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Freight Transportation Resilience in Response to Supply Chain Disruptions (2019)

Chapter: Appendix A: Inland Waterway/Locks Scenario 5

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Suggested Citation:"Appendix A: Inland Waterway/Locks Scenario 5." National Academies of Sciences, Engineering, and Medicine. 2019. Freight Transportation Resilience in Response to Supply Chain Disruptions. Washington, DC: The National Academies Press. doi: 10.17226/25463.
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Suggested Citation:"Appendix A: Inland Waterway/Locks Scenario 5." National Academies of Sciences, Engineering, and Medicine. 2019. Freight Transportation Resilience in Response to Supply Chain Disruptions. Washington, DC: The National Academies Press. doi: 10.17226/25463.
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Suggested Citation:"Appendix A: Inland Waterway/Locks Scenario 5." National Academies of Sciences, Engineering, and Medicine. 2019. Freight Transportation Resilience in Response to Supply Chain Disruptions. Washington, DC: The National Academies Press. doi: 10.17226/25463.
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Suggested Citation:"Appendix A: Inland Waterway/Locks Scenario 5." National Academies of Sciences, Engineering, and Medicine. 2019. Freight Transportation Resilience in Response to Supply Chain Disruptions. Washington, DC: The National Academies Press. doi: 10.17226/25463.
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Suggested Citation:"Appendix A: Inland Waterway/Locks Scenario 5." National Academies of Sciences, Engineering, and Medicine. 2019. Freight Transportation Resilience in Response to Supply Chain Disruptions. Washington, DC: The National Academies Press. doi: 10.17226/25463.
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Suggested Citation:"Appendix A: Inland Waterway/Locks Scenario 5." National Academies of Sciences, Engineering, and Medicine. 2019. Freight Transportation Resilience in Response to Supply Chain Disruptions. Washington, DC: The National Academies Press. doi: 10.17226/25463.
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Suggested Citation:"Appendix A: Inland Waterway/Locks Scenario 5." National Academies of Sciences, Engineering, and Medicine. 2019. Freight Transportation Resilience in Response to Supply Chain Disruptions. Washington, DC: The National Academies Press. doi: 10.17226/25463.
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Page 101
Suggested Citation:"Appendix A: Inland Waterway/Locks Scenario 5." National Academies of Sciences, Engineering, and Medicine. 2019. Freight Transportation Resilience in Response to Supply Chain Disruptions. Washington, DC: The National Academies Press. doi: 10.17226/25463.
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Page 102
Suggested Citation:"Appendix A: Inland Waterway/Locks Scenario 5." National Academies of Sciences, Engineering, and Medicine. 2019. Freight Transportation Resilience in Response to Supply Chain Disruptions. Washington, DC: The National Academies Press. doi: 10.17226/25463.
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Page 103
Suggested Citation:"Appendix A: Inland Waterway/Locks Scenario 5." National Academies of Sciences, Engineering, and Medicine. 2019. Freight Transportation Resilience in Response to Supply Chain Disruptions. Washington, DC: The National Academies Press. doi: 10.17226/25463.
×
Page 103
Page 104
Suggested Citation:"Appendix A: Inland Waterway/Locks Scenario 5." National Academies of Sciences, Engineering, and Medicine. 2019. Freight Transportation Resilience in Response to Supply Chain Disruptions. Washington, DC: The National Academies Press. doi: 10.17226/25463.
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94 APPENDIX A: INLAND WATERWAY/LOCKS SCENARIO 5 Commodity Grain U.S. Corridor Midwest to New Orleans Disruption Lock Outage or Variable Water Levels Commodity: Grains The U.S. is the world’s top grain producer and exporter.10 In 2017, the U.S. produced 585 thousand kilotons of grain, which includes corn, soybean, wheat, barley, and sorghum11. Out of this, approximately, 131.3 thousand kilotons were exported. U.S. Corn accounted for approximately 64%, soybeans accounted for 21% and wheat accounted for 12%12. The remaining 3% is mostly made of sorghum and barley. Domestic grain is an input for various products such as animal feed, ethanol, biodiesel production, as well as vegetable oil and other food products. Market and Corridor Overall, approximately 1.1 million kilotons of cereal grains were transported in the U.S. in 2015. FAF data were used to identify the domestic flow of export grains, including the states with the largest producers (or origins) and the primary destination ports for export. Using the FAF data for interstate moves rather than intrastate moves gives a better market-level view of grain movements in the U.S. Figure A-1 shows the top ten grain origin states by tonnage in 2015 at the state level. The origin of the grain is not necessarily where the grain was grown, it is where any grain was recorded leaving the state. Corn and soybeans are grown mostly in the Midwest; wheat is also grown in interior states and the Pacific Northwest. Figure A-2 shows the top ten states in grain receipts by tonnage in 2015 at the state level. The high tonnage in coastal states like Texas, Louisiana, California, and Washington reflect shipments ultimately destined for export. States close to the inland waterway system typically use barges for grain going to export in the Gulf Coast. States located further west may use rail to transport the grain to ports along the Pacific Northwest or in the Gulf Coast. Domestic grain is generally located closer to processing facilities and will generally use truck for short-hauls and rail for long-hauls. The U.S. origin and destination pair selected for this analysis is the shipment of cereal grains from Illinois to New Orleans for export to European and Asian markets. In 2015, as per FAF4 data, 29% of the grains that left Illinois was destined for New Orleans. 10 http://nationalaglawcenter.org/wp-content/uploads/assets/crs/RL32470.pdf 11 https://apps.fas.usda.gov/psdonline/circulars/grain.pdf 12 USDA Modal share 1978-2014.

