ALL INDICATORS POINT TO DRAMATIC INCREASE IN DEMAND FOR BARGE CAPACITY
The U.S. barge and towing industry has established an excellent reputation for being responsive to the needs of America's shippers and consumers. It is fuelefficient, cost-effective and highly productive.
With these qualities, it is no wonder that this industry has assumed a major role in moving the nation's freight. The bulk commodities carried by barge represent the lifeblood of America's economy . . . the fibre of its industrial and agricultural strength.
In short, they are the goods that keep our society on the move.
Barge transportation consists largely of energy commodities and other bulk raw materials basic to our economy (Table 1).
The barge and towing industry has played an important role in meeting emerging transportation needs. And it is flexible enough to respond quickly to new transportation demands. For example, this industry has played an everincreasing role in the movement of U.S. grain to export points along the Gulf of Mexico and Pacific Northwest. In 1973, the barge and towing industry moved 20 percent of all grain exports to oceangoing ports. By 1980, this share had increased to more than 40 percent.
Not only did the barge indust ry double its market share, but it did so during a period when the market was expanding very rapidly. The industry was able to build and put into service the required fleet capacity and horsepower necessary to move this grain. In 1980, for example, 1,581 new dry-cargo barges were added to the fleet. Approximately 1,000 of these additions were graincarrying barges, built in quick response to the growing grain export trade (Table 2).
Given this flexibility, together with the industry's inherent advantages, one would expect the nation's barge operators to have unlimited optimism for the years ahead. After all, numerous recent studies have projected substantial increases in the movement of commodities suitable for barge transport. Domestic needs and international t r a d e developments seem to hold great promise for the industry.
Tables 3 and 4 show the recent growth in inland waterway traffic, as well as traffic by maior rivers for 1978. However, this bright picture is shadowed by a growing number of constraints placed on the viability of the inland w a t e r w a y s transportation industry. These constraints, if unresolved, could clearly limit the ability of the barge industry to meet future needs. They demand the attention of our nation's policymakers.
They should know that barge transportation has some key advantages that make it a most attractive mode for moving bulk cargo. From a shipper's standpoint, the most important consideration is usually cost. It costs only about seven-tenths of a cent to move a ton of cargo one mile by barge, compared with 2.6 cents by rail and over 10 cents by truck.
While the inland waterways industry moves about 12 percent of the nation's total freight, it does so at only 2 percent of the total cost. For those shippers with access to barge transportation — and 87 percent of our nation's major cities are located on navigable waterways—it is the obvious choice for economical movement of bulk goods.
The cost advantage of barge transportation is due in large degree to its excellent fuel efficiency.
Study after authoritative study has shown that this transportation mode moves bulk freight more cheaply than anything on wheels.
A wealth of previous data on modal fuel efficiency was brought together neatly last year in a special study performed by Samuel E. Eastman, a lawyer, economist, and former director of the Department of Transportation's Office of Policy Review. The study, "Fuel Efficiency in Freight Transportation," combined new survey information with conclusions of more than 30 studies of transportation e f f i c i e n c y , performed mainly for the Departments of Transportation and Energy over the past 10 years. Its major findings are summarized below: While these figures again confirm the superior fuel efficiency of barging, it emphasized t h a t all bulk transport modes make a significant contribution to the nation's transportation system, and all are deserving of full recognition as energy savers. The different modes must work cooperatively to move the products that fuel America's industries and utilities, and carry the f r u i t s of this country's labors to domestic and foreign markets.
These twin advantages of barge transportation—cost effectiveness and fuel efficiency—are magnified by the awesome capacity of these vessels. A single barge load of soybeans, for example, carries the harvest of more than 1,100 acres.
One hopper barge has the capacity of 15 railcars or 57 trucks.
An added advantage of barge transportation is i t s e x c e l l e nt safety record. An Arthur D. Little, Inc., study of hazardous substance transportation r e v e a l ed t h a t barge spills occur less frequently than rail or truck spills by a significant margin. In addition, barge transportation results in less exposure of hazardous substances to urban areas, thus offering the least threat of prope r ty damage in the event of a spill.
All indicators point to a dramatic increase in d e m a n d for barge capacity in the next several years. The latest traffic projections, contained in the preliminary findings of the National Waterways Study, are a case in point. (The study is a three-year effort by the Corps of Engineers to assess the capability of the existing w a t e r w a y s system to meet the projected needs, and to formulate alternative plans for improvements to the system.) The study notes t h a t petroleum price and supply considerations will prompt a substantial switch from oil and gas to coal. It projects a tripling of waterborne coal traffic between 1977 and the year 2003.
In the agricultural sector, productivity and exports are expected to continue expanding rapidly, according to the National Waterways Study. This burgeoning harvest must be moved from America's farms to our coastal export centers. Table 5 depicts the trends in barge movements of export grain.
The study also predicts growth in industrial chemical traffic, particularly along the waterways of the Gulf Coast. In addition, the trend toward greater use of imported steel and coke will mean greater waterways movements of these commodities.
