traditional and emerging markets - missouri

Freight Development

Traditional and Emerging Markets

Traditional and Emerging Markets

Missouri River Freight Market - Commodities and Volumes• Basedonhistoricfreightmovementsinthemarketregion,thereareapproximately19milliontonsof

freightthatcouldpotentiallymoveontheMissouriRiverwithinthismarketareaeachyear.Ofthistotalpotential,over1.3milliontonsofcommoditieshavebeenidentifiedthatcouldannuallybemovedontheriveroverthenextfiveyears.

• ThekeytraditionalmarketcommoditygroupsincludeAgriculturalDryBulk(CerealGrains,Soybeans,otherOilseeds,andotherGrains),NonMetallicMineralProducts(Clay,Cement,Salt),andotherNon-AgriculturalCommodities(DryFertilizer,PetroleumProducts,Gravel&CrushedStone).

• ThekeyemergingmarketgroupsincludeWasteScrapMetal,Coal,AlfalfaPellets,DriedDistillersGrains,LiquidFertilizer,Ethanol,Over-DimensionalandOver-WeightCargo,andContainer-on-Barge.

Identifying markets and commodities that can sustain river freight growth and promote economic development opportunities

Commodity Tons Shiftable to WaterTraditional Markets: Agricultural Dry Bulk 615,000Salt, Cement, Clay, & Fertilizer Products 193,000

Emerging Markets:Waste Scrap 100,000Coal 114,000DDGS 50,000Alfalfa Pellets 50,000Liquid Fertilizer 50,000Ethanol 63,100OD/OW 20,000COB 70,000

Total Shiftable to Water 1,325,100

Benefits of Moving Freight on the River• In2010,freightmovingontheMissouriRiverincluded334,000tonsoftraditionalcommercialcommodi-

tiesandmorethan4.5milliontonsofsandandgravel.Thecommercialtonnagealoneequatestomorethan13,000truckloadsor3,000railcarsoftonnageontheriver.

• Thetotalfreightidentifiedasshiftabletothewaterin1to5yearsincludesmorethan800,000tonsoftraditionalcommoditiesandmorethan500,000tonsofemergingmarketfreightperyear.

• Combinedwith334,000tonsfrom2010,theadditional1.3milliontonsofcommercialfreightontheriverwouldpullanadditional52,000truckloadsperyearoffofMissourihighways.

• Movingthistonnagebywaterwouldresultinanestimated42%fuelusereduction;directlyandposi-

tivelyimpactingfreightratesaswellastheconsumptionofpetroleum;nottomentionprojectedbenefitsinreductionofhighwaymaintenance,congestions,andinjuriesandfatalities.

Potential for reduced freight rates-usingtheMissouriRiverratherthantruckorrailoptions.

BenefitsofMovingMoreFreightOnTheWater-FirstFiveYearsAdditionalannualtruckloadspulledoffthehighway 52,000Reductioninharmfulemissions:

CO 33%NOx 7.5%PM 7.4%CO2 42%

Fuelusereduction 42%

$0 $10 $20 $30 $40 $50 $60

Barge

Rail

BargeTruck

Sioux City

Omaha

St. Joseph

Kansas City

Brunswick

Booneville

$0 $10 $20 $30 $40 $50 $60

Barge

Rail

BargeTruck

Sioux City

Omaha

St. Joseph

Kansas City

Brunswick

Booneville

Northbound Freight rates from NOLA Southbound Freight rates to NOLA

*Barge-6bargelowRail-PublishedTariffratesBarge/Truck-includes$4/tonhandlingcharge

*Barge-6bargelowRail-PublishedTariffratesBarge/Truck-includes$4/tonhandlingcharge

Thisinformationtakenfromwww.agriservices.com/barge.htm.Pleasecontactforcurrentrates.

For more information download full 2011 Missouri River Freight Development Report at www.modot.gov/othertransportation/freight.

Traditional Markets – Agricultural Dry Bulk Commodities

Missouri Market Potential for Barge Movement

Benefits of Shifting Agricultural Dry Bulk to Barge Transportation

CommodityTotalTonnageonShiftableRoutes

Tonnage Shift(est.)

