.

Private investors are looking at ports as well. In August, the St. Louis Port Authority approved an ambitious $1.2 billion plan to develop 80 acres of the St. Louis riverfront in an industrial area sometimes called Chouteau’s Landing that has several active barge fleets. Good Development Group is proposing the multi-use development, to be called Gateway South, estimating it would take 10 years and would begin in late 2022. In November, a St. Louis land authority approved a resolution officially blighting the site spanning the proposal area. The board suggested tax abatement incentives and sent the proposal to the Board of Aldermen for approval.

Statistical Ports Make Progress

Many terminals and small ports along the Upper Mississippi and Illinois River have banded together in new statistical port districts. Advocates for these port districts say they give a better and more accurate, unified picture of the amounts of cargoes and trade these ports are handling. Formal recognition by the Corps of Engineers as a port statistical area aids with private investment and helps in applying for federal aid.

In 2022, the U.S. Waterborne Commerce Statistics Center approved three adjacent new statistical port districts: the Illinois Waterway Ports and Terminals, the Mid-America Port Commission and the Mississippi River Ports of Eastern Iowa and Western Illinois port statistical areas, collectively called the Corn Belt Ports. Together, they include the core of the nation’s largest grain-producing and exporting region.

The Northern Grain Belt is the latest such statistical port to organize itself, encompassing 11 counties from Red Wing, Minn., to Prairie du Chien, Wis. All 11 counties that make it up passed resolutions to become a part of the port stastical area.

Acquisitions/Mergers

Consolidation in the river industry continued. A lot of venerable river names were either acquired or expanded by acquiring others. On December 6 of last year, Maritime Partners acquired the assets of J. Russell Flowers Inc. On January 17, Northern Marine acquired the assets of ACBL’s Chicago fleeting operations.

The end of March saw a flurry of inland mergers and acquisitions. James Marine bought T.T. Barge Service on March 21. Luhr Bros. Inc., a third-generation family-owned business based in Columbia, Ill., and Bertucci Contracting LLC, a 145-year-old subsidiary of Crosby Enterprises, based in Jefferson, La., merged their operations to become Luhr Crosby LLC. The new company employs 400 people and operates 28 push boats, 400 barges and a variety of heavy construction equipment. The marine fleet includes several 7,200 hp. line boats, inland deck and hopper barges, spud barges and ABS deck barges. The construction fleet includes dump trucks, draglines, bulldozers, scrapers and some of the world’s largest excavators.

Campbell Transportation Company Inc. announced April 1 that it had purchased the marine assets of E Squared Marine Service LLC, adding E Squared’s eight towboats and 25 barges to its fleet of a growing number of dry and liquid cargo barges and 50 towboats.

On May 3, specialty construction firm J.F. Brennan Company announced it had acquired California-based Harbor Offshore Inc., which specializes in commercial diving, marine construction, maritime security barriers and submarine cable installation. The acquisition added submarine cabling and maritime security barrier expertise to Brennan’s portfolio and expanded the company’s operations. With the addition of licensing along the West Coast, Hawaii and Alaska, Brennan now operates in all 50 states.

VLS Environmental Services LLC of Houston, Texas, announced June 21 that it had acquired Plaquemine Point Shipyard. Based in Plaquemine, La., the shipyard is just outside of Baton Rouge and provides full-service barge cleaning and repair along the Mississippi River.

In June, Americraft Marine, a maritime subsidiary of the Libra Group, announced the acquisition of St. Johns Ship Building, a full-service marine facility based in Palatka, Fla., specializing in constructing and repairing Jones Act-compliant vessels; it’s one of the few U.S. shipyards that builds vessels that support and service offshore wind farms.

This past summer, Duncan Armentor, the river pilot who founded launch-boat operator Shamrock Marine, acquired M&P Barge Company. Named after founding brothers Murray and Perry Verret, M&P’s assets included five towboats, crew boats, various crane and deck barges, and the 225 Red Eye Fleet.

