fedgazette

News of big harvests means respite for barge industry

Minnesota State Roundup

Published October 1, 1994  |  October 1994 issue

Following a year when harvests were severely reduced by flooding, which also closed waterways for part of the year, the Mississippi River barge industry expects to rebound this fall as large harvests are reported throughout much of the Upper Midwest.

A report issued this fall by the University of Minnesota shows that after a fall-off from peak levels in the early 1980s, the barge industry may be poised to recapture some of that earlier strength.

But the barge industry—which employs over 1,200 Minnesotans directly, and supplies up to 5,000 indirect jobs, according to industry estimates—will likely never return to the glory years of 1983-84, according to one of the report's authors, Jerry Fruin, a University of Minnesota transportation economist. "I don't view this as a resurgence, but as a return to previous long-run growth patterns," he says. In other words, those peak years of a decade ago were an aberration, according to Fruin.

Ten years ago, when shipments and receipts at Twin Cities ports approached 20 million tons annually (nearly double that of the previous decade), the industry was swelled by investors trying to take advantage of tax laws that allowed generous write-offs for barge owners. Barge rates plummeted as newly formed barge companies competed for grain, coal and other cargo, which was lured from land-based transport.

"People were beating themselves over the head with prices," says Richard Lambert, director of ports and waterways for the Minnesota Transportation Department. The upshot: The roughly 2,000 companies and barge owners that worked the Mississippi River 10 years ago have dwindled to about 900. Also, as shipping rates increased from the cutthroat prices of 1983-84, cargo moved back to trucks and trains. In recent years, shipments from Twin Cities ports have averaged around 12 million tons.

This year's shipments should exceed those levels, especially if corn and soybean harvests are as high as predicted, Lambert says, because most corn and soybeans are shipped to southern ports, while wheat and other small grains travel east and west. Almost certainly, last year's shipments of about 11 million tons will be surpassed, Lambert says.

In the long run, Lambert agrees with Fruin that the industry will likely not see years like 1983-84 again, but he does expect barge traffic to increase over time, fueled by increased ag production and exports, as well as by movement of coal, salt, cement and other products. The river is not a labor-intensive or fuel-intensive mode of transport, Lambert says, but with freezing in winter and flooding in the summer, it is not always as dependable as trucks or trains.

David Fettig

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