SIC 4449
WATER TRANSPORTATION OF FREIGHT, NOT ELSEWHERE CLASSIFIED



This category includes establishments primarily engaged in transportation of freight on all inland waterways, including the intracoastal waterways on the Atlantic and Gulf Coasts. Transportation of freight on the Great Lakes and the St. Lawrence Seaway is classified in SIC 4432: Freight Transportation on the Great Lakes—St. Lawrence Seaway. Establishments primarily engaged in providing lighterage and towing or tugboat services are classified in Industry Group No. 449: Services Incidental to Water Transportation.

NAICS Code(s)

483211 (Inland Water Freight Transportation)

Industry Snapshot

There are approximately 12,000 miles of navigable inland waterways used by the domestic shipping trades in the United States. This statistic does not include the Great Lakes merchant marine trade, which if included, would almost double the statistic. In 2002 the industry was served by 3,429 towboats, some 22,438 dry cargo barges, and 3,501 tanker barges. Excluding Great Lakes shipping, the inland trade industry moved 691 million metric tons of freight in 2000, which included one-fourth of the exported petroleum and chemical shipments and three-fifths of the exported grain shipments, as well as one-fifth of the domestic coal shipments.

The inland and intracoastal navigation system is operable in water from 6 to 9 feet in depth, but several thousand miles are considerably deeper. The most important inland waterways for commerce are the Mississippi River System, the Gulf Intracoastal Waterway, the Columbia River System, the McClellan-Kerr Arkansas River Navigation System, the Tennessee-Tombigbee-Mobile River System, and the Hudson River-New York State Barge Canal System. About one-third of all inland traffic is on the Mississippi River, followed by the Ohio River, the Gulf Intracoastal Waterway, the Illinois Waterway, and the Tennessee River, in that order.

Most freight consists of dry bulk cargo and is carried aboard barges known as hoppers. This includes grain, coal, and chemicals. Petroleum products, which account for about 40 percent of the inland waterways cargo, are carried in tank barges. Ocean-going tank barges used on the Gulf and Atlantic Intracoastal Waterways may carry as much as 225,000 barrels of oil. Tonnage is high during the crop harvest months, but the Upper Mississippi and Missouri Rivers are closed to barge traffic in winter.

Inland waterway transportation of freight is considered the safest, least polluting, and most cost efficient of all freight transportation in the United States. Waterway transportation of freight is more than twice as energy efficient as rail transportation, and eight times as efficient as truck transportation. The U.S. Coast Guard enforces regulations regarding design, construction, and operation of towboats and river barges. In addition, the Coast Guard is responsible for licensing crews aboard the vessels. Cabotage laws require that vessels involved in inland water transportation of freight be built, owned, and crewed by American citizens or U.S. owned companies.

Background and Development

Mississippi River System. The Mississippi River system consists of the Mississippi and Ohio Rivers and their tributaries. It was the busiest and most important inland waterway in the United States in the early 1990s, accounting for about 40 percent of all freight shipped on the nation's inland and intracoastal waterways. By 2003, more than 150 million tons of petroleum, coal, chemicals, and grain worth more than $24 billion were transported in the Upper Mississippi River Basin each year. More than 700 million tons of both international and domestic freight were carried annually on the Mississippi River in the 1990s, with an additional 480 million tons each year via internal traffic. Of the international and domestic freight, nearly 70 percent was internal Mississippi River freight.

More than 50,000 barges and 4,000 ocean-going vessels traveling the Mississippi call at the Port of South Louisiana at the mouth of the river. The port, extending 54 miles along the Mississippi, was the largest tonnage port in the United States, and the third biggest in the world, handling more than 245 million tons of cargo in 2000. Some 15 percent of all U.S. exports went through this port.

The Mississippi River is the longest river in the United States, flowing more than 2,300 miles from northwestern Minnesota to the Gulf of Mexico. More than 1,800 miles are considered navigable. A series of 29 dams and locks constructed by the Army Corps of Engineers after World War I ensured a minimum depth of nine feet on the upper Mississippi as far north as Minneapolis. Below St. Louis, the Mississippi reaches depths of 100 feet or more. The Mississippi River-Gulf Outlet, a 76-mile canal between New Orleans and the Gulf of Mexico, was completed in 1963. It opened the port of New Orleans to ocean-going vessels and cut more than 40 miles off the river's winding course through the treacherous Mississippi Delta.