PercentShift(%)

Ag.DryBulk 5,700,000 615,000 10.8ForPo

sitionOnly

ForPo

sitionOnly

ForPo

sitionOnly

FreightMode Cost*

Truck $34.6MM

Rail $19.1MM

Barge $12.1MM

SumofTruck&Rail $53.7MM

Savings by Barge $41.6 MM

Inbound:SouthwesternIL205,100Tons

Outbound:SouthwesternIL 225,600TonsMobile 148,500TonsNewOrleansArea 1,345,600TonsOtherLouisiana 55,400TonsHoustonTX 1,640,900TonsSabineTX 1,297,100TonsCorpusChristiTX 73,100Tons*PortlandOR 85,000Tons*Seattle/TacomaWA596,000Tons

Inbound and Outbound Agricultural Dry Bulk

*PortionsofthesemovementscouldshifttotheGulfCoastexportlocations.

*Costofshippingtheestimatedshiftabletonage.


• MarketdemandforCementandClayarecloselytiedtodomesticeconomicconditions,sogrowthvolumecouldbeexpectedtoincreasewithanimprovingU.S.economy.

• Thiscommoditygroupisparticularlyattractivesincebargecarrierscanbenefitfromcomplementaryopportunities.Marketresearchindicatesfertilizermovementswillbringcoveredequipmentupstream.ThisleadstopotentialbackhaulsforallcommoditiesandincreasedutilizationofcementbargesalreadyworkingtheMissouriRiver.

• Terminallocationswithexistingandplannedcoveredstoragecanincreasefreightinsaltandfertilizer,particularlyinKansasCityandSt.Joseph.

• Oneoftheadditionalbenefitsofthismarketgroupisthatdemandcanoccurthroughoutthenormalnavigationseason.

• Theaddedmarkettonnagerepresentsover130loadedcoveredhopperbargesintothesystem;avaluableassettouseformanyoutboundcommodities.

Traditional Markets – Salt, Cement, Clay & Fertilizer Products


Inbound Fertilizer

Commodity 2009Barge Movements(tons)

MOMarketAreaTotalTonnage

(est.)

Projected5-yrWaterborneMarket

Growth(tons)

Percent Increase(%)

Cement 57,358 120,000 50,000 41.7

Clay 16,667 20,000 4,000 20.0

Salt 2,283 160,000 50,000 31.3

Fertilizer 23,724 1,600,000 93,000 5.8

Inbound:SouthwesternIL56,700TonsChicagoIL78,100TonsMinneapolisMN97,900TonsTulsaOK215,200TonsOtherOklahoma143,400TonsOtherArkansas14,300TonsHoustonTX35,600Tons

Benefits of Shifting Fertilizer to Barge Transportation

FreightMode Cost*

Truck $4.1MM

Rail $0.6MM

Barge $1.3MM

SumofTruck&Rail $4.7MM

Savings by Barge $3.4 MM

Origins and Destinations for Cement, Clay, and SaltCement Clay Salt

Origins Destinations

Chicago JeffCity&KC

CentralMO OK

SouthernLA STL,JeffCity,KC

*Costofshippingtheestimatedshiftabletonage.


• Totalmarketdemandforsandandpetroleumcommoditiescanbeexpectedtoincreasewithanimprovingeconomy–perhapsbeyondwhatisindicatedaboveforprojectedgrowth.

• Iftheexistingwaterborneasphaltmovementschangedtoland,itwouldresultinalandsideincreaseofnearly5,400trucksonMissourihighways.

• Consideringthatapproximately5milliontonsofdredgedmaterialmovesannually,itisobviousthatthistonnageisanimportantcontributorwithotherfreightcargoesontheMissouriRiverwhencalculatingthecritical“tonmiles”asameasureofutilization.Theone-billionton-milethresholdiswhatdictatestheleveloffederalsupportallocatedtoNavigationontheMissouri.

Traditional Markets – Other Commodities


Commodity2009BargeMovements

(tons)

MOMarketAreaTotal

Tonnage(est.)

Projected5-yrWaterborne

MarketGrowth(tons)

Percent Increase(%)

PetroleumProducts 119,856 138,000 18,000 13.0

Gravel&CrushedStone 116,920 * * *

NaturalSand 4,600,000 5,900,000 1,300,000 22.0*MarketandgrowthforgravelandcrushedstonearedependentontheUSACEbudgetandtheoverallfreightactivityontheMissouri–whichdictatestheleveloffederalsupport.

Movement of Petroleum Products

Imagesource:www.tidewater.com


• ScrapmetalrepresentsamarketofsignificantpotentialandtransportationcostsavingsfromtheKansasCityregiontomini-millsandexportdestinations.

• Mini-millsrepresent50%ofU.S.steelproductionandareestimatedtorequiremorethan14milliontonsofscrapeachyear.