95 shows the grain movements by volume between Illinois and New Orleans by mode. Around 7,179 thousand tons of cereal grains were projected to move from Illinois to New Orleans in 2015. Of that, 55% moved by water and 41% moved by rail. Figure A-1: Top 10 Grain Origins by Tonnage at the State Level, 2015

96 Figure A-2: Top Ten Grains Markets by Tonnage at the State Level, 2015 Table A-1: Grain Volumes Between Illinois and New Orleans by Mode Mode Tonnage (kilotons) % of Tonnage Value ($ Million) % of Value Water 3,956 55% $1,070 56% Rail 2,909 41% $ 759 40% Multiple modes 171 2% $45 2% Truck 143 2% $34 2% Total 7,179 100% $1,907 100% Source: FAF4 Supply Chain Cereal grains, such as corn, soybeans and wheat, are grown and harvested seasonally. Corn and soybean harvest typically begins in October and finishes by the end of November. Wheat has two harvest seasons, winter wheat is planted in the fall and harvested in the spring, whereas spring wheat is planted in the spring and harvested in the fall. The significant volumes of grain harvested in the fall requires the movement of a large amount of product in a short period. Grain is typically shipped in bulk. As shown in Figure A-3, grains are stored and consolidated in grain elevators, such as on-farm storage, country and co-op grain elevators, and in sub-terminal grain elevators. Transfers between elevators is done by either truck or rail, depending on the amount and locations. Trucks, trains, and barges compete and complement one another in moving grain to successively larger elevators with shipping distance often determining each mode’s role. Trucks have cost advantages for shorter distances (less than 250 miles) and function primarily as the short haul mode.

