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Low water in Great Lakes the next challenge to economy

From the New York Times

Drought and other factors have created historically low water marks for the Great Lakes, putting the $34 billion Great Lakes-St. Lawrence Seaway shipping industry in peril, a situation that could send ominous ripples throughout the economy.

Water levels in the Great Lakes have been below their long-term averages during the past 14 years, and this winter the water in Lakes Michigan and Huron, the hardest-hit lakes, dropped to record lows, according to the Army Corps of Engineers. Keith Kompoltowicz, the chief of watershed hydrology with the corps’s Detroit district, said that in January “the monthly mean was the lowest ever recorded, going back to 1918.”

While spring rains have helped so far this year, levels in all five Great Lakes are still low by historical standards, so getting through the shallow points in harbors and channels is a tense affair.

The combination of low water and infrequent dredging is annoying to recreational boaters, but the biggest impact is economic: shippers, carriers and the industries that rely on the bulk materials like limestone, iron ore, coal and salt are hugely dependent on lake travel.

Lakers can move products at prices that beat rail or road by as much as $20 per ton of cargo, using much less fuel. Given those advantages and an improving economy, about 30 ships are being built this year to run cargo on the Great Lakes, according to Craig H. Middlebrook, the deputy administrator of the St. Lawrence Seaway Development Corporation.

But for now, low water is “hammering our industry,” said Glen G. Nekvasil, the vice president of the Lake Carriers’ Association, a trade group. To cope, shipowners have had to lighten the loads on their boats, making hauling less efficient and profitable.

“When the water level drops as it has, we’re ripping tons out of the boat,” said Mark Barker, the president of the Interlake Steamship Company, which owns the Dorothy Ann.

In the Dorothy Ann pilothouse, 70 feet above the water, the sudden appearance of dashes on the screen was a moment of tight shoulders and held breath. The boat had already been lightened by dropping off thousands of tons of cargo earlier in its journey to float at this depth, and the boat glided the last few hundred feet over the soft bottom.

A large laker, 1,000 feet long, will lose 250 to 270 tons for every inch the water level drops, Mr. Nekvasil said. That can add up to 324,000 tons a season per boat, he said.

The impact does not stop with shippers. “The aggregate impact over time will be to raise the cost of commodities, which in turn will raise the price of manufacturing goods, which in turn raises the price to the consumer,” said Richard D. Stewart, the director of the Transportation and Logistics Research Center at the University of Wisconsin-Superior.

The American Society of Civil Engineers estimates that inadequate harbor maintenance increased the cost of traded products by $7 billion in 2010 and that this cost would increase to $14 billion by 2040 if the work was not stepped up.

The weirdest part is that the money is there dredge the harbours and help fix the problem.

The owners of the big lake boats like the Dorothy Ann and its barge, the Pathfinder, contend that the federal government has fallen down on the job of dredging these harbors, which could help compensate for the low water. “If we had the dredging, we wouldn’t have the dashes,” said Mr. Barker, president of the Interlake Steamship Company.

He said the Great Lakes ports could be properly dredged for $200 million. “Pretty much all we’re asking for is the cost of a highway interchange,” he said.

The federal government has a trust fund for harbor dredging, based on taxes on cargo. The fund is supposed to receive $1.8 billion in the 2013 fiscal year, but the Army Corps of Engineers requested to spend only $850 million of the fund, a situation that led Senator David Vitter, Republican of Louisiana, to hold up a piece of paper that read “I.O.U. $6.95 Billion,” the surplus in the fund since it was established in 1986, in a hearing with Jo-Ellen Darcy, the assistant secretary of the Army for civil works. The Water Resources Development Act, which was drafted to address many of these issues, has passed the Senate and is under consideration in the House.

Don T. Riley, a former official with the Army Corps of Engineers who works with a Washington lobbying and consulting firm, Dawson & Associates, acknowledged that the extra money could seem absurd. “You’ve got this major surplus — that just sounds so dumb not to spend at least what you take in because that’s what you’re paying for,” he said. But the corps spends only what Congress appropriates, he said, and tapping the fund is not necessarily easy: even if money has been collected, ordering it to be spent increases the appropriation for the corps, and that can be politically troublesome in times of budget cutting.

The long term effect of this is that if the harbours don’t function at current water levels, it will mean more trucks on the roads moving goods through our cities that are congested already.

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