Butler Miller’s, a friend in Saint Louis, family business is a barge company–Miller Barge. He graciously provided some initial thoughts on what the impact of Katrina will be on the barge industry–which is not trivial to the coming harvest.
Hurricane Katrina will have effects, immediate and longer lasting, on the shipping industryin the New Orleans area. ?For right now, with the amount of sunken equipment in the shipping channels, it is not clear when ships will be
allowed into New Orleans harbor. ?New Orleans is the major terminus of
grain export in this country, and without ships coming in, no goods can
be delivered for barges to receive, and, with harvest upon us, grain
elevators will quickly reach their storage capacity and loaded the
barges may be sitting for a while, sucking up time that the barges could
have been delivering goods to other areas.. ?Getting reliable information about marine equipment is still difficult
because a lot the industry workers have their homes and lives to tend
to. ?I have to rely on news footage, thinking ‘that barge could be ours
floating through that neighborhood’ because I just don’t know where all
of the equipment is. ?Initial estimates have at least fifty barges sunk,
with many, see above, unaccounted for. ?Looking a little longer range, it is not clear what infrastructure may
have been destroyed by Katrina. ?Other ports like Lake Charles, LA,
Galveston, TX and Houston are understandably looking to ‘help’ in this
turbulent time. ?While the city of New Orleans itself, I believe, is
changed forever, I do believe that New Orleans as a port can comeback.
Remember, it was Lake Ponchartain that broke the levees not the Mighty
Miss, as the Mississippi River is sometimes called. ?
As a quick update: Transportation rates are going up, both due to fuel price increases and the tragedy in New Orleans with some in the industry for 30 years saying it’s the highest ever. This is depressing grain prices, which hurts farmers already reeling from a horrible year to due to drought.
I’ve heard that as many as 200 barges were missing; presumed to have sunk to the bottom of the Mississippi. Everyone says this is bearish for grain prices, but if we’re not exporting and contracts are due to be delivered, our buyers will have to turn to the world market to “re-buy.” They will ultimately drive up world prices. And there is no word on the state of grain elevators at the Port of Louisiana, except some sketchy information that a few majors have incurred damage. With energy prices at current levels, they won’t be paying to drydown that grain. I don’t think this is as bearish grain prices as everyone thinks. I think Katrina’s impact will be felt in the grain markets, here and well beyond our shores.