• Scrapexportvolumeremainshighduetodemandindevelopingcountries.DirectscrapshipmentfromKansasCitywillpermitcontinuousshipmentfromtheorigintotheultimatedestinationwithoutintermediatere-handlingtoothertransport–resultingintransportationsavings.

• CoaldestinationsincludepowerplantsincentralMissouri.Transportationsavingsofmovingcoalbybargeinsteadoftruckcouldbesignificant,potentiallysupportingloweroverallenergycosts.TheseplantsmightbebestservedbyMissouriRiverterminalslocatedatChamois,JeffersonCityand/ortheBrunswick/Miamiarea.

Emerging Markets – Waste Scrap Metal & Coal


Commodity MOMarketAreaTotalTonnage(est.)

TonnageShift(tons) PercentShift(%)

WasteScrapMetal 335,000 100,000 29.9Coal 250,000 114,000 45.6

CoalInboundfromSt.LouisMetro(IL),andothereasternminingorigins

ScrapMaterialfromKansasCity(KS&MO)toSt.LouisMetro(MO&IL)

Inbound Coal and Outbound Waste Scrap Metal


• DriedDistillersGrainswithSolubles(DDGS)isanemergingmarketwithgrowingdemandandsupplyincloseproximitytotheMissouriRiver.

• DDGSprimarilymovestodomesticandexportmarketsbyrailandtruck,butbargeisgaininginmarketshare.Amodestpenetrationpotentialof50,000tons(5%ofcurrentmarketsize)inbulkisprojectedforLowerMississippiRiver(LMR)export.Significantlymoreispossible.

• DDGSalsomovesinincreasingnumbersincontainerswhichcreatesatransloadpotentialfortheKansasCityregion,movingproductinhighvolumebetweenbargeandcontainers,withsubsequentContainer-on-Bargepotentialtothe(LMR)andworldmarkets.

• Alfalfapelletvolumesarepricesensitivewithothergrowingregions.Likeothersimilarcrops,largevolumeshaverespondedrapidlytothemarketplaceduringperiodsofstrongpricingadvantage.Oneofthekeycomponentsofpricingadvantageistransportation,andwatertransportationcanresultinsignificantcostsavingsoverothermodes.

Emerging Markets – Dried Distillers Grains & Alfalfa Pellets


DDGSInboundfromethanolplantsNorthandWestofMissouriouttotheLowerMississippiRiverandtheGulfofMexico

AlfalfaPelletsInboundfromNebraskaandIowaouttotheLowerMississippiRiverandtheGulfofMexico

Inbound and Outbound DDGS and Alfalfa Pellets

CommodityMOMarketArea

TotalTonnage(est.)TonnageShift

(tons)PercentShift(%)

DDGS 790,000 50,000 6.3AlfalfaPellets 150,000 50,000 33.3


• TheLiquidFertilizermarketcouldshiftbacktowaterwithappropriateinfrastructuredevelopmentandthroughputcapacitysimilartothewaythebusinessmodelwasstructuredinthepast.

• LiquidFertilizeroriginsfromtheLowerMississippiRiverandtheMcClellan-Kerrsystemtakeadvantageofbothforeignanddomesticproducers.

• Ethanolasanemergingmarketismainlydistributedbytruckandrailwithsometransportationopportunitywithbarge;plantsneartheMissouriRivercanchangethesupplychainandpotentiallyreducetransportationcostandincreasedestinationoptions.

• Ethanoldestinationsincludemajorrefiningcomplexesandblendedproductdemanddistributioncenters,whichfrequentlyhavewaterwayaccess.

Emerging Markets – Liquid Fertilizer & Ethanol


EthanolInboundfromethanolplantsNorthandWestofMissouriandOutboundtotheLowerMississippiRiverregionandtheGulfofMexico

LiquidFertilizerInboundfromtheLowerMississippiRiverRegion&McClellanKerrArkansasRiverNavigationSystem

Inbound Liquid Fertilizer, Inbound and Outbound Ethanol

CommodityMOMarketArea

TotalTonnage(est.)TonnageShift

(tons)PercentShift(%)

LiquidFertilizer 150,000 50,000 33.3Ethanol 763,802 63,100 8.3


• PotentialforimmediateContaineronBargemovementmayincludeemptycontainerrepositioning.ThesemovementscouldoriginatefromtheKansasCitymarketandshiptodestinationsthathavedemandforemptiestofillwithexports:Memphis,BatonRougeandpotentiallyMinnesota.