97 Once the grain reaches an elevator connected to the inland water system along the Illinois and Mississippi Rivers, and has amassed enough volume, the grain is transloaded into barges. These river barges travel through locks along the Upper Mississippi River – Illinois Waterway (UMR-IWW) navigation system towards New Orleans, LA. Upon arriving at the Port of South Louisiana, the grains are transloaded again into deep-water vessels for export. Source: WSP Figure A-3: Grain Supply Chain Grain is often sold through futures contract, where the seller agrees to deliver grain at a future date at a predetermined price or at a “basis” price plus an adjustment to be determined in the future. Transportation is the largest cost component in grains basis, and the shipping costs increase during times of low transportation availability. It is generally only worthwhile to move grain from one location to another if the difference in price between the two locations exceeds the transportation costs. The farmer for whom it is expensive to move grain to relevant markets has a lower profit than the farmer that can move grain to markets inexpensively. When grain spot prices are low, farmers can store the grain until they can sell it at a higher price, depending on available storage capacity and on the expected returns from storage. Farmers depend on transportation to get their products to market domestically and globally. There is a high degree of competition among barges, railroads, and trucks in some markets to supply transportation for grains. The modes are also complementary and grain is often transported multimodally.13 The performance of this multimodal supply chain, and in particular the movement of grain down the Mississippi River, depends on the availability of grain-specific facilities such as grain elevators, hopper railcars, and barges; the waterway infrastructure such as docks and locks; the railway infrastructure such as tracks and bridges; and the highway infrastructure such as the roads between farms, country elevators, and sub-terminal elevators. Disruptions to the transportation system can seriously impact the shipping costs and basis.14 For example, channel limitations that may be imposed during high or low water situations, as well as lock closures due to failure or scheduled maintenance, can extend the amount of time it takes for barges to transit, empty, and return up the Mississippi for another trip. This causes delays and a shortage in barge stock available to bring the grain to market. 13 https://www.ams.usda.gov/services/transportation-analysis/modal 14 https://www.ams.usda.gov/sites/default/files/media/AnalysisofGrainBasisBehaviorTransportationDisruptionsSummary.pdf

98 A standard dry bulk barge carries 1,750 tons; a rail bulk car carries 110 tons; a highway tractor-trailer carries 25 tons.15 Replacing a single barge trip requires 16 railcars or 70 trucks. Trucks are owned and maintained by private companies and operate over mostly publicly maintained roads.16 Sending trucks over long distances adds considerable expense and increases congestion on highways. Rail is a better option for long haul grain transportation. Railways and infrastructure are owned and maintained by private companies. Considering the number of rail cars necessary to replace a single barge, the availability of railway hopper cars would be challenged during the harvest season. UMR-IWW Locks The Mississippi River north of the mouth of the Ohio River at Cairo, Illinois is considered the Upper Mississippi River. There are 27 locks and dams that the USACE uses to maintain a minimum nine-foot deep navigation channel. The Lower Mississippi River flows south of the Ohio River to the Gulf of Mexico and does not have any locks. This allows large barge tows that are unconstrained by lock sizes. The Illinois River is connected to the Mississippi River north of St. Louis. The Illinois River also has a minimum channel depth of nine feet, which is maintained by seven locks and dams without auxiliary chambers. Any single lock outage will shut down navigation. The Kaskaskia River is 325 miles long in Southern Illinois. The end of the river connects to the Mississippi River near New Athens, IL. It is navigable for 35 miles and does not have any dams or locks. Figure A-4 shows the locks along the Upper Mississippi River and the Illinois River.17 15 http://www.mvr.usace.army.mil/Portals/48/docs/CC/2013_Flood/Tow%20Facts%20-%20Fuel.pdf 16 https://www.nap.edu/read/21763/chapter/4 17 www.mvr.usace.army.mil/Portals/48/docs/Nav/LocksAndRiver.pdf

99 Source: USACE Figure A-4: Lock and Dams along the Upper Mississippi River and the Illinois River Figure A-5 shows a cross-section of the Upper Mississippi River, and demonstrates how the lock and dam systems are used to maintain channel depth of nine feet. The USACE is responsible for these locks and dams. Work is underway to repair and upgrade locks and dams because many of them have already surpassed their design life. The USACE publishes lock status reports on their website.18 Scheduled maintenance and failure of locks are forces that can disrupt the supply chain. Disruption Historically, the Mississippi River experiences periods of high water and low water that impact shipping. The National Oceanic and Atmospheric Administration (NOAA) monitors water level conditions at locations all along the river to help local officials, maritime companies and carriers plan for supply chain disruptions. Disruptions on the inland waterway system can have widespread significant economic and societal impacts. For instance, the main lock chamber of Lock 27 on the Mississippi River was closed to navigation traffic for gate repairs between July 26, 2004 and August 10, 2004. The closure resulted in lengthy delays for the carriers.19 In 2011, a historic flood from Tennessee to Louisiana disrupted waterway commerce, delaying barge traffic and forcing some cargo to be trucked. Grain elevators, a crucial link to the nation’s grain exports, were flooded. Early corn and soybean plantings on delta farms were submerged. 18 http://corpslocks.usace.army.mil/lpwb/f?p=121:4:0 19 McLaughlin, T. (2004, August 6). Delay in lock repair forces big backup of barge traffic. St. Louis Post-Dispatch (MO), pp. C02.

