MVTTC Highlights Strengths, Opportunities On The Lower Miss

There are a lot of good things happening on the Mississippi River, Sean Duffy, long-time executive director of the Big River Coalition, said in his opening remarks at the annual Mississippi Valley Trade and Transport Conference (MVTTC), held February 27 at the Westin Hotel in New Orleans.

“If you want to hear about the many things,” he said, “clear your calendar until next Tuesday.”

Duffy is chairman of the MVTTC. He jokingly called himself “the real Sean Duffy,” distinguishing himself from the former congressman with the same name who now serves as the secretary of transportation under President Donald Trump’s administration.

Throughout the day-long conference, speakers from industry and government and economists all acknowledged there are uncertainties on the horizon, but for the most part, they projected a positive future for the transportation industry on both the brown-water and blue-water sides.

Duffy described how Louisiana Gov. Jeff Landry has created a navigation and safety task force to promote the marine transportation industry, with the Mississippi River pilots’ associations all considering dredging an expanded Pilottown Anchorage as the task force’s number one priority.

Coupled with the beneficial use of the dredged material for coastal restoration, the proposed expanded Pilottown Anchorage would be a win-win. It is also a huge safety issue, now that the Mississippi River has been dredged to 50 feet, with the river now accommodating deep draft vessels that measure up to 1,400 feet long from the Gulf up to Baton Rouge, La., at Mile 240 Above Head of Passes (AHP).

Duffy recounted how in 1989 a Russian freighter, the mv. Marshal Konyev, grounded at the Pilottown Anchorage. The current forced the ship to drag bottom for a mile and a half before it lodged in the channel. It took eight days to free it.

Capt. Michael Miller, president of the Associated Branch (Bar) Pilots who guide ships from the sea buoy to the Pilottown area more than 30 miles upriver, said Pilottown Anchorage is the last location where down-bound ships can be rounded up and anchored and where up-bound ships can wait if navigation issues require them to stop.

Recent dredging will allow an additional 300 to 400 new ships to transit the Mississippi River, Miller said, on top of the 6,000 ships that currently make calls. With transits upbound and downbound, that could total 12,000 ship transits annually on the Lower Mississippi River.

Bar pilot Henry Peterson joined Miller in discussing challenges pilots face with high- and low-water river conditions and a $40 million backlog for repairs and upgrades to aids to navigation, including replacing the range lights destroyed in Hurricane Ida in 2021, which the pilots would use to line up deep draft vessels while guiding them into the jetties at Southwest Pass.

Peterson said at times pilots have had to take it upon themselves to climb a navigation aid ladder to correct a problem using duct tape. He pointed out that because of the current spending restrictions in Washington, neither the Coast Guard nor Corps of Engineers sent speakers to the conference.

Beaux Jones, president and CEO of Baton Rouge-based The Water Institute, discussed the uncertainty of long-term weather forecasting. Instead of picking one set of data—with the most alarming forecast often garnering the most attention—Jones suggested picking several different scenarios, then predicting what could happen and how to deal with it by considering weather and operational factors, such as equipment failures.

Louisiana Rep. Mark Wright said the state recently merged waterways planning into the economic development department, and “things really clicked.” He said Landry is pushing the development of the state’s 36 ports into one plan where one port is not favored over another. Wright, a former regional vice president for the American Waterways Operators (AWO), said that move has “made a world of difference.”

Gary LaGrange Honored

Leading up to the conference, Duffy had asked Gary LaGrange, former president and CEO of the Port of New Orleans, to introduce keynote speaker Dr. Loren C. Scott, a Louisiana-based economist. While LaGrange did introduce Scott, Duffy later confessed the request for the introduction was just a ruse to ensure LaGrange would attend the conference so he could recognize LaGrange with a special award.

MVTTC bylaws allow for an honorary membership to be awarded, Duffy explained, and the first-ever honorarium went to LaGrange.

Duffy also announced scholarship awards to five students.

In addressing the crowd, LaGrange told the story of receiving a phone call from Washington just five hours after Hurricane Katrina passed in 2005. When asked what the Port of New Orleans needed, LaGrange ticked off a list of first aid supplies, blankets and other incidentals.

“No, no, what do you really need?” then-Secretary of Defense Donald Rumsfeld said.

LaGrange responded that the city needed an open ship channel, restored intermodal connectivity and housing. In response, ready reserve ships from the U.S. Department of Transportation’s Maritime Administration were deployed domestically following a disaster for the very first time. With 80 percent of the housing in New Orleans flooded after the levee failures, LaGrange spent the next four and a half months living on the Cape Kennedy, a ready reserve ship docked in New Orleans.

