Skip to Site Navigation | Skip to Content

Facing the waterways quagmire

Facing the waterways quagmire

The Journal Record

August 31, 2009

TULSA – The 445-mile McClellan-Kerr Arkansas River Navigation System faces $91 million in critical maintenance repairs across Arkansas and Oklahoma.

While that’s an impressive chunk of cash, it pales against the $5.5 billion or more weighing against America’s nearly 11,000-mile inland waterway system over the next five years, analyst Norb Whitlock warned Friday.

And that’s less than half the $12 billion in new construction needs that are facing a water highway system where 117 of its 240 locks are more than 50 years old.

“If those numbers are even close to being correct, we have a major problem,” Whitlock told a group of about 100 executives gathered Friday at Muskogee’s Three Forks Harbor River Center for the 39th Annual McClellan-Kerr Navigation Conference.

While the Obama administration continues to pour $1.5 billion or more in economic stimulus funds into river projects, allowing the Army Corps of Engineers’ Tulsa Division to cut a third of its critical backlog this year, river system projects continue to receive lower priority at Congress than highway construction or other issues, as U.S. Sen. Jim Inhofe indicated Thursday in his tour of the Corps’ dewatering project at Lock 18.

Perhaps more troublesome, the primary funding mechanism for new waterway construction stands dangerously depleted – and few people have any ideas on how to replenish it.

Nourished by a 20-cent diesel fuel tax on barges, the Inland Waterways Trust Fund has enabled some $2 billion in new construction along the waterways since its inception two decades ago, filling a federal mandate to provide 50 percent of those costs. But with inflation, congressional interference, poor scheduling, potential waste and other factors playing havoc on project costs, Whitlock said the fund now holds only $85 million in its coffers.

To rejuvenate the trust enough for America’s construction needs, Whitlock said the fuel tax may have to rise five times to $1 a gallon – an amount he said could eliminate the economic advantages water transportation offers.

“It seems unfair that the system would punish an industry so environmentally friendly, so economical, and is the safest mode of transportation today,” said Whitlock, the recently retired chief of operations for American Commercial Lines of Jeffersonville, Ind., and former chairman of the Inland Waterways Users Board.

Whitlock pointed to one possible alternative, establishing a bank-like inland waterway authority capable of issuing grant anticipation revenue vehicles (GARVEE) bonds.

“That could take some of the peaks out of the federal appropriation flow,” he said. “It could smooth costs, and takes the industry out of the pay-as-you-go system.”

Noël P. Comeaux, a transportation industry analyst with the Office of Marine Highways and Passenger Services in Washington, suggested funding relief may also come available from still-developing programs under the Energy Independence and Security Act of 2007.

Designed to lower highway and rail congestion by encouraging increased use of inland waterways, Comeaux said the OMH leaders are studying several different funding mechanisms, including shipper tax credits.

But such credits, and the fuel tax itself, depend on barge traffic severely wounded by the national recession.

“There’s not a whole lot of good right now,” said John Janoush, vice president of the family-owned towing company Jantran of Rosedale, Miss. “Inbound tonnage can’t get a grip.”

Revenue for St. Louis-based American Commercial Barge Lines fell 28 percent in the first half of 2009, said Regional Sales Director Janice Luchan. This reflects a 43-percent drop in steel shipments and a 27-percent decline in liquids. While grain volumes rose 49 percent and coal shipments climbed 8 percent, she said that traffic provides lower margins.

Janoush said this recession has spurred a round of mergers among operators while reversing once-surging barge prices.

“It wouldn’t surprise me if in the near future we may have five or less major barge lines,” he said. “We’re very close to that now.”

Terrence M. Moore, director of business development for AEP Barge Line, said operators must look for new solutions to survive this downturn. He suggested they consider partnerships among rail and trucking carriers to provide the services customers need.

“In this day and age, you’ve got to look beyond the boxed barge,” said Luchan. “It’s what you do with the equipment. How smart you are. How efficient you are.”

The only direction everyone seemed to agree on was opposition to the lock tax funding mechanism Obama administration officials have tossed around to replenish the waterways trust fund.

“It’s a question of whether we keep our barges floating or do we sink them with an unaffordable tax,” said Whitlock.

Moore said his barge fleet, which moves 66 million tons of cargo a year, pays $9.6 million a year to the 20-cent fuel tax. He said it would pay $38 million if the lock tax goes into effect.

While that would harm most carriers, Whitlock said it would prove grossly unfair to upstream destinations like the Tulsa Port of Catoosa, accessible only after ships go through 18 locks.

“We’ve got to make sure the systems put forth are uniform and fair to everyone who uses the waterways,” said Moore.

No comments (Add your own)

Add a New Comment


Comment Guidelines: No HTML is allowed. Off-topic or inappropriate comments will be edited or deleted. Thanks.