The Ohio River is more than 980 miles long, beginning at Pittsburgh, where it is formed bythe confluence of the Allegheny and Monongahela Rivers, and flowing to Cairo, Illinois, where itjoins the Mississippi. It is the second largest barge line in the inland waterways system. The onlyserious impediment to navigation on the Ohio was removed in 1830 with the construction of the Louisville and Portland Canal around the Falls of the Ohio at Louisville, Kentucky. A system of 41 moveable dams completed in 1929 eliminated the problem of low water and permittedyear-round navigation. Major tributaries to the Mississippi and Ohio Rivers include the Tennessee, Arkansas, Cumberland, Missouri, and Illinois Rivers.

The Mississippi and Ohio Rivers were opened to exploration by the French in the 1600s, but did not become important rivers of commerce until the beginning of the nineteenth century. Settlers began moving into the Ohio Valley about the time of the American Revolution, and records indicate shipments of flour from Louisville to New Orleans as early as 1782. In 1783 a Louisville merchant advertised goods from Philadelphia that had been shipped up the Mississippi. Commerce was occasionally interrupted as Spain, which had obtained the Louisiana Territory from France in 1762, strictly controlled trade on the Mississippi and periodically closed the river to foreign navigation. In 1801, Spain ceded the territory back to France, which sold it to the United States in 1803 in the Louisiana Purchase.

With access to the Gulf of Mexico guaranteed by the Louisiana Purchase, south bound commerce on the Mississippi grew rapidly with pork, corn, whisky, hides, and other agricultural products from the Ohio Valley shipped aboard flatboats or the more colorful keel boats, which could haul up to 10 tons. Strong river currents kept trade moving in one direction until the introduction of the steamboat in about 1817. Within just a few years, 60 steamboats plied the waters of the Mississippi and Ohio Rivers. By the mid-1830s, there were more than 230 such boats. By the 1840s, steamboats regularly carried grain and lead from the upper Mississippi; coal from the Ohio Valley; and cotton, sugar, and molasses from the South. Stern-wheelers, introduced in the late 1850s, could carry up to 350 tons of cargo while still maintaining less than three feet of draft. Rates for freight shipped from New Orleans to Louisville fell from $5 per hundredweight in 1815 to only 25 cents in 1860. Rates for the return trip fell from $1 to 32 cents.

The commercial importance of the Mississippi River System, especially for east-west trade, began to decline in the 1850s with the construction of railroads, which could deliver goods faster and more directly. This became especially apparent during the Civil War, when the Confederacy mistakenly believed it could cripple the Union by controlling the Mississippi. After the war, shipments of coal increased dramatically, but railroads captured most of the grain and cotton trade. Between 1870 and 1891, the number of steamboats on the Mississippi and Ohio Rivers dropped from almost 500 to about 150. Barges, pushed ahead by steamboats, began to carry much of the remaining river trade. In 1904, the steamboat Sprague set a record by guiding a "tow" of 56 barges loaded with 53,000 tons of coal from Cairo to New Orleans. Steamboats continued to operate on the Mississippi and Ohio Rivers until the early 1900s, when they were replaced by diesel powered towboats. Although called towboats, the vessels actually pushed their "tows."

The United States recognized the importance of river freight during World War I, when the railroads were unable to meet the increased demands for shipping, and the government was forced to build an emergency fleet of barges and towboats. This led to a revival of trade on the Mississippi River System in the 1920s, when the upper Mississippi channel was dredged to a depth of nine feet and a series of moveable dams made it possible to navigate the Ohio during low-water months. Shipments on the Ohio increased from 7 million tons in 1915 to 22 million tons in 1929. The Inland Waterways Corporation, created by Congress in 1924 to regulate freight transport on the rivers, also developed a radically new towboat design with increased power that further revitalized the industry. In 1938, Congress authorized the construction of floodwalls along the Ohio and reservoirs on its tributaries to control flooding. In 1944, Congress also passed the Flood Control Act, which included provisions for a 12-foot channel and a series of dams on the upper Mississippi, and modernization of locks and dams on the Ohio. Work on the improvements did not begin until 1954.

Nearly 35 percent of the freight carried on the Mississippi River System in the early 1990s was petroleum products. Coal accounted for about 25 percent. Tows on the lower Mississippi often included as many as 40 barges—the equivalent of 600 railroad cars of freight—and were the size of four football fields.

