Dan Overbey keeps a watchful eye on the mighty Mississippi
Monday, December 3, 2012
Dan Overbey, executive director of the Southeast Missouri Regional Port Authority, is no stranger to the shipping industry or to Scott County.
Overbey grew up in Sikeston, Mo., and worked through school at his parents' Shell service station. After high school he received a degree from Southeast Missouri State University, where he met his future wife, Gail Ann Urhahn, from Benton, Mo., whose parents owned a Sinclair station. They both attended the University of Texas at Austin where Overbey received a master's degree in business administration.
Overbey worked for Missouri Pacific Railroad in economic research; Frisco Railway in market research; various positions with several trucking companies owned by Burlington Northern Inc.; Sam Tanksley Trucking as director of corporate development; and Drury Development Corporation in commercial real estate. He also taught marketing at Southeast. He came to SEMO Port Authority as executive director in 1993.
Q: With already low levels, how has the reduction of outflow from the Missouri River affected the SEMO Port Authority?
A: With the Mississippi River around 7 feet on the Cape gauge, barge tows are moving well. The tows are smaller since the river gets narrower as it falls. Many barge lines are limiting customers to 9-foot drafts, or depth in the water, from a normal 12-foot draft. This reduction means a 25 percent reduction in each load shipped. The most current forecast from the U.S. Army Corps of Engineers, St. Louis District, shows a drop of 5.5 feet over the next four weeks, reaching a 1.5 at the Cape gauge around mid-December. In our harbor, with no silt, that would give 7.5-feet of water in the middle, allowing us to only load barges at half of a normal load. However, depths that low would more than likely cause a shutdown of the river itself.
Q: Does the reduction of barge loads have an impact on prices of goods being shipped, and are there alternative choices for the customers who are shipping?
A: Although the towboat is actually pushing a smaller tow, it's actually using more fuel due to more required steering and thrust changes. The cost to the towing company will increase per ton with the shallower barge draft due to fewer tons per barge. For companies that ship by barge, the higher costs seriously affect their business. Companies that are accustomed to using the river to ship do take this into account when figuring their averages. However, a lengthy shutdown forces companies to consider other options. The advantage to shipping on the river is that its cost is much lower, in normal conditions, than trucking,which is at least 12 times as costly, or by rail, which is three to four times as costly. In reality, companies that use the river cannot afford to truck to or from the Gulf Coast. For many companies, all they can do is go into a temporary shutdown and only make emergency shipments by rail or truck. Some grain elevators have already put part of their harvest in covered and ventilated piles beside their full elevators. This is often done to wait for lower barge rates in the winter, but this year they could be waiting until spring.
Q: What are the economic effects that will take place if barge traffic is halted, and is this something you could see happening in the near future?
A: According to the corps' forecast, there is a high likelihood a shutdown will occur in late December. A shutdown of a week or two can be handled by the industries, as this happens during very high floods; a shutdown of a month or longer will have major effects on the nation's economy. Barge lines are warning customers of the forecast shutdown, and companies are preparing by moving products immediately and raising or lowering inventories. All this includes higher costs of handling and moving their goods.
Q: How will the changes affect local farmers in regard to shipping their crops?
A: If the Mississippi River closes temporarily in the area east of Scott City, yet stays open south of Cairo, Ill., the grain prices will likely split. Prices will go down above the shutdown area, as they will be disconnected from world markets, and may rise from Cairo south due to continued river traffic. Companies may begin to bid more in order to fill their orders. Farmers in river markets farther north will feel the effects much harder due to further travel to an open harbor. In normal river levels, some tows go past with 42 barges (six wide and 7 long) that will hold 2.7 million bushels or approximately 75,000 tons, the same as 657 rail cars or 3,024 truckloads. This tow will fill one ocean ship. If this tow were carrying the product of 18,000 acres of corn, based on 150 bushels per acre, at $7 per bushel, the tow's corn is worth $19 million. The same tow carrying the product of 72,000 acres of soybeans, based on 35 bushels per acre, at $15 per bushel, the tow's value is $40 million. The low cost of river transportation is what keeps mid-America farmers competitive in the world market. That's how the USA feeds itself and a large portion of the world. So you can see, with these numbers, how a lengthy shutdown could hurt the local farmers, as well as the nation's economy.
Q: What are some of the stresses with your business being so dependable on Mother Nature?
A: Most folks who know the river love it because it is so unpredictable and certainly not boring. We had a similar low water situation in 1988 and the next year the Corps blasted rock out of the river bottom south of the Thebes, Ill., railroad bridge to give a better and deeper river channel. Now they need to do it on the north side, up to Grays Point. Five years after that in 1993 we had the historic flood followed by the 1995 flood, and every 10 years or so you have ice shutting down the river for a few days. Between St. Louis and Cairo, with no locks or dams to control river levels, you can have 45 feet of vertical fluctuation. This means that a dock has to accommodate barges going up and down 45 feet. That's what we deal with from very high floods to very low river levels.