100 Source: USACE Figure A-5: Cross Section of Upper Mississippi River Channel Maintained by USACE Low water levels and inadequate channel depths require barges and vessels to be loaded to less than capacity to reduce draft. Inadequate channel widths require that the number of barges in a tow be reduced to match available channel width. One-way or day time only traffic restrictions may also be imposed. These channel restrictions increase the amount of time required to ship grain. In 2012, drought and low water threatened barge operations and created difficulties navigating river sections, particularly in the northern part of the river. Historic draught and excessive heat reduced water levels near Thebes, Illinois, 125 miles south of St. Louis. In response, the USACE used contractors to remove rock formations in certain river sections to help maintain a 9-foot deep channel for navigation. There have been extended periods where low river levels and reduced channel widths impeded grain barge movements and access to shallow draft ports. USACE reports that the UMR-IWW system has over half of the most delayed lock sites in the U.S. inland waterway system. Delays are due to traffic backups caused by congestion as well as closures for operation and maintenance. Problems with the locks are currently creating additional fuel and labor costs to BOs, ultimately increasing transportation costs of grain. A study on the economic impacts of an inland waterway disruption on the transport of corn and soybeans determined that the closure of Lock 25 on the upper Mississippi River could cause a decrease in corn and soybean prices in the regions next to the river of $8.51/metric ton and $16.33 per metric ton respectively, a “reduction of exports of nearly eight million tons, or 13%,” and a “decrease of more than 7,000 jobs, a $1.3 billion loss of labor income, and a reduction of about $2.4 billion of economic activity (total industry output) annually.”20 Several of the lower locks on the Upper Mississippi have been targeted for extension from 600 feet to 1,200 feet to enable larger barge tows top pass through more quickly and reduce the cost of barge transport.21 In addition to the ebb and flow of the Mississippi River and its tributaries and lock closures, other supply chain disruptions include oil spills, damaged bridges, and ice. Earthquakes or terrorist attacks could destroy navigational infrastructure.22 Diversion Alternatives If a segment of waterway infrastructure were out of service, shippers could postpone their deliveries, reroute them to another port or the export port by rail or truck, or find another market (such as ethanol for corn or crushers for soybeans). However, the diversion of grain traffic onto more expensive shipping routes and subsequent lost sales in grain exports could drastically impact the U.S. grain industry. If a supply chain disruption causes shipping costs to increase in the U.S., U.S. grain exports could lose global market share, leaving a surplus of grain in the U.S. market. A surplus would drive prices down significantly, and lower prices of grain would result in a loss in profits by producers. Figure A-6 is a detailed map of the waterway corridor between Illinois and New Orleans including major nodes and links. It also shows the Class I railway corridors between Illinois and New Orleans. The two railroads with the most direct routes are CN and UP. CN railroad connects Illinois with New Orleans east of the Mississippi River, while the UP railroad connects Illinois with New Orleans west of the Mississippi River. 20 Yu, T.E., B.C. English and R.J. Menard. Economic Impacts Analysis of Inland Waterways Disruption on the Transport of Corn and Soybeans. Staff Report #AE16-08. Department of Agricultural and Resource Economics, University of Tennessee. September 2016. 21 Lance R. Grenzeback and Andrew T. Lukmann, “Case Study of the Transportation Sector’s Response to and Recovery from Hurricanes Katrina and Rita.” 22 Tong, J. (2014). Disruption response support for inland waterway transportation (Doctoral dissertation).

