The Gulf of Mexico and coastal ports are the ultimate location for U.S. imports and exports, and so those locations will consume dredging dollars reserved for the rest of the system.
For example, on January 20, ocean vessels can only load to 40 feet 11 inches at mile marker 221.8 at Baton Rouge versus authorized 45 feet. Typically, the Army Corps of Engineers dredges the lower Mississippi River to 47 feet for a 2-foot level of safety. Below Baton Rouge, vessels can currently load to 47 feet. If Baton Rouge is dredged to 47 feet, an ocean vessel can load heavier, which reduces the ocean freight cost on a per metric ton basis. Lesser volume locations are the last to receive funding.
The Mississippi River carries a large amount of sediment, which travels downstream and can accumulate in various spots (shoaling) within the river’s main channel and harbors. If the shoaling is too high or the river level drops, these spots can become impassable for fully loaded barges or simply put, nobody can make any money. With the annual spring high water event, sediment will have to be dredged. The same is true for the ports.
Like the lower volume rivers, the lower volume ports tend to be the last to receive funding. Part of the funding issue is a legacy of earmarks for small inland ports. When earmarks were eliminated, small ports were without dredging funding, a situation that resulted in small ports questioning the allocation of funds. According to the United States Government Accountability Office, “A majority of the stakeholders GAO interviewed, as well as U.S. Army Corps of Engineers (Corps) officials, stated that funding constraints limit the Corps’ ability to fully dredge the 13 ports’ harbors, which can affect freight movement. According to local Corps officials, they received about $13.1 million of the $20.6 million needed to fully dredge the 13 ports’ harbors in fiscal year 2016. Some stakeholders told GAO that smaller ports are negatively affected by the Corps’ emphasis on the amount of cargo moved (measured in tons) when making decisions about which harbors to dredge. Congress has directed the Corps to consider harbors’ significance and to conduct an assessment of harbors’ use and benefits—considering factors beyond tonnage—to inform its allocation of dredging funds.” Notwithstanding this directive, it is hard to economically justify not maintaining higher volume locations to maintain lower volume locations. This effectively means the funding for lower volume locations is total funding minus the cost of maintaining higher volume locations. For this reason, the increased funding approved for 2020 is extremely important for smaller ports and river segments at the far reaches of the Inland Mississippi River System.
For the Army Corps, 2020 looks to be a good year. In addition to an extra $652 million in funding in 2020, the expensive Olmsted Locks and Dams is winding down, which will provide extra funding for other important maintenance projects in future years. Also, it has been recognized that navigation should not have to pay half the bill for projects that primarily benefit cities. For a breakdown of the budget, Waterways Council, Inc. (WCI) reported:
The Fiscal Year 2020 (FY20) Energy and Water Development (E&WD) and Related Agencies Appropriations Act bill funds the Corps of Engineers’ Civil Works mission at $7.65 billion, $652 million above the FY19 enacted level and $2.69 billion above the President’s budget request. Very significant in the bill is the adjustment by Congress of the Construction cost-share for Chickamauga Lock, this time to 65% General Revenue funding/35% Inland Waterways Trust Fund (IWTF) (from 50%/50%) for one fiscal year (FY20). This change enables efficient funding of all ongoing construction projects to advance their delivery date and lower final project costs. The bill utilizes more than full-use of the estimated receipts of the IWTF that includes additional prior-year revenues to yield a very strong investment level of $317 million for FY20.
The Construction account will receive $2.68 billion or $1.37 billion more than the President’s FY20 request, and $498 million more than the FY19 enacted level.
The Corps’ Operations & Maintenance (O&M) account is funded at $3.79 billion, which is $1.86 billion above the President’s record-level FY20 budget request.
Harbor Maintenance Trust Fund (HMTF) projects will receive $1.63 billion, an increase of $665 million above the President’s FY20 request. Once again, Congress will meet — and exceed by more than 11% — the HMTF target set by the Water Resources Reform and Development Act (WRRDA) of 2014.
Mississippi Rivers and Tributaries (MR&T) will receive $375 million in FY20. The Investigations account funding is $151 million, which is $74 million above the FY20 Administration request and $26 million above the FY19 enacted level. Included in the President’s budget, as well as the FY20 bill, is Pre-Construction Engineering Design (PED) funding for the Three Rivers Project in Arkansas at $1.5 million.
The Inland Waterways Investigations account received a 50% increase in funding ($3.25 million more than the FY19 level) that will allow for authorized projects and on-going studies to compete for additional funding in the Corps’ 2020 Work Plan.
For the agriculture sector, the Inland Mississippi River System is one of the greatest advantages the U.S. farmer has versus the world. The funding issues are important because many ports that are important to local farmers are very small in terms of cargo. In addition, the transportation system has evolved to assume the river would be assessable. For this reason, alternative transportation modes are limited. This situation was highlighted last year when record high water levels resulted in navigation issues across the Inland Mississippi River System.
For the lower volume ports and river segments, an improved budget greatly increases the odds money will be available to help locations critical to farmers. The higher volume ports are most likely to be funded. Especially important for soybean farmers, Mississippi Rivers and Tributaries (MR&T) will receive $26 million more in 2020. With all of the dredging issues created in 2019, $26 million more is likely not enough, but there are only so many dredges available. The greater the transportation efficiency, the greater the profits. Recognizing the importance of the waterways and ports is great news for an industry whose profit margin is dependent on shipping products to foreign customers.