Initially, the Coast Guard said it would take eight months to reopen the port. However, even without power from the electric grid, the first ship was docked and unloaded just eight days after the storm.

Scott Delivers Keynote

In a wide-ranging keynote address punctuated with well-timed jokes, Scott addressed the issue of the Trump administration’s proposed tariffs, energy policies, taxes and climate change.

With proposals not to tax tips and overtime pay and to make Trump’s first-term tax cuts permanent, one of the biggest issues facing the Trump administration, Scott said, is how big of a deficit the government is comfortable with.

Scott went on to explain an economic principal called the Law of Comparative Advantage, which states that a country’s standard of living increases with the reduction of trade barriers. Tariffs have consequences, said Scott, who added that the threat of stagflation, or economic malaise, is very real.

“One reason Biden got fired is inflation,” Scott said, adding that inflation was also an issue for Jimmy Carter. Interest rates on 30-year loans rose to 18 percent, and the prime rate hit 21.5 percent under Carter.

Trump is using tariffs as a “negotiating technique,” said Scott, who pointed to Trump’s threat to impose tariffs on Mexico if it failed to secure its own southern border to immigrants headed toward the United States.

With the threat of tariffs restricting trade, Scott said, many manufacturers are stocking up on inventory. Scott pointed particularly to steel and aluminum.

Scott also discussed other headline-grabbing actions by the Trump administration, including executive actions aimed at restricting funding for non-governmental organizations. Scott argued that the motivation for that, in part, was that some NGO funding in the past had gone to pay protesters who would speak at permit hearings and sway decisions, including some connected to industry along the Mississippi River.

Scott also called out lazy journalism that relies on incomplete statistics or economics.

“Alarmists sell newspapers,” Scott said, pointing to a frequently -cited analysis of 11,000 climate studies that formed the basis of the claim that 97 percent of scientists believe there is a significant threat of human cost from climate change. The bigger picture conclusion from that study, Scott said, is that two-thirds of the scientists surveyed had “no opinion on whether climate change was human caused or even significant.”

Addressing the recent fires in Los Angeles, Scott said wildfires were much more prevalent in the 1920s and 1930s. Data currently being reported, Scott said, used a near-year starting point to make wildfires seem more frequent. A report from the Biden administration used 1985 as a starting point, thus “skewing the evidence of the trend in wildfires,” Scott said.

Finally, Scott pointed to the use of whale oil during the Civil War as evidence of how market pressure is a better motivator of change than government regulations.

Prior to the Civil War, whale oil was the primary fuel for lighting. The price: 23 cents per gallon. Supply issues in 1865 caused the price of whale oil to skyrocket. Scott noted that, in 1859, drilling in Titusville, Penn., hit crude oil. “American character and ingenuity,” Scott said, led to discovering how to refine the oil into low-priced kerosene, completely changing the market.

“The Civil War drove the price of whale oil to $1.45 a gallon, incentivizing capitalists to refine crude oil into kerosene,” Scott said. “The market economy finds a way to solve all kinds of crises.”

Two speakers attended from the U.S. Department of Agriculture (USDA). Charlie Gottbrath, director of freight and logistics at Cooper Consolidated, moderated a discussion that included Adam Sparger, a director with the U.S. Department of Agriculture (USDA), and economist Richard Henderson. The panel discussed the importance of the inland waterways to U.S. agriculture.

Transportation on the inland waterways is the “secret to our success,” Sparger said, allowing the more expensive cost of raising crops in the United States to be offset by cheaper shipping to the coast for export. Sparger noted that China and Brazil are catching up in terms of shipping costs.

Lower Mississippi River ports are the biggest exporter of grains, and Henderson noted that some crops travel 2,000 miles to reach export ports.

USDA provides statistics on grain movements, and Henderson shared the website addresses for accessing the open data platform.

River Impact Study

During the conference, Duffy announced a forthcoming study by the Big River Coalition and the Louisiana Department of Transportation and Development that will highlight, in part, the adverse effects of river closures. The segment included presentations by Ken Eriksen, managing member and strategic adviser of Polaris Analytics and Consulting, and Susan Olson, founder of Action Intel.

The Mississippi River Ship Channel sees a lot of 12-hour closures for maintenance dredging, moving pipelines and other needs, Duffy said. Efforts are made to give shipping interests a two-week notice. In the late 2000s and early 2010s, during the expansion of the Huey P. Long Bridge in Jefferson Parish, there were requests to close the river for a full three months. That length of time was untenable, so engineers developed innovative building technique to limit closures to 12 hours twice a week.

