Rains brighten prospects for shippers on Mississippi River

Tue Jan 15, 2013 12:46am IST

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* Rainfall brings relief to drought-drained river

* Barges take on heavier loads of fertilizer

* Army Corps completes first phase of rock removal

By Tom Polansek and P.J. Huffstutter

CHICAGO, Jan 14 (Reuters) - Vessels on the Mississippi River were gearing up on Monday for the shipping superhighway to fully reopen within weeks after being crippled by a severe drought as heavy rains at the weekend and an earlier-than-expected finish to the rock removal improved prospects for shippers.

Low water on the nation's busiest river has impeded the flow of billions of dollars worth of cargo like grains, crude oil and coal over the past two months, with the government clearing rocks to deepen a critical stretch between Illinois and Missouri.

"We got an awesome rain over the weekend," said Matt Zimmerman, vice president and general manager of Midwest Grain and Barge, which is placing heavier loads of fertilizer on vessels at the Gulf of Mexico to be delivered to farmers in the Midwest farm belt.

"We got even more than we were expecting. It was such widespread rain. It's a difference maker for sure," he said.

Water levels on the river near Cape Girardeau, Missouri, where Midwest Grain and Barge is based, have increased since Friday, raising hopes that the waterway will be able to support heavier traffic into February.

If water levels decline again, companies that have gambled by filling barges with heavier loads will have to park vessels on the side of the river until rain comes again.

Barge traffic has been limited for months across a shallow 200-mile (321-km) stretch between St. Louis and Cairo, Illinois, where the Army Corps of Engineers is removing rocks at Thebes, Illinois, in its largest such undertaking in a quarter century.

The first phase of the project was completed earlier than expected over the weekend, removing 365 cubic yards (280 cubic meters) of limestone from the channel near Thebes and deepening the navigable area by 2 feet (61 cm).

Work to remove additional rock at Thebes and another spot near Grand Tower, Illinois, could be completed by the end of January, at which point daily river closures that have snarled traffic in the area will end.

"The success of the rock removal work, combined with recent and forecast rain, increases out confidence we will sustain and adequate channel through this spring," said Maj. Gen. John Peabody, commander of the Army Corps' Mississippi Valley Division.

And nature seems to be on the side of shippers.

The National Weather Service said that by Thursday the water level of the Mississippi River at St Louis will be up nearly 2 feet from last Wednesday, bringing it to the highest level in almost a month.

At Thebes, the water level has jumped almost 9 feet since Friday.

WEEKEND STORM

A weekend storm dumped 1 to 3 inches of rain along the river valley from St. Louis to Cairo, Illinois, said Drew Lerner, president of World Weather Inc. That followed another storm late last week which contributed 1 to 1-1/2 inches of rain and a spell of unseasonably mild weather that melted snow and also boosted the river, he said.

Expectations for the river conditions to improve have lead barge company AEP River Operations to direct 200 empty barges to move north of Cairo from lower positions on the river.

Clients want to load their barges with coal around the St. Louis area, and ship it down the Mississippi River for export from the Gulf of Mexico, said Martin Hettel, senior manager of bulk sales for AEP.

Nearly 125 miles to the south, in Scott City, Missouri, corn processor SEMO Milling has started spending more to buy grain from local farmers in anticipation of river conditions improving.

The company processes corn into grits, flour and other products to sell to food companies like PepsiCo Inc's Frito Lay and breweries, such as Anheuser Busch.

Before the forecasts for water levels on the river improved this week, the mill figured it would be able to buy corn from local farmers with little competition from grain elevators and processors that ship grain on the river.

Now, that is not the case.

"Once we realized that, we felt we had to be a little bit more aggressive," said Dan Fetherston, commercial manager of the corn processor.

TOUGH TIMES

These have been tumultuous times for the nation's energy and agricultural sectors and others, who rely on the Mississippi River as a cheaper way to transport an estimated $7 billion in goods in December and January.

Since late autumn, water levels in the shallow point of Thebes, Illinois, were expected to plummet to the lowest in more than a century.

That would have forced the river to effectively close to commercial shipping traffic, potentially impacting more than 8,000 jobs and halting the movement of 7.2 million tons of commodities worth $2.8 billion in January, according to lobbyist groups such as The Waterways Council and American Waterways Operators.

Such transportation concerns prompted AGRIServices of Brunswick in Missouri last month to try to rush barges south, loaded with grain, out of the heartland and return with loads of fertilizer.

The company and others remain nervous the river may still close to commerce if conditions worsen.

Slowed river traffic has turned a typical two-week barge trip from New Orleans to St. Louis into a four- to eight-week venture, said AGRIServices general manager Bill Jackson.

Each extra day on the river costs the company another $300 per barge - a fee that is steadily eroding the economic benefits of moving commodities by water, rather than across land by rail, Jackson said. Two of the company's three docking areas in St. Louis are inaccessible due to low water. They still cannot get to them.

Even with the recent rains, Jackson said, "I'm not feeling optimistic."

Jackson has been meeting with railroad carriers in Memphis to explore an alternative transportation method - just in case the river does close.

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