A new study says that increasing the depth of the shipping channels in the lower Mississippi River to 50 feet could create thousands of new jobs and billions of dollars in additional U.S. exports.
The study, The Economic Impact of Deepening the Mississippi River to 50 Feet, was done by Tim Ryan, a professor of economics at the University of New Orleans and commissioned by the the Big River Coalition and the Louisiana Department of Transportation and Development. U.S. Senator David Vitter, the ranking member of the U.S. Senate
Committee on Environment and Public Works, joined industry and Louisiana
transportation officials for the release of the new report.
“In order to take advantage of the new larger vessels that will be used increasingly in the future after the opening of the new Panama Canal locks, the Mississippi River must be deepened to 50 feet. The deepening of Southwest Pass, the navigable deep-draft entrance to the River, from the effectively maintained depth of 47 feet to 50 feet would open up approximately 175 miles of the Lower Mississippi River to accommodate post-Panamax vessel transits,” the study said.
Deepening the river to 50 feet would allow vessels currently using the waterway to carry more cargo and the use of larger ships on the Lower Mississippi River.
The study assumed that the number of post-Panamax and Cape-size vessels using the Lower Mississippi would begin increasing in 2017 and that by 2024, there will be 18-percent more large ships (ships capable of carrying more than 75,000 tons of cargo) carrying the top ten commodities, which include crude oil, pig iron, iron ore, and gasoline on the import side. On the export side, the top commodities are corn, soybeans, coal, crude oil, pig iron, and iron ore.
“At the end of an eight-year period of phasing in the implementation of the usage of the larger post-Panamax ships, the deepening of the Lower Mississippi River to 50 feet will accommodate an increase of an estimated 24.36 million tons of cargo, valued at $16.26 billion,” Ryan calculated.
The study said the U.S. would see increased production caused by lowering the cost of exporting goods to other countries and lower gasoline prices due to the reduced costs of importing crude oil. The study said “the U.S. economy will add 16,991 jobs as a result of the increases in production and $849.5 million in increased income for American workers.”
The costs of the dredging is predicted to include a one-time component of $300 million and an annual increase in on-going channel maintenance of $90 million per year. The report noted that in 2011, because of inadequate funding for maintenance dredging, there were several long periods of shoaling that required draft restrictions down to 43 feet.
The Big River Coalition noted that Lower Mississippi River channel was originally authorized to be deepened to 55 feet in the Water Resources Development Act (WRDA) of 1986.
“However, the channel was never deepened below 45 feet due to the onerous requirement by the federal government that annual maintenance beyond 45 feet is the responsibility of the local sponsor, or the State of Louisiana in this case,” the coalition said. “Recent language passed by the Senate in the latest WRDA bill would shift maintenance costs up to 50-foot drafts to the federal level. Industry leaders and the Big River Coalition agreed upon a reduced draft from 55 feet to 50 feet to match the controlling draft of the new locks on the Panama Canal, expected to be completed in 2015.”
Big River Coalition said the river deepening is a two-phase process. “Phase one would deepen Southwest Pass to Venice, La., or Mile 10 above Head of Passes — a 30-mile stretch of river. The first phase would automatically open 175 miles of River to a 50-foot channel, due to the River’s naturally deep channel. Estimates are Phase I’s construction costs would be $195 million with annual maintenance costs of $60 million,” the group said. “Phase II would begin at Belmont Crossing and dredge several river crossings to Mile 232 at the Baton Rouge Harbor at a cost of $105 million, with annual maintenance costs of $30 million.”
Gary LaGrange, president and chief executive officer of the Port of New Orleans, said the U.S. economy depends on the river “for both the inbound movement of raw materials critical to manufacturing, as well as the outbound movement of goods produced in the United States bound for global markets.” He added that America’s “maritime highways” must be a priority of the federal government if domestic manufacturers are to compete globally.
Sean Duffy, executive director of the Big River Coalition, said consumers would ultimately pay more for goods if the Mississippi River isn’t deepened to match the Panama Canal’s depth.
“The cargo carried on the River has an estimated $135 billion annual impact on the nation’s economy. We are talking about a River that connects 31 states and two Canadian Provinces through the third largest river basin in the world. It is a true maritime superhighway,” he said. “The time to bring the Mississippi River channel and its infrastructure into the future is now.”
The Big River Coalition consists of more than 110 maritime businesses, trade associations and port authorities in 10 states along the Mississippi River and its tributaries. The study and other documents can be accessed on the Big River Coalition’s website. – Chris Dupin
Study: Deepening Mississippi River could increase exports