“The costs of closing the river are not factored into state restoration or pipeline removal projects,” Duffy said. “The cost to industry has to be part of the economic equation for projects. The cheapest option may not cost the collective navigation industry more than adjustments that are often preferred by navigation interests.”

There were three major disruptions to vessel transits in the United States in the past year, Eriksen said, including the allision with and collapse of the Francis Scott Key Bridge in Baltimore, Md., and a grounding in the Delaware River. Incidents like that often shift cargo and lead to higher freight rates, which are passed on to consumers.

If there are impediments to traffic on the Mississippi River, farmer associations will send out word not to sell grain until the situation and price improves, Eriksen said. This affects pricing to consumers as well.

Eriksen said during low water events, barges cannot be loaded to their maximum draft , and more barges are required, which causes higher freight rates. Again, those factors create a cost component that is often passed to consumers.

Eriksen explained when there is disruption in the supply chain, customers will seek other suppliers. The problem, Eriksen said, is, “Can the supplier overcome seeds of doubt?” In other words, will the system be able to respond and recover?

Olsen gave a detailed description of exports and imports, including leading countries to which those products are shipped and countries of origin for imports.

After lunch, Scott Sigman, principal adviser for Equinanimous Advisory Service Enterprise, moderated a session on commodity-related trade impacts. Sigman asked a series of resiliency questions to his four panel members: Beth Ann Branch, president and CEO of the Port of New Orleans and CEO of New Orleans Public Belt Railroad; Andrew Luttrell, director of sales/grain/fertilizer for Ingram Barge Company; Mike Steenhoek, executive director of the Soybean Transportation Coalition; and K.R. McKenzie, director of sales, metals and equipment, at CSX Transportation.

McKenzie said not as much coal is being shipped, but the scrap metals market has grown with 80 percent of scrap now being consumed domestically. Competition exists between barge and rail, he said.

Branch said her resiliency efforts focused on levees and floodwalls as well as meeting the needs of customers, along with rail and trucking servicing the port. Economies of scale dictate larger vessels are calling on the port, and with them, a greater focus on air and water drafts. Air draft restrictions are playing a bill role in the Port of New Orleans developing a new container terminal below the Crescent City Connection bridge.

Steenhoek likened the soybean industry to a boxer, saying it had to respond to trauma and prevent tragedy—some human, some weather related. Like a boxer, he said, the soybean industry had to “get up from the canvas” when incidents occur with appropriate emergency response. Available acreage is all but tapped out and soybean processors have been shifting from mostly meal for animal feed to soybean oil markets, he noted.

Steenhoek also made an analogy to hockey players—don’t skate to where the puck is, but where it is going. The biofuel market from soybeans is increasing, including into aviation fuel.

Luttrell said Ingram had to analyze market dynamics both tactically and strategically, suggesting the company had to be right sized, even with “not knowing what is coming at us.” He pointed to foreign competition in the soybean market and to the impact tariffs might have on the transport of steel products and fertilizer.

Energy Supply

Phillip Graeter, director of energy and environmental markets at Energy Ventures Analysis, closed the conference with a look at the recent “polar vortex” that swept across the South, bringing 10 inches of snow to parts of Louisiana and extreme cold to the north.

While summer air conditioning puts a strain on the base load and peak supply of electricity, the recent extreme cold also stressed the system.

Regarding energy sources, Graeter discussed how wind and solar are available with “what the weather gives you,” but two fuels—coal and natural gas—can provide increased energy production when peak demand increases. During the polar vortex, for instance, the electrical grid was able to shift 80 gigawatts of power to the Southeast to meet demand.

Another huge draw on electricity will be artificial intelligence. Data centers use a huge amount of electricity, and that usage is year-round, he said.

Rules under the Environmental Protection Agency (EPA) will add new restrictions on coal plants, and economics will dictate the closing of 30 percent of electrical production by coal plants over the next three to four years, he said.

While domestic coal use in the United States has trended downward sharply, coal exports have been strong. But even that can change due to politics and global supply. As an example, Graeter pointed to China cutting off coal imports from Australia when the Aussies pointed to China as the source of the COVID-19 pandemic. Australia, in turn, was able to find other buyers for its coal. India, another importer of coal, has opened more domestic coal mines, which could also affect the export market.

Featured image caption: Louisiana State Representative Mark Wright (right) speaks as part of a panel discussion at the Mississippi Valley Trade & Transport Conference that also included (from right) Beaux Jones, president & CEO The Water Institute, Henry Peterson with the Associated Branch Pilots and Capt. Michael Miller, president of the Associated Branch Pilots. (Photo by Tracie Morris Schaefer)