101 Entities Involved in Ensuring Resiliency BCOs: The BCOs, such as Cargill, Bunge, ADM, etc., are responsible for making routing decisions to deliver the cargo to its destination. State DOTs: State DOTs are responsible for preparing statewide freight and rail plans prioritize freight-related infrastructure improvements to the transportation system, which include Ports along the inland waterway system. USACE: USACE is responsible for maintaining the U.S. Inland Waterway System. The agency uses contractors to maintain the locks, dams, levies and other infrastructure vital to the waterway system. USCG: USCG is responsible for inspecting vessels, facilities and maintaining the Inland Waterway navigational system that guides vessels up and down the rivers and lakes. Sometimes the USCG will close river sections if water levels are too low or too high or if navigational aids are damaged or missing. MARAD: MARAD is an agency within the USDOT that oversees the development and maintenance of waterborne transportation, port operations, vessel operations, environment, safety, and the integration of the waterways with other parts of the transportation system. FMC: FMC is a federal agency responsible for regulating ocean borne transportation system for the benefit of U.S. exporters, importers, and the U.S. consumer. While MARAD works in a promotional role for the performance of the waterway infrastructure, the FMC administers the regulatory provisions of shipping laws.

102 Source: FAF4 Figure A-6: Map of Waterways and Rail Lines between Illinois and New Orleans MTOs: The MTO will be responsible for all operations related to loading and unloading of barges and transfer of grains to rail or trucks. Various Grain Associations and Councils: Grain associations and councils helps in export and production market, along with storage, and policy development and implementation to help U.S. grain industry. A few grain associations include: o US Grain Council o American Soybean Association o Whole Grains Council o National Association of Wheat Growers o National Grain and Feed Association Performance Grains are a necessary agricultural and industrial supplement in domestic and international markets. The grain supply chain is a relatively low cost and slow system in which farmers depend on transportation to get their products to market. Grain transportation demand is a function of:  Weather-related disruptions to transportation,  Variation in annual crop size and location,  The timing of planting and harvesting,  Global trade patterns,  Crop quality concerns,  Competition in production by other countries, and  Commodity price fluctuations23. The performance of the grain supply chain depends on the following factors:  Crop harvest yields.  Country elevator, sub terminal elevator, and farm storage facility storage capacity including ability to handle peak fluctuations in produce.  Product processing times at inland river terminals, export ports, and destination ports.  Transport availability by barge defined by the functionality of supply chain infrastructure, such as locks, and assets such as tug boats and barges.  Lock repair and maintenance durations.  River conditions (and the effective dissemination of this information to vessels).  Availability of enough tug and helper boats to help guide barges.  Compliance with national and international agricultural export regulations.  Provisions to protect the perishability of produce.  Productivity of the transfer of products between facilities and transportation modes. 23 https://www.ams.usda.gov/sites/default/files/media/Corn%20Transportation%20Profile.pdf

