Red River Waterway Closure Business Interruption Costs Adding Up

May 1, 2012

The costs of closing the Red River Waterway in Louisiana for 15 days haven’t been fully totaled, but they’re adding up to millions of dollars. A broken lock system shut the waterway from April 2 to April 17.

Since the lock near Marksville reopened, Red River Valley Association Executive Director Richard Brontoli has been collecting data from affected companies and compiling information about the closure’s impact to the waterway economy. The data is still incomplete, pending shipping firm reports.

However, the costs are many and varied, Brontoli told The Times and they affect the shipping and user companies and Red River Waterway entities like the Port of Caddo-Bossier. They include costs associated with unavailable equipment, crew and cargo maintenance, and tow rental costs.

Some of the stalled barges were empty and on the way to be reloaded, Brontoli said. Others carried petroleum, scrap metal and other commodities.

He said demurrage, the cost associated with delay of cargo, averages about $250 per day per barge. Each of the six tows held up on the waterway was pulling six barges — for a $135,000 total impact.

Barges carrying cargo bound overseas must arrive on time, or the cargo must be replaced and delivered from a different source, Brontoli said. That can be a huge expense — at least $1 million for stalled petroleum barge, he said.

Stalled equipment earns no revenue, but, worse, disrupts companies’ scheduling for weeks, Brontoli said. Shipping companies couldn’t meet pending contracts, requiring them to send other assets or contract with other companies or divert other assets. There are also losses due to missed opportunities because the equipment is unavailable for potential future deals and contracts.

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