Overall demand for inland waterway shipping grew only slightly during the 1998-1999 trade season. With an aging barge fleet, capacity was expected to decrease, to keep rates up, while volume was expected to expand less than 0.5 percent through 2010. One exception was the Mississippi River, which had a good season in 1999. Its rates were generally higher than the 6.1 percent average rate increase appreciated by the water transportation industry overall.

Intracoastal Waterways. The Gulf Intracoastal Waterway is a natural, sheltered waterway completed in 1949 that follows the coastline of the Gulf of Mexico for 1,065 miles from Brownsville, Texas, to Carrabelle, Florida. The Atlantic Intracoastal Waterway also is a system of rivers, bays, estuaries, and inlets that stretches 1,200 miles from Miami, Florida, to Trenton, New Jersey. There are three major canals along the Atlantic Intracoastal Waterway: the Chesapeakeand Delaware Canal across northern Delaware, which connects Chesapeake Bay with the Delaware River just south of Philadelphia; the Dismal Swamp Canal, south of Norfolk, Virginia; and the Caloosahatchee River-St. Lucie Canal across southern Florida. Vessels traveling the Atlantic Intracoastal Waterway are exposed to the ocean for less than 100 miles during the entire route.

Columbia Snake River System. The Columbia Snake River System is the longest river in the United States to flow into the Pacific Ocean. It is the nation's second largest waterway. From its headwaters in the Canadian province of British Columbia, the Columbia flows southwest through Washington state before turning westward to form much of the northern border of Oregon and joining the Snake River at Lewiston, Idaho. Along its course are 465 miles of navigable waterways and 36 large and small ports. Eleven dams on the American portion of the Columbia, including the Grand Coulee Dam, account for nearly one-third of the hydroelectric power produced in the United States. Ocean-going vessels can travel inland on the Columbia as far east as Pasco, Washington, while barges can navigate further up the Columbia and onto the Snake River as far as Lewiston, Idaho. Freight hauled on the Columbia consists primarily of grain and other agricultural products. One-third of all U.S. wheat exports move out of the Columbia River to world markets. Potatoes are another major export commodity moving downriver from Lewiston, Idaho; Pasco, Washington; and Umatilla, Oregon.

Steamboats first appeared on the Columbia in 1851, running between Astoria, Oregon, on the Pacific Coast and Portland, Oregon, 113 miles inland, and on to the Cascade mountain range. Amule-powered portage railroad, built in 1853, allowed steamboats to go as far as The Dalles, Oregon. The Oregon Steam Navigation Company, a monopoly controlling steam transportation on the Columbia and Willamette Rivers, was formed in 1861. During the 1860s, the Columbia and Snake Rivers were important routes for miners flocking to Idaho and Montana, and some steamboats managed to traverse the rivers nearly to the gold fields. However, the commercial importance of the Columbia and its tributaries did not begin to grow until after 1873, when construction of the Oregon City locks on the Willamette allowed grain from the fertile upper Willamette Valley to be shipped directly to Portland.

Other improvements followed. Locks were built on the Columbia at the Cascades between 1878 and 1898, and the Celilo Canal at The Dalles opened in 1915. The Bonneville Dam, just west of The Dalles, was completed in 1937. A towboat demonstrated the feasibility of shipping grain by barge all the way from Lewiston in 1945, but large shipments did not begin until the Lower Granite Dam was opened in 1975.

McClellan-Kerr Arkansas River Navigation System. The Arkansas River is the longest tributary of the Mississippi, flowing more than 1,450 miles from central Colorado to the eastern edge of Arkansas, where it enters the Mississippi. The first steamboat reached Little Rock, Arkansas in 1822, and Fort Gibson, Oklahoma, in 1827. The 436-mile-long McClellan-Kerr Navigation System was completed in 1971, and opened the Arkansas to barge traffic as far west as Tulsa, Oklahoma. The four largest cities in Arkansas, including Little Rock, are all located along the river.

Tennessee-Tombigbee Waterway. The Tennessee River is the largest tributary of the Ohio River and is part of the Mississippi River System. From its headwaters in Knoxville, Kentucky, the river flows southwest through Tennessee and into Alabama before turning north and eventually emptying into the Ohio at Paducah, Kentucky. The Tennessee-Tombigbee Waterway, a $2 billion inland waterway, opened in 1985 by connecting the Tennessee with the Black Warrior and Tombigbee Rivers in Alabama. Nicknamed the Tenn-Tom, the 234-mile long waterway connects 16,000 miles of 14 major navigable inland waterway systems in Middle America with deepwater ports on the Gulf of Mexico. The Tombigbee flowed into the Mobile River, providing shorter access to the Gulf of Mexico. While estimates projected 20 million tons would be shipped on the Tenn-Tom per year, that figure had only reached 8 million tons by 1995. With the construction of the Trico Steel and British Steel mini mills in Decatur and Mobile, Alabama, in 1996, tonnage from these two mills alone was projected to represent an additional 2.5 million tons of cargo annually. Companies shipping via the waterway claimed large savings over conventional modes of transportation.