The Maritime Administration's Mid-America Ports Study came up with similar conclusions, and projected a doubling of inland waterborne commerce by the year 2000. Under t h e m e t h o d o l o gy used in this study, the following barge-carried commodities were expected to e x p e r i e n c e high growth by the turn of the cent u r y : grain (up 80 percent) ; coal (127 percent) ; petroleum products (75 percent) ; fertilizers (446 percent) ; and chemicals (108 percent) .
Since the release of the Mid- America Ports Study in May 1979, there has been an unprecedented increase in interest in U.S. coal among foreign buyers. Spurred by skyrocketing oil prices, other countries have started turning to this alternative source of energy.
U.S. exports of steam coal during the first half of 1980 increased nearly eightfold compared to the first half of 1979. A report issued last year by the World Coal Study forecast U.S. coal exports of between 150 million and 240 million tons by the year 2000, compared with the record 65 million tons expected this year.
Another recent development expected to impact on the barge industry was the signing on October 22, 1980 of a grain agreement between the United States and the People's Republic of China.
Tt calls for the PRC to purchase at least six million metric tons of U.S. grain annually from 1981 to 1984.
It is obvious that the inland waterways industry will be called upon as never before in the next two decades to haul commodities essential to this nation's economy and strategic position in the world. The central question is whether the industry will be allowed to do the job—or be stifled by various constraints.
Some of the major constraints facing the industry concern the physical capacity of the waterways system to handle increased traffic. This problem does not refer to the actual size of the waterways ; given adequate maintenance dredging, they are wide enough and deep enough to accommodate s u b s t a n t i a l growth for years ahead. The real threat is that the Corps of Engineers will be prevented—through a host of legislative and regulatory obstacles — f r om maintaining adequate channel depths and modernizing inadequate man-made facilities on the rivers.
The gravity of the dredging s i t u a t i o n was exemplified last July by a massive traffic backup on the Upper Mississippi River near Bellevue, Iowa. At one point, 26 line-haul towboats, pushing approximately 330 barges, were immobilized until the channel could be reopened. Their cargo—including some 462,000 tons of grain, coal, crude oil and other commo- dities—was valued at more than $50 million.
Similar incidents occurred last year on other reaches of the Mississippi, and on the Arkansas and Missouri Rivers. The "blame" for this situation cannot be placed solely on the Corps of Engineers (which can take pride in its long and distinguished record of maintaining the nation's waterway system) or any of the other many agencies now i n v o l v e d in the dredging process. The problem is precisely that there are so many agencies involved.
Today, the Corps must consult with regional offices of such Federal units as the Environmental Protection Agency, the Fish and Wildlife Service, and the Soil Conservation Service, not to mention a myriad of agencies from individual states. Taken together, these requirements serve to make the Corps' task a nearly impossible one.
The General Accounting Office (GAO) addressed this problem in a report issued in June 1980 on "Managerial Changes Needed to Speed up Processing Permits for Dredging Projects," a study requested by the Chairman of the House M e r c h a n t Marine and Fisheries Committee. Citing the spread of Federal regulation in this area during the past decade, the report said: "Striking a balance among these competing objectives has complicated the process for issuing dredging permits, involving several Federal agencies and increasing the time required to process applications.
"Lengthy processing is costly to applicants, makes planning difficult, and can hinder construction and water transportation," the GAO report continued. "During fiscal year 1979, the average times to process dredging permits at Baltimore, New Orleans, and Philadelphia districts of the Corps of Engineers ranged from 4 to 10 months. Some were in the process more than 2 years. Corps regulations i n d i c a t e t h a t total processing time generally should not exceed 3y2 months." Fortunately, the Corps was successful in signing memoranda of understanding in 1980 with the other Federal agencies involved in the permit process, a step that should help shorten the process.
The new plan calls for three classes of permits, and only those having a major environmental or policy impact can be "forced up" to Washington for a decision. All others should be decided at division level, a f t e r consultation between Corps officials and their regional counterparts from other agencies.
The barge and towing industry believes that another necessary step is to change to Section 404 (T) of the Federal Water Pollution Control Act Amendments of 1972. This section provides for state involvement in controlling d i s c h a r g e of dredged material within the navigable waters of each state. It should be amended to clearly define the authority of the Corps of Engineers to maintain commercial interstate water transportation.
Another constraint to barge industry growth is created by the condition of many of the navigation locks on the inland waterways.
Many of these facilities were built in another era of transportation requirements. The Corps does a commendable job keeping them in working condition, but the age and inadequate size of these structures demand that more decisive steps be taken.
When the Ohio River project was completed in the late 1920s, the Corps of Engineers was projecting 13 million tons of traffic annually on that river. The Ohio handled 23 million tons its first year of operation, 152 million tons in 1978, and the 1980 tonnage is expected to be calculated at 200 million tons. Many of the locks and dams on the Ohio River were last modernized more than 40 years ago.
The Gulf Intracoastal Waterway, which celebrated its 75th anniversary in 1980, originally was expected to handle about 5 million tons annually. In 1978, it carried 120 million tons.
On some occasions, backups of up to 60 barge tows are experienced at Locks and Dam 26 on the Mississippi River, just below its confluence with the Illinois.
