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September 9, 2006

Gulf grain exports slowly resume

While high gas prices have focused popular attention on the importance of the U.S. Gulf offshore industry, the effects of Hurricane Katrina also threaten another key element of the U.S, economy: grain exports. Those exports, of course, are vital to the barge industry.

The Mississippi Gulf traditionally is responsible for about 55 to 65 percent of U.S. raw grain (corn, soybean and wheat) waterborne exports. Of the 50.2 million metric tons exported from U.S. ports thus far in 2005 (as of Aug. 18), 29.7 million metric tons--or 59 percent--has been exported from the Mississippi Gulf. The preponderance of Mississippi River/ Center Gulf exports is corn and soybeans; of this year's total exports from that region, 89 percent (26.2 million metric tons) comprises corn and soybeans

The National Grain and Feed Association and North American Grain Association are issuing periodic statements concerning the recovery of the grain export industry following Hurricane Katrina.

Yesterday, Randy Gordon, vice president, communications and government relations, National Grain and Feed Association said that the U.S. grain export elevator industry and related infrastructures in the New Orleans, La., area continue to make gradual but steady progress in recovering from the after effects of Hurricane Katrina.

The industry is working methodically around-the-clock to restore facilities to operating condition in the Mississippi River/Center Gulf.

Assessments conducted to date have found that the elevator facilities sustained relatively limited physical damage. As of yesterday, power had reportedly been restored to as many as eight of the 10 grain export elevators in the New Orleans area, and that several facilities had resumed unloading barges. Some vessel loadings of grain also have occurred.

Among the most critical infrastructure-related challenges confronting the grain export elevators in the region at this time are:

  • Shortage of labor needed to operate facilities and unload barges: Multiple labor challenges continue to exist in the region. Among these are a shortage of boatswain mates--the trained personnel responsible for lashing and positioning barges for unloading. An adequate number of pilots to operate vessels in port also is needed. In addition, grain firms continue the process of locating their employees, and there is a critical need to provide housing and living accommodations, including food and water, near these facilities to enable them to operate on an around-the-clock basis. Finally, and extremely importantly, given curfews in the region to restore law-and-order, there is a need for local government authorities and law enforcement agencies to devise an acceptable system for allowing grain elevator employees to access and operate facilities on a 24/7 basis, including during night-time hours.
  • Restoration of full navigation and unrestricted barge and vessel operations on the Mississippi River: The river continues to be open only to shallow-draft traffic and to deep-draft vessels to 39-foot draft for daylight-only operations until aids to navigation (such as signal buoys) have been reestablished. Two-way traffic has been restored, but only for daylight operations. The U.S. Coast Guard has reported to the NGFA and NAEGA that it may be seven to 10 days before these navigation aids have been repaired or replaced. In addition, there continue to be obstructions in the bar channel at the mouth of the Southwest Pass that remain as obstacles to navigation, and which salvagers continue to try to remove today. But the U.S. Army Corps of Engineers does not have a schedule yet as to when this work will be completed. The Corps also indicates that survey work has found evidence of some shoaling in the Southwest Pass that may need to be addressed. It is the understanding of the NGFA and NAEGA that several vessels with 43-foot drafts still are awaiting permission to transit to unload cargo. The Southwest Pass is the channel used by ocean-going vessels to load and unloading products, including those transporting U.S. grains and oilseeds; the bar channel is a navigation passage dredged in open water that otherwise would be of insufficient depth to handle ocean-going vessels.
  • NGFA and NAEGA say it is essential to the grain export industry that unrestricted two-way navigation to normal river drafts of 48 feet be restored as soon as possible to allow for round-the-clock operations at these facilities to unload barges and load vessels. Congestion of barges and vessels in the region will remain an issue until full navigation is restored.

  • Full restoration of power and communications.
  • Securing adequate fuel to permit resumption of operations.
  • Facilities located at West Coast, Texas Gulf, Great Lakes, as well as a few other ports, provide a viable alternative outlet for some quantities of export grain. Overland rail and truck routes also exist for grain, feed and ingredient exports to Canada and Mexico. However, these venues are supplied to a significant degree from different transportation, bulk grain and oilseed origination, and distribution points than those that supply the Mississippi/Center Gulf, and are not capable of assuming surge capacities from the Katrina-affected region. Further, the cost structure, as well as the storage/loading capacity and flexibility of these alternative ports are significantly different and in some cases are somewhat more constrained than what exists through the Mississippi River/Center Gulf system. And indications are that some of these ports, as well as rail and truck movements, already are running at or near full capacity. For these reasons, the NGFA and NAEGA continue to urge that U.S. government prioritize the investment of human and financial resources on recovery and restoration of operations at the Mississippi/Center Gulf port.

    Export elevators in the Mississippi/Center Gulf region range in storage capacity from 2 million to nearly 8 million bushels each. There are 10 commercially operated grain elevators in the New Orleans area, with a combined storage capacity of approximately 526 million bushels. These facilities have a rated vessel-loading capacity generally ranging from 60,000 to 100,000 bushels per hour.

    There also are several floating rigs in the region that are registered to operate as barge-unload/vessel-loading facilities, some of which have resumed limited operations. These rigs have no storage capacity, but operate as transloading facilities with a rated vessel-loading capacity ranging from 30,000 to 60,000 bushels per hour

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