| Economics of Missouri Navigation |
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| The following are comments
the of Paul Werner, Mid-continent Vice-President for American Waterways Operators to the
National Resource Council at Columbia, Mo. on April 25, 2000. Good afternoon, and thank you for inviting me. My name is Paul Werner. I am the Mid-continent Vice President for the American Waterways Operators, the national trade association of the inland and coastal barge and towing industry. I represent barge and towing interests on the Missouri, Mississippi and Ohio River systems. Our time together is very short, so I will get right to the point. Much of what has been reported concerning the impact of Missouri River changes on Mississippi and Missouri River navigation is incorrect. My purpose this afternoon (as Paul Harvey would say) is to tell you the rest of the story. I will attempt to quickly surface some frequently misinterpreted or misunderstood factors regarding Missouri River navigation and encourage you to investigate further if you find my comments applicable to your work. Let me start with economic value and efficiency. I constantly hear people refer to Missouri River navigation as an $8 million dollar industry-nothing could be further from the truth. That $8 million is a Corps of Engineer estimate of the difference between the cost of shipping cargo by water and the cost of shipping the same cargo by rail. It has nothing to do with the dollar value of the industry. The Corps did contract with the Tennessee Valley Authority to evaluate the regional benefits of Missouri River navigation-TVA estimated that regional benefit to be a little more than $200 million dollars per year. That figure is reported in the Corps’ technical reports, but you will never see it in the media reports. The $8 million figure is also flagrantly misused in comparing navigation benefits with recreational benefits. Recreational benefits are derived from actual expenditures-revenues from park entrance fees, camping fees, etc. There is no logical comparison to be made between these two very different figures. Finally, the $8 million cost differential between water rates and rail rates is being used to miscommunicate and distort the value derived from our federal investment in Missouri River operations. The Corps receives about $1.8 billion for operations and maintenance activities. Only $3.5 million of that (about two-tenths of one percent) is directed toward bank stabilization and navigation activities on the Missouri River. That equates to roughly one-half cent per ton-mile for commodities carried on the Missouri River. The median cost per for Corps of Engineer managed systems is about four cents per ton-mile-well above the Missouri River cost. In fact, in its 1998 Teasdale Report (an internal Corps of Engineers efficiency report) the Corps ranked the Missouri River as one of its most cost efficient navigation systems. Let me spend a minute on Missouri River operations. You will hear the phrase “split navigation season” referring to a proposal to lower summer flows to what is believed to be more natural levels-levels that would not sustain commercial navigation. Let me assure you there is no such thing as a split navigation season. Missouri River barge companies currently have a short work year-typically eight months-and the first month is only marginally profitable due to start-up expense. That eight-month season translates into a relatively fixed number of round trips. You can’t go any faster or carry any more. You can’t simply move more cargo into the spring or fall. Under the split season concept this already short work year would be trimmed by an additional two months. Start-up expenses would nearly double because you can not leave the equipment high and dry. The towing companies would lose nearly 30 percent of their productive round trips. And, from a personnel standpoint, it is highly unlikely that crewmembers-particularly the highly skilled pilots and captains-would accept such a drastic reduction in hours, and annual income. All things considered, we believe that regularly scheduled commercial navigation would cease to exist under what is termed a split navigation season. Finally, I’d like to comment briefly on the Missouri River’s impact on Mississippi River navigation. The Mississippi River carries more than 60 percent of our nation’s export grain products, nearly 30 percent of our nation’s coal supplies, 25 percent of our petrol-chemical products and 1000’s of tons of other essential commodities such as salt, cement, wood, and steel. Missouri River water is vital to this Mississippi River traffic. In recent months, some individuals or groups have suggested that a split navigation season on the Missouri River would actually benefit Mississippi River navigation by making additional water available during the fall grain-shipping season. These claims are based on a Corps of Engineers model that looked at the average annual cost impact of reduced Missouri River flows on Mississippi River navigation over the last 65 years. One year, 1939, causes the split season to appear beneficial-on average-over the entire 65-year period. Remove 1939 from the model and the picture changes dramatically. Many people question why the Corps would even look at pre-reservoir years in its model-the Missouri River project was completed in 1967 and river flows have been managed quite differently ever since. The 1939 data is particularly distorting-at least as it applies to average annual cost. The model calculates a Mississippi River cost impact of nearly $1.2 billion dollars for 1939, the next highest year was only $255 million (less than 25 percent of the 1939 figure) and the most severe modern day (or post reservoir) cost impact was $154 million (less than 15 percent of the 1939 figure). In addition to this major deviation in cost, Mississippi River traffic patterns were quite different in the late ‘30’s as the upper Mississippi River locks and dams were under construction at that time. From a modern day viewpoint, the two worst drought years on the Mississippi River system were 1976 and 1988. In ’76 (based on the same Corps model) a split season scenario would have increased Mississippi River navigation cost by 50 percent, in ’88 the cost to Mississippi River navigation would have been increased by 33 percent. Well, my time is about up so I will stop here, but I would like to leave you with this thought. There is no reason to believe that commercial navigation and ecosystem enhancement is incompatible on the Missouri River. The Missouri River basin states, and-I believe-the individual state Departments of Natural Resources and Conservation concur that the best solution is one that enhances the ecosystem while preserving the economic advantages of waterborne transportation. Thank you for allowing me to comment. I will be glad to answer any questions you might have. |