Agriculture Secretary Sonny Perdue highlighted the importance the inland waterways to agriculture while in Illinois on Aug. 28 and also highlighted an important new report from the U.S. Department of Agriculture quantifying the cost savings and competitive advantages that would accrue from investing in long-delayed improvements to inland waterway locks and dams on the Upper Mississippi River and Illinois River system.
During an Aug. 28 stakeholder event in Alton, Ill., Perdue joined assistant secretary of the Army for Civil Works Rickey Dale “R.D.” James and Major General Mark Toy, U.S. Army Corps of Engineers commander and division engineer for the Great Lakes and Ohio River Division, on a tour of the Melvin Price Lock & Dam Facility before participating in the Waterways Report Stakeholder Townhall.
U.S. farmers have enjoyed a competitive advantage accessing the global export market in larger part due to an effective, robust and resilient infrastructure and transportation network. The report notes that the inland waterway system carries large volumes of bulk commodities and farm inputs such as fertilizer over long distances, mainly for export or import, and is of vital importance to numerous industries. In 2017, 532.8 million tons of domestic barge traffic worth $220 billion moved on the system. Every dollar of waterway activity output results in $1.89 in additional U.S. economic activity directly related to the waterways.
Due to its efficiencies and lower costs, the inland waterway system saves between $7 billion and $9 billion annually over the cost of shipping by other modes. The infrastructure, however, is aging and needs major rehabilitation and construction to restore it to its full capability and forestall major disruptions while providing opportunities for growth, the report noted.
Historically, barge traffic has grown, but lagging infrastructure maintenance and improvement needs have resulted in more frequent delays, with the percentage of vessels delayed increasing from 35% in 2010 to 49% in 2017. “Delays can cost up to $739 per hour for an average tow, amounting to more than $44 million per year,” the report noted.
Without consistent, predictable funding, the grain and soybean export draw area around the waterway system could shrink from an average of 150 miles currently to as little as 75 miles under a constrained scenario as the cost to ship on the river increases. For corn, delays on the Mississippi River could have a negative impact of up to 24 cents/bu. The impact to soybeans could be up to 25 cents/bu.
The added costs associated with delays are ultimately borne by shippers, especially farmers, who will pay more (and, in the case of farmers, get a lower price) for goods shipped on the inland waterway system. Higher costs also reduce the competitiveness of the river system.
Compared to the status quo, increasing investment in the inland waterway system by $6.3 billion over a 10-year period (through 2029) and $400 million per year thereafter through 2045 cumulatively would grow the waterways' contribution to U.S. gross domestic product by 20% to $64 billion and would increase waterway-related employment by 19% to 472,000 jobs. The study found that this option would more than offset the cost of completing all the proposed projects and would increase the market value of U.S. corn and soybeans by $39 billion. Conversely, reduced investment would decrease the market value of those commodities by $58 billion, the study found.
The inland waterway infrastructure is aging and needs major rehabilitation and construction to restore its full capability, forestall major disruptions and provide opportunities for growth, the report adds. Most locks on the Upper Mississippi River and Illinois River system have far exceeded their projected 50-year life span.
The National Grain and Feed Assn. (NGFA) and Waterways Council Inc. (WCI) applauded the report.
“USDA’s study underscores the inland waterways as a conduit to our nation’s agriculture competitiveness as well as to overall U.S. economic prosperity. We believe the study makes the case to expedite the Navigation & Ecosystem Sustainability Program (NESP) that would modernize five locks on the Upper Mississippi River and two on the Illinois Waterway to be ready to capitalize on predicted grain shipments while at the same time improving the health of our marine ecosystems and habitats,” WCI president and chief executive officer Mike Toohey said.
“NESP is awaiting pre-construction engineering and design (PED) funds to be ‘shovel-ready’ for these vital locks,” he continued.
NGFA president and CEO Randy Gordon said the study paints a grim picture of the significant cost of further delays. Foreign competition from countries like Brazil is only increasing, given the current trade disruptions, and China is investing aggressively in South America’s transportation infrastructure -- to the U.S.'s detriment, he said.
“The United States simply can’t afford to lag behind any longer,” Gordon continued. “This study is a wake-up call to the White House Office of Management & Budget and Congress to make the PED funding for NESP available this year and to ensure growing investments are continued and expedited in the tremendous natural resource that America’s inland waterways represent.”