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IN KATRINA'S AFTERMATH: CHAOS AND SURVIVAL

Bottled-Up River Prevents Ships From Reaching Gulf

Port conditions are hurting farmers and transport companies as their stocks languish.

September 02, 2005|Joseph Menn and Claire Hoffman | Times Staff Writers

Hurricane Katrina has closed the door on the biggest passageway in American agriculture, the mighty Mississippi River, triggering shifts that will hurt farmers and cut exports even as they boost the fortunes of rival transportation systems.

As the first assessment of New Orleans' port conditions circulated Thursday, experts said it might be next year before cargo movement returned to normal there and upriver at the even bigger Port of South Louisiana.

"I wouldn't be surprised not to see it for months," said David Sehrt, chief operating officer of the largest barge company, Ingram Barge. "Most of the terminals don't have electricity, and nobody has any workforce."

The U.S. is the world's biggest agricultural exporter, and most of what is sent abroad floats down the Mississippi on barges and out from one of the Louisiana ports on ships headed out into the Gulf of Mexico.

Now, many fully loaded barges are drifting with nowhere to go. As the Coast Guard and other officials make their inspections, the lower Mississippi is closed to commercial traffic.

The barges could be sent elsewhere, said Sehrt, but "people haven't made arrangements, they're kind of waiting to see how long it's going to take" to reopen the waterway and its ports.

The traffic jam has left the barge companies unable to take on new loads just ahead of their busiest season.

"It's been really, really tough on us financially," said Bob Gardner, president of Kentucky-based Barge America.

Large quantities of grain originally headed for export already are languishing in Midwest elevators. Grain brokers with nowhere to send their stocks are offering less to farmers, who are trying to unload the remnants of 2004's crop before this year's harvest -- which is just beginning and will peak in a matter of weeks.

"We still have a lot of corn in the bins from last year that needs to find a world market before the harvest starts," said Iowa Farm Bureau head Craig Lang. "Even a one- or two-day stop will really block the lines."

Contract prices for corn to be delivered in December hit their lowest prices since June on Wednesday, although prices edged up Thursday on speculation about coming dry weather.

"As soon as you shut the Gulf off for exports, your entire river system has lost its market," said Jay Fitzgerald, an agricultural broker for Advance Trading Inc. in Bloomington, Ill. "The values went down almost immediately."

Consumers aren't likely to benefit, however, because grain makes a number of stops before it reaches grocery stores and because energy costs are rising for processors.

And they may see an increase in coffee prices. New Orleans, one the nation's biggest coffee ports, holds about 8% of the world's supply, and coffee industry experts predicted that the loss of the tens of thousands of tons stored there would take a year to replace. Coffee contracts have risen 11% this week in New York trading.

"The market has decided that all of the 1.6 million bags stored in the New Orleans warehouses is dead meat," said commodities analyst Ann Prendergast of Refco Group.

Procter & Gamble Co., maker of Folgers, said half its supply was unaccounted for.

If the shipping problems continue more than three weeks -- well into the new harvest -- world markets may be affected, said FTN Midwest Securities Corp. analyst Christine McCracken.

"You're probably looking at modestly higher prices," she said. "Given where we are in the harvest, the clock is ticking."

New Orleans also serves as an import point for a variety of other cargo, including machinery, oil and steel. In all, about 6,000 sea-going vessels pass each year through the Port of New Orleans, which includes a series of wharves, warehouses and terminals strung along several miles of the city's riverfront and on the Industrial Canal.

Many of the wharves suffered damage, port officials reported in an e-mail circulated to other ports early Thursday.

"Yesterday, I thought the damage could have been worse," Port of New Orleans President Gary LaGrange said in the e-mail from his spokesman. "Today, I'm not so sure."

One major impediment to reopening the port is the lack of workers, LaGrange said, because many port employees have left the flood-ravaged city. In addition, railroads that serve the port were still having to route trains around New Orleans because of damage to tracks and rail bridges.

While they wait for the Louisiana ports to reopen, shipping companies are turning to other ports and rail routes as alternatives to the river.

Some agricultural products and another Mississippi mainstay, coal, will move onto railway cars, straining capacity and pushing shipping prices up, analysts and companies said.

Much of the coal is expected to head for Baltimore, said broker Dan Vaughn of United Power Inc., because that city's port has some of the specialized equipment and facilities that were in place at storm-damaged ports.

"Railing to Baltimore is exactly what they're looking at," Vaughn said.

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