One of the biggest river acquisitions was announced in August, when Maritime Partners, a maritime leasing and financing services company, purchased M/G Transport Services from Auxo Investment Partners, a private equity firm that had operated M/G since 2017. M/G offers marine transportation services in the Lower Mississippi River area and along the west canal to Houston, Texas. With more than 300 dry cargo barges, M/G moves petroleum coke, sugar, barite and other materials. M/G will continue to operate under the M/G brand as a standalone entity.

In October, Devall Towing and Southern Towing Company announced that they will fully integrate operations and management of the two companies in 2023—the culmination of a deal originally announced in February 2021. The combination of Devall’s extensive coastal operations network with STC’s upriver capabilities enables the new company to provide integrated marine transportation solutions across the entire U.S. inland and coastal waterway system. The merger will make Southern Devall the seventh largest inland river transportation company, backed by 230 barges, 70 towboats and the expertise of 700 employees to safely transport the nation’s chemicals and fertilizers along all 12,000 miles of navigable waterways.

In October, Viterra Limited announced that it closed an agreement to acquire the grain and ingredients business of Gavilon Agriculture Investment Inc., a subsidiary of Marubeni America Corporation, for a purchase price of about $1.125 billion. Gavilon, headquartered in Omaha, Neb., operates a network of grain elevators and river terminals in major growing areas across the U.S., with access to major railroads, rivers and ports. Rebranding of assets and indicia to Viterra will take place in 2023, as the new company becomes one of the industry’s largest grain origination companies.

Later that month, Tuscaloosa, Ala.-based barging company Parker Towing Company announced it had acquired Baton Rouge, La.-based tank barge operator General Marine Services, which operated a fleet of liquid tank barges and towboats for customers in the refining industry. For Parker Towing, the acquisition expands its tank barge division and fits into its strategy of continuing to diversify and grow from a traditionally dry-cargo carrier, the company said.

In November, Louisiana-based Bollinger Shipyards finalized its acquisition of the Halter Marine and ST Engineering Halter Marine Offshore shipyard following the close of a $15 million deal with former Singapore-based ST Engineering, Bollinger said. The acquisition includes 378 acres comprising two shipyards in Pascagoula, Miss., and two dormant yards north of Pascagoula. The newly acquired yards were renamed Bollinger Mississippi Shipbuilding and Bollinger Mississippi Repair. The acquisition came after reports that former owner ST Engineering sustained a combined net loss from 2017 and 2021 of about $256 million across the two yards.

In November, Middle River Marine LLC announced its acquisition of the assets of Kindra Lake Towing LP of Chicago. Middle River Marine began river and rail terminal operations on the Great Lakes and the Illinois River system in 1998. Its terminal operations now include South Chicago, Calumet Park, Lemont, Joliet, Rock Creek and Henry, and its marine operations include 11 vessels and an 88-barge fleet with more than 120 total employees. The deal will expand MRM’s bulk material logistic operations with the addition of five vessels, marine equipment and a harbor slip in South Chicago. Middle River will expand its affreightment, towing, fleeting and terminal services to customers on the Illinois Waterway, including to Lake Michigan.

Kindra has provided Coast Guard-approved fleeting areas for tank barges and marine equipment and services for special projects.

Decarbonization On The Waterways

One of the best-attended panel discussions at this year’s Inland Marine Expo, held in St. Louis May 23-26, discussed electric and hybrid technologies. Joshua Sebastian, vice president of The Shearer Group, led a panel discussing why towing companies should consider electric and hybrid propulsion alternatives. Jonathan Braun, CEO of Zeeboat LLC, noted that the International Maritime Organization wants to reduce maritime emissions by 50 percent by 2050. Electric and zero-emission ferries are being built in Europe already. Panelist Jessica Lewis of Industrial Service Solutions, a Zeeboat partner, described how four fully electric towboats displacing 7,000 twenty-foot equivalent units a year from trucks could save more than $78 million in truck fuel costs, for a net-zero carbon solution where 64 mariners could replace 5,400 truckers.

Inland waterways proponents never fail to remind the industry’s partners that the waterways are already the cleanest, greenest mode of transport, even if water transportation can improve its emissions. President Joe Biden has stated that his goal is for the entire U.S. to get to “net-zero” emissions by the year 2050, and for the maritime sector to cut its carbon emissions in half by 2030. All infrastructure grants will now at least partly address carbon-intensity and climate change, according to Biden’s “whole of government” push to decarbonize.

