Businesses that rely on barge traffic on the 440-mile McClellan-Kerr Arkansas River Navigation System to move fertilizer, grain and other commodities are raising concerns about looming federal budget cuts’ effects on shipping.
The U.S. Army Corps of Engineers operates locks and dams along the river and oversees dredging activity to keep the river open for barge traffic.
Laurie Driver, a Corps spokesman, said the agency is assessing the potential impact of so-called sequestration, or budget cuts, on the civil works program and its personnel. Sequestration was a bipartisan compromise reached in 2011 to enact deep cuts to military spending and an array of other federal programs if an overall budget deal couldn’t be reached.
“Sequestration will result in approximately a 5-percent reduction across Civil Works programs, projects and activities, but that reduction has not yet been applied on a project-specific basis. That action must await enactment of appropriations that fund the federal government beyond the current continuing resolution that is set to expire March 27,” Driver said in a prepared statement.
In a brief interview, Driver said that March 27 is the expiration date for providing funding for federal operations, given Congress’ failure to pass a budget.
In 2012, tonnage shipped on the McClellan-Kerr system was 11.687 million, up 10 percent from 2011, the Corps reported.
David Choate, vice president of grain and barge operations at Bruce Oakley Inc., a transportation and logistics firm in North Little Rock, said his firm has been at meetings with the Tulsa and Little Rock districts of the Corps.
“They have been trying to work with us and the industry on contingency plans,” he told the Arkansas Democrat-Gazette. If the agency does not get operations and maintenance funding, he said, “I would see that as a big obstacle to commerce on the river. It will affect a lot of people.”
In addition to agricultural commodities such as soybeans, corn and wheat in the region, other crops, such as wheat from as far away as the Dakotas, moves on the river, which runs from Catoosa, Okla., to the Mississippi River, as well as scrap steel destined for recycling. In the recent past, he said, shipments of silica sand moved on river barges to Arkansas before being transported overland to the Fayetteville Shale natural gas formation to be used for hydraulic fracturing, also known as fracking, to release the gas.
Recreational boating also could be cut back, Choate said.
Sen. John Boozman, R-Ark., said: “We are meeting with the Army Corps of Engineers to find out what can be done to minimize the impact of sequestration. Across-the-board cuts are not the optimal approach to reining in spending because essential programs are facing interruptions in services. We need to make targeted cuts and we are addressing that with our colleagues in Congress.”
His Democratic counterpart, Sen. Mark Pryor, added: “Millions of dollars of Arkansas products and goods are being shipped around the country every day on our navigable waterways, so it’s essential that we maintain funding for these projects. Unfortunately, based on the conversations I’ve had with the U.S. Army Corps of Engineers, it appears that every project that receives funds this fiscal year will receive a cut of approximately 5 percent due to sequestration.”
Duane Hawkins, manager of Logistical Services Inc., which operates the Port of Little Rock, said the Corps had already cut back hours of operation on 17 locks and dams based on the frequency of their use.
“It’s not going to be good,” he said.
Hawkins does not anticipate an immediate impact at Little Rock, but said operations at Van Buren and Muskogee, Okla., are likely to be affected.
“Fertilizer season is just now getting under way and it will continue to the first of July,” he said.
In addition, he said, Welspun Corp. Ltd., headquartered in Seattle, is bringing in steel coils and pipe for its projects. Welspun Tubular LLC in Little Rock buys steel coils and manufactures pipe for the oil and gas industry.
And, of course, harvest season awaits in the fall.
“The barge industry is huge,” Hawkins said, and neither truck nor rail is as efficient as barges for moving big, bulky items.
“It’s really essential to keep these barges moving,” he said. “It’s a very clean, efficient way to move bulk cargo.”
Marty Shell, president of the Fort Smith Port Authority, said the Corps of Engineers has done a good job of maintaining the locks and dams as far upstream as the Port of Catoosa at Tulsa, and keeping a stream depth of 9 feet or more. The Corps, he said, has been able to do that despite annual budget cuts of 5 percent to 6 percent per year over the past several years.
“I think we’re seeing a trickle-down effect of what our government in D.C. has done, their failure to pass a budget and failure to put infrastructure higher up on their agenda,” he said. Still, he said, he credits the Corps offices in Little Rock for keeping freight moving on the river.
“They seem to be able to get the job done, no matter what,” he said.
Shell said the region’s highways and railways are operating at capacity, while the Arkansas River system is at 30 percent capacity, leaving ample room for shipments to grow.