It sometimes takes 2Vo to 3 days for a tow to clear this most infamous of barge bottlenecks. The Corps has finally received approval to go ahead with a replacement lock there—following funding delays and court battles with the railroads and environmental groups—but it is expected to be another 8 or 10 years before the new, larger facility is completed.
By that time, demand will already meet the enlarged capacity.
Numerous other facilities have the potential for becoming just as t r o u b l e s o m e as Locks and Dam 26. The National Waterways Study has identified several of these facilities, including the Vermilion Lock on the Gulf Intracoastal Waterway; Gallipolis and Emsworth Locks on the Ohio; Winfield Lock on the Kanawha; Marseilles Lock on the Illinois; Bonneville Lock on the Columbia; and many others.
Any discussion of needed capital improvements to the inland w a t e r w a y s s y s t em inevitably turns to the question of who will pay for them. It was not always so. The freedom of the inland waterways from user charges extends back at least to the Northwest Ordinance, which stated that t h e s y s t em "shall be common highways and forever free . . ." That policy, which recognized the navigable rivers as a national asset benefiting numerous interests, was restated numerous times during t h e c o u n t r y ' s first 200 years. But it was changed in 1978, when Congress passed Public Law 95-502, which provided not only for the construction of a new facility at Locks and Dam 26, but also for a Federal tax on fuel used in commercial transportation on inland waterways.
The fuel tax, which became effective October 1, 1980, started at four cents per gallon and will increase in steps to 10 cents per gallon by 1985. The tax receipts will be placed in a trust fund for c o n s t r u c t i o n and rehabilitation projects on the waterways. Another provision of Public Law 95-502, Section 205, calls for a study of the impact of waterway user taxes and charges. That study is being undertaken by the Departments of Commerce and Transportation, and is scheduled to be submitted to Congress by September 30, 1981.
However, well before the results of that study are even released, the Administration has proposed and Congress is now considering legislation t h a t would dramatically increase the user charges paid by our industry, e f - fective this October 1. The Corps of Engineers, according to legislation introduced in the House and t h e Senate, is to devise a syst em of user fees to recover 100 percent of operations, maintenance, and construction expendit u r e s on t h e waterway system.
We do not quarrel with t h e Administration's objectives of reducing inflation and c u t t i n g Federal expenditures. But we do t a ke issue with t h e inequity of placing t h e burden of user charges on only one mode of bulk transportation, while at the same time Federal expenditures that benef i t other t r a n s p o r t a t i o n modes go unreimbursed.
We also object to t h e policy of recovering Corps of Engineers expenditures on the waterway s y s t em f r om only one beneficiary of t h a t system—commercial navigation.
A Corps of Engineers preliminary cost allocation study revealed that approximately 25 to 30 percent of navigation account funds do not benefit navigation, but other users of t he w a t e r w a y s y s t e m . To recover those expenditures f r om only one of the many waterway beneficiaries is inequitable.
The policy of recovering Coast Guard expenditures, as proposed by t h e Administration, is also inequitable.
The Federal Railroad Administration (FRA), f o r example, expends f u n d s f o r t h e inspection of rail track, similar to t he Coast Guard's function of inspecting vessels f o r s a f e t y . However, we see no a t t e m p t made to recover FRA f u n d s f r om t h e railroad industry. But we do see a proposal to recover Coast Guard expenditures f r om t h e barge and towing industry. Again, we believe t h i s discriminatory policy to be patently unfair.
These types of inequities can only result in major shifts of cargo from one mode of transportation to another. Traffic could in many instances be forced from energy-efficient and s a f e t y barge t r a n s p o r t a t i o n to less efficient modes. The probability exists f o r serious disruptions in t h e flow of commerce and less transportation efficiency and higher costs f o r both shippers and consumers.
This in t u r n could fuel inflation.
I t should be evident that the barge industry faces more than enough challenges to i t s viability through the c u r r e n t level of fuel taxes and t h e other constraints already discussed. For example, t h e M a r i t i m e Administration's Mid-America Ports Study concluded t h a t "The waterway user charge and t h e constraints imposed by t h e . . . locks and dams which reach capacity over the forecast period will reduce water- borne traffic by as much as 16 percent by t h e year 2000." With t h e s t r e s s e s t h a t undoubtedly will be placed on our t r a n s - portation system in t h e next several years, it should be obvious t h a t additional, unnecessary burdens are counter to t h e nation's best interests. While numerous factors—such as environmental, s a f e t y and economic concerns— must be considered in t h e Federal decision-making process, we believe that t h e p e n d u l u m has swung too f a r to the side of regulation.
A more realistic approach to these important decisions is required, one t h a t balances social concerns with economic realty.
Such an approach requires recognition by t h e nation's policymakers t h a t the barge industry plays a vital role in t h e t o t a l U.S.
t r a n s p o r t a t i o n system.
The country's 25,000 miles of navigable waterways are t r u l y a national asset, beneficial to a wide a r r a y of interests. We can either use them to t h e i r fullest potential, or neglect their maintenance and stifle their use. The choice
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