On the Tennessee-Tombigbee Waterway, 1998 steel hauling traffic increased by 140,000 tons from 1997, and as of June 1999 was up an additional 50,000 tons from 1998. Overall tonnage in all categories on the Tenn-Tom during 1998 was up about 2 percent, with a total 1998 tonnage trade of 9.3 million tons. Traffic on the Tenn-Tom was expected to increase again in 2000, due to the new Boeing plant in Decatur, Alabama, which would begin building Delta Five Rockets.

Hudson River-New York State Barge Canal System. At one time, the New York State Barge Canal System was the most important inland waterway in the United States. The famed Erie Canal from Lake Erie to the Hudson River was completed in 1825, and provided the United States with a navigable waterway from the Atlantic Ocean to the upper Great Lakes. The canal, enlarged several times between 1825 and 1862, was one reason that New York City developed into the nation's financial center.

Like the Mississippi River System, however, the Erie Canal declined in importance after the Civil War because of competition with the railroads. In 1903, New York State passed a $100 million bond issue to upgrade the Erie Canal and to connect it with three smaller canals to create the toll-free New York State Barge Canal System, which opened in 1918. The smaller canals linked the Erie Canal with Lake Ontario, Lake Champlain, Seneca Lake, and Cayuga Lake. More than 90 percent of the state's population now lives within 20 miles of the Hudson River or the canal system.

In 1993 and several years following, unusually heavy rains in the upper Midwest caused the Mississippi and its tributaries above St. Louis to swell to record flood levels, inundating towns along the rivers and destroying billions of dollars worth of farm crops and personal property. The Great Flood of 1993 and floods that followed also had a devastating effect on the inland waterways shipping industry. In 1997, the U.S. Army Corps of Engineers informed the port of New Orleans that it would take all summer to restore a 45-foot draft in the Southwest Pass, the channel used by ocean-going vessels to enter Louisiana's five deepwater ports, because of the millions of tons of sand and silt from devastating Ohio River Valley floodwaters.

Ironically, in 1993 the inland waterways shipping industry was only beginning to recover from a drought in 1988, when water levels on the Mississippi and Ohio Rivers fell to their lowest point since 1871. More than 100 towboats ran aground on the upper Mississippi during the summer, periodically closing the river to traffic. Those towboats that did manage to navigate the low water were forced to reduce the load and number of barges in their "tows" by two-thirds, from an average of 50 to 16 barges, which reduced profitability and forced companies to increase rates.

Current Conditions

In the early 2000s, the industry was scrambling to upgrade or replace equipment on projects involving locks and dams. By 2003, more than 50 percent of the 194 locks in the United States were more than 50 years old. In the Upper Mississippi, only one of the locks was built after the 1930s. The locks were half the length of the barges in some cases, causing the traffic equivalent of an interstate highway with one lane. The total replacement cost was expected to be $125 billion. A lack of timely action on aging and degraded equipment was estimated to cost the industry $2.6 billion annually, $155 million of which is due to congestion and delays. And of course, the longer repairs are delayed, the more expensive the repairs will be.

The question was whether inland waterways were a freight industry bargain or a dinosaur, whether a true need or government pork. Nonetheless, in 2004 barge transportation remained the cheapest form of freight transportation. According to the Waterways Council, freight moved by water costs less than 5 percent of the cost of other modes of transportation. The freight moved by water would require more than 40 million trucks or more than 10 million railroad cars. While there were hundreds of millions of dollars in the government trust fund for upkeep of the waterways, disbursement and appropriation was at issue, as was the question of how much more the public transportation system should be subsidized and how much more those in the industry should contribute. The budget allocated to the U.S. Army Corps of Engineers Civil Works program was $1.3 billion shy of the amount the Corps claimed it needed in 2003.

In late 2003, amidst a storm of criticism from both the state government of Kansas and conservationists, the U.S. Army Corps of Engineers planned to tap into reservoirs in Kansas for the ninth time in order to release water into the Mississippi as a support to inland waterway barge traffic. In addition to questions of water conservation, the debate focused on the relative importance of barge traffic, as well as the Corps' federal duty to support such traffic.