The inland industry, where river assets can have a 50-year lifespan, is still in early days of the decarbonization discussion. In the short and medium term, “drop-in” fuels like renewable diesel made from biomass that can be used to drastically reduce emissions in existing diesel engines, with no modification required, are already available.

A June webinar on maritime decarbonization whose speakers were introduced by new Maritime Administrator Ann Philips was titled, “Maritime Decarbonization: It’s Complicated.” Ian Gansler, government relations associate for the American Association of Port Authorities, noted that AAPA members have conducted surveys that identify $50 billion in potential decarbonization projects that could be built or financed within the next 10 years.

Decarbonization advocates are already looking beyond emissions solutions like renewable diesel to an all-electric future. Ingrid Irigoyen, associate director of ocean and climate for the Aspen Institute Energy and Environment Program, said in the June webinar that while “transition fuels” like renewable diesel or biodiesel may reduce emissions, “none of them can get us to zero at scale on a life-cycle basis.” Irigoyen is concerned about “technology lock-in,” or vested interests getting behind one favored technology or fuel to the detriment of other solutions. “Maritime decarbonization is inevitable, and it must happen,” she said. “It is doable, but it needs to be cost-effective.”

Data Will Be Key

Which decarbonization initiatives are most-cost effective? Which are doable? What are reasonable timelines? Are we measuring carbon accurately and correctly? And not least, what are the costs? All these questions require enormous amounts of data to answer properly.

“Developing recommendations to standardize accounting for GHG emissions within the North American shipping industry is essential in paving the way to net-zero emissions,” said David Cummins, president and CEO of the Blue Sky Coalition, a non-profit strategic alliance formed to accelerate the transition of waterborne transportation in Canada and the United States toward net-zero GHG emissions, in a report released in November. “Distributing this data and making it easily accessible is an important step in expanding the drive to adopt these new technologies and ideas,” Cummins said.

The report highlights how decarbonizing shipping will require the use of multiple fuels and propulsion systems, even within a single vessel category. It revealed that emissions associated with North American shipping are not yet required to be reported under a standardized structure, so different approaches are emerging as voluntary reporting has increased.

Future Of River Workforce

The largest generation in U.S. history, the Baby Boomers, is currently retiring at the rate of 10,000 a day. They are being replaced in the workforce by Generation Z, the smallest cohort in U.S. history. That is one reason why the job market continues to be strong despite rising inflation and fears of a recession.

Labor shortages on the rivers were a panel topic at the Inland Marine Expo, and also at this year’s Workboat show. A recent study by the Boston Federal Reserve reveals that one of out of every nine men between the ages of 25 and 54 have dropped out of the labor force. Some theories about why this is happening focus on lack of advancement opportunities in available jobs for men that don’t require a college degree. Austin Golding, president of Golding Barge Line, said at the Workboat panel that worker shortages are affecting his business. He said retention is a bigger issue than recruitment and can be most effectively addressed by ensuring real opportunities for growth within the organization.

Many organizations are finding ways to get the word out to young people about the benefits and opportunities of a career on the water. Popular TV host Mike Rowe, whose show “Dirty Jobs” on the Discovery Channel showcases unusual occupations, often speaks on this issue. Rowe has had several episodes focusing on river-related jobs, most recently this past January when he worked a day at Master Boat Builders in Coden, Ala.

There are more pathways than ever before that help young people find and build rewarding river careers, from the several community colleges that have maritime education programs like San Jacinto Community College and West Kentucky Community & Technical College, to the many outreach programs of the Seamen’s Church Institute and special programs like Who Works the Rivers? that help plant the seed in young children through many educational programs.

WRDA Passes House, Looks Set For Signing

Finally, this December the House of Representatives presented the inland industry with a Christmas present in the form of a Water Resources Development Act that makes permanent the federal cost-share for lock and dam projects at 65 percent and removes the sunset provision for that cost-share. At this writing there is every indication that the Senate will pass and that the president will sign this year’s WRDA, which is included in the National Defense Authorization Act.

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