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A publication of the Upper Mississippi Waterway Association.
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May 2018
 
Predictable Funding Saves Time/Money

     A formal ribbon cutting ceremony at the Olmsted Locks and Dam project on the Ohio River is set for August 29 and the Army Corps of Engineers Louisville District expects to begin locking tows through several weeks earlier. 
     Since it was first authorized with an estimated price tag of $775 million and a 1998 completion date, the word “Olmsted” has become synonymous with boondoggle.  Because of inconsistent funding and other challenges, final cost will be close to $3 billion and it will have taken over 30 years to complete. 

Erratic funding expensive
     Now, a new study by Texas A&M University, sponsored by the Soy Transportation Council says the reason Olmsted and other projects cost so much and take so long is the erratic funding that has been normal operating procedure in the U.S.
     "Predictable Funding for Locks and Dams," lays out what its authors say are best practices that would increase the odds of projects being completed on time and on budget.  “How you allocate money is just as important as how much money you allocate,” the study says.
     A recent Pittsburg Post Gazette story provides another real-life example of the cost/time conundrum laid out by the Soy Transportation Council.
     “Congress authorized replacing Monongehela River locks and dams at Braddock, Charleroi and Elizabeth in 1992 at an estimated cost of $750 million,” the story says. “But inconsistent funding has increased the cost of the project, which was supposed to be completed in 2004, to between $1.2 billion and $2.7 billion, depending on how much of the work originally authorized is funded.”
 
(Above) This undated Corps of Engineers photo shows crews at work on the Olmsted Locks and Dam located near the confluence of the Ohio and Mississippi Rivers.
 
From the Executive Director . . .
 
Relevance of the past

      The Waterways Journal reported earlier this month that grain shippers aren’t too happy with system-wide rail service deterioration or excessive charges involving Class I railroads, compelling the National Grain and Feed Association (NGFA) to cry foul to the Surface Transportation Board (STB) in a letter detailing shipper complaints.  According to NGFA, Class I railroads are trying to impress Wall Street investors and shareholders by reducing their operating ratios to a point that has degraded service to unacceptable levels.
 
     The charges listed against them included operational problems such as significant transit delays; power and crew shortages; misrouting cars to a wrong destination; delays in moving single-car shipments [versus unit trains] and others.  Complaints of excessive charges included a $1,000-per day charge for overweight rail cars and a $250 charge for diverting railcars to a different destination than originally billed.
 
Railroads adapting?
     This writer has not seen the letter to STB, nor have we found it on its website, therefore we must take these charges at face value.  As we understand this issue, NGFA is concerned, and rightly so, with how Class I railroads are apparently adapting to the 21st  century advances in technology.
 
     UMWA sees NGFA’s comments in a somewhat different light and with a bit of irony.  For starters, while the complained of railroad actions are aggravating and costly, similar criticisms have been leveled against railroads since “the earliest [land] grants offered ten square miles of Federal land for every mile of rail built” – think Robber Barons of the late 19th century: Vanderbilt, Plant, Gould and Harriman, just to name a few.  And, by the way, several dabbled in steamboats: including James J Hill (Red River Transportation Company); Charles T. Hinde (Captain of steamer Davenport, St. Louis to St. Paul) and Cornelius Vanderbilt (Captain of a steamboat between New Jersey and New York).
 
When ICC ruled
     It is the passage of time which now produces a modicum of humor and plenty of irony in the fact that some issues that concern today’s NGFA, delays in transit, for example, are the same issues which allowed members of that same organization of a century earlier to thrive and be competitive in the industry.  For example, during the nine decades the Interstate Commerce Commission (ICC) had economic control over railroad rates and charges, tariffs of the day allowed “milling-in-transit” to modify the form while enhancing the economic value of some grains.  Then, this delay in transit had economic value; just-in-time logistics didn’t exist.  Today delays are not tolerated.
 
     Similarly, carloads of barley from mid-western country origins located on so-called grain gathering railroads (Great Northern/ Northern Pacific) were allowed to be shipped to a major grain market such as, Minneapolis with a malting-in-transit privilege when the car was ultimately reshipped.  This provision forced the Western Trunk railroads (CNW, Milwaukee Road, Soo Line) to be competitive thus producing an economic environment that allowed multiple malting companies to compete while protecting U.S. barley growers and restricted the transport of barley and malt to U.S. railroads. 
     This is an important consideration given that the U.S. was not the only source of barley during the 93-year reign of the ICC; France was also a major source.  Using ocean vessels to the St. Lawrence ports of Port Arthur/Fort William, Ontario thence lake vessel to U.S. ports in Minnesota and Wisconsin, France offered a quality product at competitive prices to the Lake Michigan home of the majority of U.S. malting companies.  In a way, this was an early example of water-compelled rates, not against railroads, but against U.S. producers.
 
Consigned in transit
     Finally, the (generally) western lumber industry was sustained and allowed to expand because of a tariff provision that allowed carloads of lumber to be shipped east with an open destination before they were sold.  As they traveled, such cars could later be consigned to an explicit party and destination provided the sale orders were executed before the cars reached an interchange point.
 
     By this time it should be obvious to our discerning readers that we are writing this column using facts in a lighthearted manner to make the point that actions of Class I railroads, as with most other for-profits, is relevant to their time.  Issues faced by NGFA members during the nine decade reign of the ICC were not only relevant to that time, but were allowed under the lawfully published rates and charges of that time – the law of the land, if you will.
 
     Today’s world of contract rates, shipper-provided multiple-car loading terminals, rail car auctions and the divisive issue of private versus federal/state infrastructure funding could not have been envision by those in the grain transport world of ICC rules.  While the two are discordant, both are relevant to their time and must be accepted as such; nothing more, nothing less.
 
Disclaimer:  Thoughts and opinions expressed in this column are those of its author and not necessarily those of the Upper Mississippi Waterway Association or its members
 
Other Items of Interest...

*    Another emergency lock closure stopped traffic through Lock and Dam 11 on the Mississippi at Dubuque late in April.  L&D 11 has been in service for 81 years and the closure was forced when crews preparing for routine maintenance found damage to the anchoring system.

*   River transportation has again demonstrated its capacity to handle cargoes that no other mode could even attempt.  Recently the Mv. Mister Mac was on the Ohio River moving a huge load of equipment for a natural gas processing plant in Pittsburgh, Penn.  In fact, the Shelly Corporation picked its plant site because it was close to river transportation. The company says the river will also mean lower costs for building materials and other plant supplies.

*   The old lift bridge in Stillwater, Minn., will resume a revised lift schedule May 15.  It will operate every half hour between 8 a.m. and 12 midnight, seven days a week until October 15.  A downloadable schedule is available on the Minnesota Department of Transportation web site.

*   Even larger Post-Panamax container ships are being allowed through the new locks on the Panama Canal beginning June 1.  The change is expected to increase route capacity by 10% when vessels with a beam of 51.25 meters are allowed.  It will mean 20-row wide deck loads, up from 19 rows.

*   The National Mississippi River Museum and Aquarium in Dubuque, Iowa, was recently named “Silos & Smokestacks People’s Site of the Year” by the group Silos & Smokestacks National Heritage Area. 
 
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