Industry Leaders

In 2001, there were 362 firms operating 395 establishments in this industry, down from 368 firms in 2000. Nearly all were small or medium-sized firms employing fewer than 100 workers. Collectively, there were nearly 16,000 employees earning a payroll of $730 million.

The 2001 industry leader was Ingram Barge Co. of Nashville, Tennessee, with more than $2.0 billion in revenue and 2,800 employees, followed by Ingram Industries Inc. with $1.9 billion in revenue and 6,100 employees. In 2002, Ingram Industries acquired competitor Midland Enterprises. Houston-based Kirby Corp. posted $535 million in revenue in 2001, with 2,200 employees. Other industry leaders that year were Tampa-based Gulf Coast Transit Co. with $237 million in revenue and 400 employees, and New York-based General Maritime Corp. Industry analysts expected more companies to pursue mergers and consolidations in the mid-2000s as a way to remain viable.

As of January 1, 1999, all members of the American Waterways Operators (AWO) were required to participate in its Responsible Carrier Program (RCP) as a condition of membership. The requirement was precipitated by the 1994 accident involving a barge which struck an unlit railroad bridge in fog, causing the railroad track alarm to malfunction. As a result, Amtrak's Sunset Limited derailment killed 42 people. The RCP requirements exceed federal safety standards and regulations, incorporating only the best industry practices available, in an effort the increase industry safety.

Research and Technology

A significant development in the inland waterways trade fleet has been the conversion digitized Army Corps of Engineer maps of the entire inland river system, hooking them to Global Positioning Systems (GPS) installed on each boat. Such information, as applied to this industry, assists captains in pinpointing their exact locations on the river, their relative positions as to oncoming traffic, and their expected itineraries based upon speed and direction.

Another key issue carrying over into 2000 was the general upgrading and replacement of an aging fleet. By 2003, an estimated 35 percent of the dry cargo barges were 25 years old or more. Barge construction had been accelerated to meet the expected demands of the first decade, with construction of state-of-the art jumbo open- and covered-hopper barges costing approximately $235,000-$275,000 each. By 2005, $1.4 billion dollars of capital would be required by the industry.

Further Reading

Baker, Deborah J., ed. Ward's Business Directory of US Private and Public Companies. Detroit, MI: Thomson Gale, 2003.

Flessner, Dave. "Tennessee Waterway Advocates Urge Army Corps to Rebuild Chickamauga Dam." Knight Ridder/Tribune Business News, 7 November 2003.

Glass, Pamela. "Image Conscious: The Inland Waterways Industry Wants to Get Its Message Out." Workboat, June 2003.

Horn, Kevin. "Inland Insider." Workboat, August 2001.

——. "Inland Insider: More Money for Inland Maintenance." Workboat, December 2003.

——. "Inland Insider: Survival of the Biggest." Workboat, September 2003.

Jacobson, Bernie. "Captain's Table: Expand Capital Construction Fund Eligibility." Workboat, December 2003.

Keane, Angela Greiling. "Locks, Dams, and Money." Traffic World, 26 January 2004.

Leach, Peter T. "Barge Wars: Aging River Locks Threaten Costly Delays for Agricultural Shippers." The Journal of Commerce, 10 November 2003.

Lundeen, Tim. "Effort Underway to Improve Upper Mississippi River System." Feedstuffs, 22 September 2003.

"Overview of the Port of South Louisiana." 20 March 2004. Available from http://www.ports1.com .

Palmer, R. Barry. "Waterways Council Inc." The Journal of Commerce, 12 January 2004.

Pyne, Joseph H. "Kirby Corp." The Journal of Commerce, 12 January 2004.

"To Barge or Not to Barge." Pollution Engineering, October 2003.

The Transportation Institute. Industry Profile: 2004. 20 March 2004. Available from http://www.trans-inst.org .

"Two Barge Lines Plan to Merge in $230 Million Deal." Knight Ridder/Tribune Business News, 25 January 2002.

U.S. Census Bureau. County Business Patterns 2001. 20 March 2004. Available from http://www.census.gov .

——. Statistics of U.S. Businesses: 2001. Available from http://www.census.gov/epcd/susb/2001/us/US332311.htm .

U.S. Industry and Trade Outlook. New York: McGraw-Hill, 2000.



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