103 The grain supply chain depends on keeping the costs of transportation low. Without low shipping prices, the U.S. would not be able to compete on the world market for exports of grain, and the financial well-being of U.S. grain producers would be in jeopardy. Domestically, low shipping prices keep food costs low for consumers, and market prices higher for producers. An important consideration in a grain supply chain is the chain of custody and the way grain is sold. Grain producers can be corporations or individual farmers. Farmers may be members of a cooperative, which markets grain on the farmer’s behalf, or the farmer may sell grain to a marketing company, which will then market the grain on the farmer’s behalf. Since the production and marketing of grain are often separate, it is important that the exporter and producer establish communication protocols prior to a disruption. Boosting Resiliency  Invest in infrastructure improvements that enhance resiliency along the waterway system. Potential improvements include existing and redundant lock structures, dredging, and upgrading transshipment facilities to enable transfer of cargo under extreme low water conditions.  Provide regularly scheduled maintenance of infrastructure to include replacement and repair of assets prior to end of its useful life. Maintenance scheduling should be closely coordinated with BOs, so that it does not occur during peak periods. Work with agencies that have local jurisdiction over the maintenance of infrastructure.  Protect mobile assets against inclement weather in advance by positioning them in safe locations. Barges that are not tied up properly can get loose and sink or strike infrastructure, causing further damage and delays.  Identify roads on which spring seasonal load limits can be waived. Create and implement a set of procedures and guidelines for doing so during a disruption.  Improve rural “grain corridors” and designated alternative corridors by focusing on eradicating or refurbishing abandoned railroad branch lines.  Increase warehouse capacities to improve seasonal logistics buffers and additional value-added services for logistics chain modifications.  Use information technology to improve vessel and port communications, and the dissemination of up-to-date, online information on current and expected water depths in the navigation channels.  Install vibration sensors and cameras to monitor the condition of important infrastructure, e.g., locks and dams.  Coordinate disruption planning efforts with the River Industries Task Force as well as the USACE.  Include local fire departments, and lock masters in contingency planning efforts especially for incidents involving hazardous or flammable materials.  Pre-ship or defer shipment of loaded barges prior to a scheduled maintenance or disruption.  Devise a plan for how to prioritize barge processing and travel during a disruption.  Establish a helper boat system to guide barges through locks when conditions are adverse.  Work with the USACE to determine where dredging is required to remove shoaling following a flood event.  Store spare lock components in centralized locations to expedite the lock repair process.  Acquire more buoy and buoy tenders for the USCG. Where possible, supplement physical buoys with electronic buoys. This should be done thoughtfully so that captains and pilots still have visual navigation aids and are not dependent on digital ones.

104  Use Automatic Identification System information to quantify barge delays after the disruption. Use this data to calculate the total cost of a delay and to disperse real time data to users. Knowing the actual cost of a delay may encourage lawmakers to appropriate resources towards lock and dam upgrades.  Refer to the Notices of Navigation Interest documents published by the USACE, and the Notice to Mariners documents published by the USCG. Additionally, refer to the Marine Safety Information Bulletins published by the USCG, and NOAA announcements on new charts.  Promote multiyear funding for USACE projects, so that large projects can be guaranteed for completion and avoid costly and inefficient start/stops.

Next: Appendix B: Responding to Surge in Freight Trafic Caused by Military Deployments »
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TRB’s National Cooperative Freight Research Program (NCFRP) has released a pre-publication version of Research Report 39: Freight Transportation Resilience in Response to Supply Chain Disruptions. The report provides guidance to public and private stakeholders on mitigating and adapting to logistical disruptions to supply chains resulting from regional, multi-regional, and national adverse events, both unanticipated and anticipated.

The report, which makes a significant contribution to the body of knowledge on freight transportation and system resiliency:

(1) assesses research, practices, and innovative approaches in the United States and other countries related to improving freight transportation resiliency;

(2) explores strategies to build relationships that result in effective communication, coordination, and cooperation among affected parties;

(3) identifies factors affecting resiliency;

(4) analyzes potential mitigation measures;

(5) characterizes spatial and temporal scale considerations such as emergency planning and response timeframes;

(6) prioritizes response activities by cargo types, recipients, and suppliers;

(7) identifies potential barriers and gaps such as political boundaries, authorities, ownership, modal competition and connectivity, and social and environmental constraints; and

(8) examines the dynamics of supply chain responses to system disruptions.

The report also includes a self-assessment tool that allows users to identify the current capability of their organization and institutional collaboration in preparing for and responding to supply chain disruptions.

Disruptions to the supply chain and their aftermath can have serious implications for both public agencies and companies. When significant cargo delays or diversions occur, the issues facing the public sector can be profound.

Agencies must gauge the potential impact of adverse events on their transportation system, economy, community, and the resources necessary for preventive and remedial actions, even though the emergency could be thousands of miles away.

Increasing temporary or short-term cargo-handling capacity may involve a combination of regulatory, informational, and physical infrastructure actions, as well as coordination across jurisdictional boundaries and between transportation providers and their customers.

For companies, concerns can include such issues as ensuring employee safety, supporting local community health, maintaining customer relationships when products and goods are delayed, and ultimately preserving the financial standing of the company.

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