Posted on April 1, 2020
The US Army Corps of Engineers project to deepen the Mississippi River Channel to 50 feet will lower transportation costs along the channel and enable increased exports and imports, including of coal.
The project’s purpose is “to maximize the efficiencies to match the draft of the Panama Canal,” said Sean Duffy, executive director of the Big River Coalition, on a call Monday, adding:
“There’s a number we use a lot, the average foot of cargo on these size of vessels -– a million dollars per foot of additional cargo capacity. The effort to get a deeper draft is to drive up those efficiencies.”
The Port of South Louisiana, which serves ships arriving from the US Gulf Coast into the Mississippi, is the largest tonnage port in the western hemisphere, and the five foot draft increase plan, first announced in USACE’s Fiscal Year 2020 Work Plan, would make it the fourth deepwater port with drafts of 50 feet or more in the US.
An Informa Economics, or IEG, report, “Impacts on Crops and Product Export Flows of dredging the Lower Mississippi River to 50 Feet,” noted that a 50 foot depth would allow the ability to load a large Capesize ship, while saving upwards of $20/mt and loading greater volumes on one ship.
Additionally, IEG, in a report released May 2018, said, “The impact of a deeper draft in the lower Mississippi River will save $5/mt in ocean freight as the average volume loaded increases from 66,000 mt to 78,000 mt.”
GROWING IMPORTANCE
“Forecasts indicate that the US will remain the single largest participant in the global grain trade and US coal producers will continue to hold a marginal position in the global market,” USACE said, noting the importance of growing commerce opportunity in the Mississippi River Ship Channel.
Duffy also noted agriculture would be one of the biggest beneficiaries of the project, adding that the river by nature exports 60%-70% of grains.
“With the change brought on by fracking, tankers would be included,” Duffy said, adding:
“We have quite a few refineries on the lower river. With the change to that trade we’ll still see a benefit and export at that draft.”
Currently, the channel can handle Capesize and Suezmax ships, and that would not change with the deepened depth. “However, a deepening project will allow shippers to load their vessels more efficiently or take advantage of larger vessels, resulting in fewer trips,” USACE said.
USACE had said that coal exports and trade through the USGC “began to decrease rather sharply in 2012, likely due to the significant transformation from coal to natural gas and renewables for electricity generation in the US.”
However, benefits would still be seen by coal exporters as transportation costs decline and larger quantities of coal could be shipped through the channel on each carrier. IEG noted that, despite the decline in coal barge movements, coal remains the largest commodity transported on barges by volume.
“For heavy commodities, such as coal and iron ore, a deepening of the lower Mississippi River would immediately result in more volume moved and much larger average load out size,” the IEG report said.
According to USACE, coal produces about 9% of commerce through the channel. The report, which was published in 2018, also forecast coal export growth at 0.7% at the ports of Baton Rouge, South Louisiana and Plaquemines once the project was completed.
The US exported about 10.2 million st of thermal and met coal through New Orleans Census district in 2019 and 18.3 million st in 2018.
PROJECT DETAILS
Duffy noted in a previous email that the funding for the deepening has taken about a decade to achieve and counted it as a historic event.
Regarding the coronavirus pandemic, Duffy said “it’s truthfully hard to say” how the project may be affected. Currently, dredges are working on the river, and across the country. Duffy noted that if there are no changes, he expects to see the deepening project start in August-September of this year.
Although, it’s a “tricky question” on how long it should take, Duffy said. The general estimate is about a year, depending on dredge availability. It also depends on how much sediment the river has in it. High rivers bring a lot of sediment, Duffy noted, and there have been high rivers recently.
Source: hellenicshippingnews
