Katrina Brings Hell And High Water

Gulf Coast hurricane spells disaster for many food shippers.


The storm’s effects have been particularly damaging, and, in some cases, are expected to be very costly for Midwest farmers and agricultural firms that transport products by barge down the Mississippi River to New Orleans to be loaded onto ships. According to George Friedman, founder of intelligence firm Stratfor, Austin, TX, barge traffic for agricultural products is the most economical shipping method, especially since most products have a low value-to-weight ratio. Without river access, many of these companies will have to rely on more expensive trucks and rail cars to move their products, further adding to an already tight market for truck and rail capacity.

Cargill’s grain and meat divisions, for example, rely heavily on Mississippi River barge transport to get product to New Orleans for export. In fact, the company had 300 barges of product on the Mississippi River when the storm hit. Those barges sat idle on the river waiting for it to reopen to larger boat traffic.

“We weighed other options of sending it by rail or truck, but they were not viable because of capacity issues,” says David Feider, a Cargill spokesperson. “It wasn’t something we could execute because of the tightness of capacity right now.”

One barge, Feider says, holds about as much cargo as 15 railcars or 60 trucks, “so trying to divert that much cargo elsewhere would have been next to impossible.”

The company also considered diverting shipments to Baton Rouge, LA, and then sending them through the Gulf Intercoastal Canal to Houston for unloading, but instead opted to wait out the river closing.

That was probably the best thing the company could have done to ensure the future of New Orleans. “Grain barges do not need to stop at New Orleans, and can redirect past the city and onto the Gulf Intercoastal Waterway using other ports like Houston, Galveston or Tampa for offloading,” says Rodger Baker, a senior analyst and director of geopolitical analysis at Stratfor. “The longer the shipping firms use alternative ports, the less likely they will be to return to New Orleans, assuming the alternative ports can add new infrastructure to deal with the increased throughput,” he states.

So far, that has been a problem. As shippers move to other ports throughout the South—including not only Freeport, Port Everglades, Wilmington and Houston, but also Tampa, Miami, Pensacola, Fort Lauderdale and Panama City in Florida; Newport News, Norfolk and Portsmouth in Virginia, and Morehead City, NC—those facilities were having a hard time dealing with the increased traffic. Many reportedly had to turn away cargo for the first time in their history.

Freeport, for example, traditionally handled about 300 containers of bananas a week, but since the hurricane shut down Gulfport, it has been handling more than 1,000 containers a week.

Good news came in mid-September when officials at the Port of New Orleans announced that power had been restored to many facilities there, and on Sept. 14, it unloaded its first ship since the storm hit.

Port Director Gary LaGrange estimates the port could be at about 30 percent to 40 percent capacity within a month, 70 percent to 80 percent in three months and at 100 percent in four to six months.

“We are committed to restarting commercial cargo operations at this port as soon as possible because the cargo we handle has a significant impact on the economy of the region and the nation,” LaGrange says.

“Hurricane Katrina damaged the port, and we are currently able to handle a small frac tion of our normal activity. Nevertheless, we are taking important first steps in get ting the New Orleans economy primed and re-establishing our relationships with our customers.”

However, reopening the port alone does not solve all the problems. “While much of the port infrastructure was not significantly damaged by Katrina, the massive population shift—which will be prolonged—has left many of these facilities with minimal if any staff. This leaves the ports largely inoper-
able. While this is a temporary situation, the disruption comes at the start of the harvest season, and thus will soon increase in mag-
nitude,” warns Stratfor’s Baker.

Also welcome news to the countless logistics providers and shippers who do business in and around the Gulf Coast was the start of work to repair the Twin Span Bridge on I-10 between New Orleans and Slidell, LA, and on a temporary replacement for US-90 in Mississippi. Both highway reconstruction projects began the week of Sept. 12 and are likely to take several months to complete.

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