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Issue: 06/27/2011

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Floods Disrupt Deliveries

06/22/2011

By Tom Nicholson Text size: A

Floods that swelled the Mississippi River to record levels are also threatening to push up the region's materials prices and cause costly delivery delays as the disaster's cost to the construction supply chain mounts. Impeded barge shipments of scrap metal, aggregates, gypsum and other materials on the flooded Mississippi River will drive materials costs up in the region this summer, says Ken Simonson, Associated General Contractors' chief economist. In the two months since flooding began on the river, the disaster has slowed down the whole system, says Larry Daily, president of Bettendorf, Iowabased Alter Barge Lines Co. Even as the waters start to recede, there is a backlog of freight such as cement, aggregates and rebarwaiting to be moved, and barge operators are losing money. Flood conditions have already spurred a 10% increase in shipping costs and more for spot shipment prices, Daily says. U.S. Coast Guard shipping restrictions are still in place for barge operators on the Mississippi River, reducing typical 35- to 40-barge tow sizes to fewer than 30 barges per tow and reducing barge cargo weight by one quarter. There have been restrictions on the river since the second week of April, including barge drafts being reduced from 45 ft to 44 ft, says Daily. We can't haul as much material, and eventually those losses will get passed on. A single barge can carry as much cargo as 70 tractor-trailers or 17 rail cars, and delaying a vessel for one day can represent a loss of $20,000 to $40,000 for barge operators, says Bob Anderson, spokesman for the Mississippi Valley Division of the Army Corps of Engineers. While transport-based price hikes are worrisome, supply woes have been
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Ergon Inc.s oil refinery/asphalt plant in Memphis is shut down indefinitely due to flooding.
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compounded by the closing of dozens of materials plants along the river, such as Martin Marietta Inc.'s aggregate facility at Vicksburg, Miss., and Ergon Inc.'s oil refinery/asphalt plant at Memphis, Tenn. Both have been inundated by floodwaters and remain idle indefinitely. Beleaguered along with the region's materials industry are contractors with projects tripped up by the flood. Stalled projects include the U.S. Army Corp. of Engineers' barge gate installations on the Mississippi River at New Orleans and Avondale, La., which were stopped in early June due to delayed barge shipments of 414 86-ft-long steel piles that are stranded north of Memphis, says Corps spokesman Col. Jeff Eckstein. Innumerable smaller projects hit temporary snags because of tightening materials supplies in the region, contractors say. For example, Vicksburg-based Riverside Construction Co. Inc.'s riverside limestone production facility was deluged. It's bad. There are hundreds of materials suppliers on the river which have been affected, says a company spokesperson. For six weeks in May and June, managers for National Gypsum LLC, Westwego, La., watched their supplies dwindle as six barges, with 11,000 tons of by-product gypsum, were delayed, says Nancy Spurlock, National Gypsum communications director. [As floodwaters rose] everyone thought the river would be very high at New Orleans and rushed material over to Westwego to get it there before the flooding occurred. The supply juggling kept drywall production going and curtailed price adjustments during the delay. Finally, around June 15, the barges deposited a huge pile of gypsum on our dock, Spurlock says. Shifting to truck and rail transport presents additional upward pressure on materials prices in the region, notes John Johnson, president of Memphis-based Mid-South Wire Co. Barge transport costs 30% less than truck or rail, Johnson says. When barge shipments of steel were delayed for two weeks, we had to bring it in trucks, which did cause a temporary cost addition on our products, Johnson adds.
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