• ContaineronBargeserviceissupportedbyopenhoppersandcouldprovidebackhaulprospectsshouldcoalorprojectcargoesdevelopasinboundfreighttothesystem.

• OpportunityformovingloadedcontainersontheMissouriRivercouldbesupportedoncesufficientterminalcapacityisdevelopedinKansasCityincombinationwithtransloadingofspecialtyagriculturalgrainsandDDGS.

• ContaineronBargecouldmoveinamarketwithscheduledweeklyserviceofmultiplebargesatmaximumweightsforshipperfreightcostadvantages.Theinitial5-yearestimateincludesapotential70,000tonsannually.

Emerging Markets – Marine Highway Container-on-Barge

COB Benefits Current COB Challenges COB StrategiesCan maximize weight capacity Availability of containers Develop ocean carrier supportCan maximize cubic capacity Total transit time Create scheduled service with

multi-barge towsShallow draft operations Supply chain perceptions Improve navigation reliabilityCan lower transport cost Inland terminal capabilities Appropriate terminal upgrades

Lower fuel consumption Consider start-up incentivesImproved public safety Marketing & salesEnvironmentally friendly Advocacy

Marine Highway Container on Barge (COB)

TheM-55andM-70MarineHighwayprovidesa1,400mileunencumberedtransportationcorridorbetweenoceanroutesatNewOrleans,LAtoKansasCity,MO,thusalleviatingfivedistinctstateDOTpermitjurisdictions,eliminatingbridgeclearanceconstraints,improvingpublicsafetyandresultinginnumerousenvironmentalbenefits.


• Thecargotypesmovingonthehighwaysthatcouldmoveonthewaterincludemetalshapes,coolers&chillers,cylindricaltanksofalltypes,militaryequipmentandwindenergycomponentstonamejustafew.

• Themarketvolumecouldbeexpectedtoincreaseasfreightcapabilitiesdevelopandnewroutesareestablished.

Emerging Markets – Marine Highway Over Dimensional Over Weight Cargos

ForPo

sitionOnly

Marine Highway Over Dimensional Over Weight Cargos (ODOW)

NumberofODOWMovesonMissouriHighways EstimatedMarketsize EstimatedMarket

Penetrationin5Years

140,000peryear 12,500peryear40%penetration=20,00tons

(potentially1,000bargemovementsperyear)

InitialmarketanalysisofODOWtruckmovementsinandthroughMissouriindicatesthat12,500movementsonI-29,I-70,andI-55maybeshiftabletotheMarineHighway.Theoriginsanddestinationsarecompatible,andthecargotypescouldmovebybarge.


Contact information for Missouri River Freight Movement

• AEP River Operations TerryMoore•636-530-2490 [email protected]

• AGRIServices of Brunswick, LLC KevinHolcer•800-279-4229 [email protected]

• American Commercial Lines JaniceLuchan•502-751-9441 [email protected]

• ARTCO Barge Line KevinVanMeter•217-424-5556 [email protected]

• Capital Sand Company RayBohlken•573-634-3020 [email protected]

• Celtic Marine Corp. TimKlein•773-774-2569 [email protected]

• Excell Marine GordonPulzke•513-792-9291 [email protected]

• Heartland Barge DougHalbert•618-281-451 [email protected]

• Hermann Sand and Gravel, Inc. SteveEngemann•573-220-4908 [email protected]

• Holiday Sand & Gravel MikeOdell•913-438-0240 [email protected]

• Ingram Barge Co. GeneShiver•618-344-2875 [email protected]

• Jantran, Inc. JohnJanoush•662-759-6841 [email protected]

• Lewis and Clark Marine, Inc. PaulWellhausen•618-876-1116 [email protected]

• Limited Leasing Co. TerryBangert•636-665-5180 [email protected]

• Magnolia Marine Transport Company LesterCruse•601-629-6652 [email protected]

• McDonough Marine Service RonWhite•281-452-5887 [email protected]

• Osprey Line, LLC CharlesDuet•504-569-2166 [email protected]

Active Missouri River Barge Carriers and Other Carriers Who Have Expressed Interest in Missouri River Freight Growth

• Howard/Cooper County Regional Port Authority RoyHumphries•660-882-5858 [email protected]

• St. Joseph Regional Port Authority BradLau•816-232-4461 [email protected]

• Port Authority of Kansas City MichaelCollins•816559-3721 [email protected]

• Missouri Port Authority Association SherrieTurley•888-667-6787 [email protected]

Missouri River Public Port Authorities

traditional and emerging markets - missouri

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