Forum Highlights Strengths, Needs on WaterwaysView Source
Marine Money International hosted its second annual Marine Finance Forum in New Orleans on November 30, with present operations and future needs of the inland waterways of the United States a central topic of discussion.
“Locks and dams—it’s no secret they’re old,” said Tracy Zea, president of Waterways Council Inc. (WCI). “Right now, the average age of our locks is 60 years old. Eighty percent of our locks are past their design life of 50 years. The reason this is a problem is all locks are designed for 50 years, and after 50 years, the risk of failure goes up exponentially.”
Zea highlighted the $2.5 billion set aside for inland waterway projects in the Infrastructure Investment and Jobs Act (IIJA), also called the Bipartisan Infrastructure Law, or BIL. That amount was a billion dollars more than what was set aside for coastal navigation projects, Zea said.
Of that $2.5 billion, about $113 million is yet to be allocated. Zea said he expects that remaining amount to be allocated in the upcoming president’s budget, with $80 million in funding potentially going to the west gate of the Brazos River floodgate project on the Gulf Intracoastal Waterway (GIWW) or the funding going to buy down the $332 million-plus cost overrun at Kentucky Lock and Dam on the Tennessee River.
“Both are good options because you get a legacy project like Kentucky off the books,” Zea said. “That’s been under construction for 20 years. But also starting Brazos and completing the west gate would be fantastic news for the GIWW.”
In all, seven inland waterway infrastructure projects received funding from IIJA, with five projects considered to be “funded to completion.” However, with faulty cost estimates, inflation and personnel issues, four of those five projects will need significantly more federal funding.
Zea said WCI is pushing hard for cost overruns to be 100 percent federally funded.
“Within the Senate, we have 18 senators that submitted it as a priority, so we feel very confident that something’s going to happen in this bill,” said Zea, speaking of the upcoming Water Resources and Development Act. “Is it 100 percent federal? Probably not. They are going to shift the cost share, so the trust fund will probably pick up about 15 percent of the rest of the projects. The reason this is important is this will help leverage our fuel tax dollars to ensure completion of these projects.”
Zea said a huge issue is the time it takes to start and finish projects. Today, projects can take decades to complete. That’s in stark contrast to the 1920s and 1930s, when inland waterway projects would often take just six years to complete.
“We are encouraging the Corps that they need to expedite these locks,” he said. “Construction should be completed in a six- to
eight-year timeframe. If it’s a 10-year timeframe, we have 15 projects on the books, and that’s 150 years. That’s unacceptable for this system.”
Later in the day, Jennifer Carpenter, president and CEO of The American Waterways Operators (AWO) moderated a panel that discussed the status of the inland marine dry cargo and liquid sectors. Panel members, who included Mike Ellis, CEO of American Commercial Barge Line (ACBL); Clark Todd, president and CEO of Blessey Marine Services; Bob Thomas, chief operating officer of Southern Devall; and Del Wilkins, president of Illinois Marine Towing, reviewed 2023 and looked forward to challenges and opportunities for the industry moving forward.
Ellis noted that river conditions in 2022 and 2023 were much the same, though global market conditions affected barge rates quite differently. From low water to a boom crop in Brazil to lock delays, dry cargo-focused operators have had to deal with a lot this past year.
“We’ve had so many challenges the last two years,” Ellis said. “We’re really looking at 100-year events happening almost every year.”
Todd discussed the market from a liquid cargo perspective, highlighting 2023 as an “absolute rebound” compared to 2022.
“It wound up being a really solid year for most of us on a commercial perspective,” he said. “The biggest challenge we have at the end of the day is operating our vessels.”
Dating back to his year as chairman of AWO last year, Todd said personnel remains a real challenge for the industry, along with the high cost of building new equipment.
Thomas said transporting chemicals has been a healthy business line for Southern Devall in 2023, but fertilizer, which is tied to world agriculture production and demand, has been a volatile space the past few years.
“That’s literally driven by the wind and the weather,” said Thomas, who later added, “I wish I could predict it, but I can’t predict the weather any better than anybody else.”
Wilkins said, despite the political push to move away from oil and gas, he sees that market as strong for the foreseeable future. He also mentioned “onshoring,” or companies moving operations back to the United States from overseas, as positive for the industry.
With weather-related challenges and persistent low water, several panelists argued for the need to share that risk with customers through fixed rates or surcharges. Doing so will be crucial for building capacity and new equipment.
“It’s just part of our business that, if we don’t transfer those risks, we won’t be able to reinvest in our fleets,” Ellis said.
Overall, the panelists said they are bullish with regard to supply and demand for products that move on the inland waterways. Their concern lies with waterway infrastructure investment and what a lack of investment could mean for global competition and competition with other modes of transportation.
“Our waterway system,” Ellis said. “If we’re not investing in it, that equation becomes much tighter.”