PORTAGE | Up? Down? Good? Bad? As 2013 moves forward, the outlook for the Port of Indiana-Burns Harbor remains cloudy, but could turn brighter if the rains fall.
Jody Peacock, director of corporate affairs for the Ports of Indiana, said he is “cautiously optimistic” in his projections for 2013.
The Northwest Indiana deep-water port is responsible for bringing $4.3 billion in economic activity to the state annually, and Peacock expects that to continue and grow.
“There are some indications we could see some increases in heavy industrial cargoes, including steel, this year,” he said. “They’ve been on a steady increase the last couple of years."
At the time of the interview, the Port didn't have year-end numbers for 2012 yet, but Peacock said they should be up from 2011.
The cargoes handled by the Port are very diverse, and each moves independently of the others, Peacock said.
The Port has seen significant increases in shipments of coal, grain, fertilizer, steel and minerals through the 2012 shipping season, although there were some indications that shipments of limestone, road salt and miscellaneous cargos could be down slightly or flat, he said
“One goes up, one goes down,” Peacock said. “There are so many factors to whether it (business) picks up or drops off.”
Art Flores, superintendent of port operation for ADS Logistics, said activity at the Port depends on the government resolving its differences on taxes and spending.
If so, businesses will begin putting money into the economy and companies begin ordering and moving materials.
“I believe the Port will do better this year,” said Flores, whose company runs a storage facility there. “It did better last year than the year before. If the economy gets better, it gets better for us overall in the Port.”
ADS Logistics is a storage facility that depends on steel mill orders.
“We’re forecasting to be up this year but it depends if mill orders come through or not,” he said. “We make money, a profit, not by storing coils but by turning over our inventory.”
John Novitski, plant manager for Steel Warehouse Co. at the Port, said he assumes Port shipments “will be somewhat similar to last year and 2012 was an improvement over 2011.”
“Since 2008, when business bottomed out, there’s been a slow recovery and now there’s been an upward trend. But it hasn’t gone back to its glory days.”
Steel Warehouse processes light gauge carbon steel in support of Midwest stampers, fabricators, and other suppliers to the appliance, office furniture and automotive industries, according to the company. It’s the Port’s largest customers, Novitski said.
“It’s kind of a goofy market,” he said. “No one knows what’s happening for more than a few months out. Right now everyone’s busy. But there’s skepticism if it will last. There are no long-term commitments. No one’s forecasting positive. Many customers aren’t optimistic. Auto is doing well, but not much else.”
Located between U.S. Steel Corp.’s and ArcelorMittal’s’ huge steel plants at Burns Harbor, the Port handles 15 percent of all U.S. steel trade with Europe and has more than 10 steel processors on its 600 acres.
The steel plants' locations on the lake are “the reason the steel industry has done so well in Northwest Indiana,” Peacock said.
“It’s at the connection of the Great Lakes, the river systems, highways, and rail systems,” he said. “That’s important to being able to move steel cargoes by water.”
As a multi-modal facility, the port handles an average of 500,000 trucks, 10,000 railcars, 400 barges and 100 ships annually, according to the Ports of Indiana, which governs the Burns Harbor Port and ports in Mount Vernon and Jeffersonville.
Peacock calls Indiana’s port system “truly unique.”
“People don’t understand you can have a port 600 miles from ocean the way we do,” Peacock said. “It means companies can bring cargo by water, which is the cheapest safest most environmentally friendly mode of transportation, and to bring it into heart of country.”
For example, it would take 1,000 trucks to handle the same amount of steel cargo as one towboat moving 15 barges, he said.
About one-third of Burns Harbor Port’s cargo is moved by barge through the Chicago Area Water System that includes the Chicago Ship Canal as it feeds into the Illinois River and the Mississippi River.
Both the Asian carp issue in the canal and the river’s historically low water levels due to recent drought could mean problems for Port shipments, Peacock said.
There is continuing pressure from some Great Lake states and various groups to permanently close the canal in an effort stop the carp from migrating into the lake, he said.
“There are already barriers in place that are doing that, barriers that other waterways don’t,” Peacock said. “It’s not a viable solution for cargo. It’s very important that the CAWS be keep open to shipping. The channel is important to connect our port to New Orleans. Cutting it off from Northwest Indiana would be disaster.”
Mississippi barge traffic problems would definitely have a detrimental effect on the Port, Peacock said.
Although that effect is yet to be determined, a good number of companies at the Port that use the waterway, said Ken Stone, operations manager for Lakes and Rivers Transfer, a bulk cargo stevedore at the Port and a division of Jack Gray Transport Inc.
Between 70 percent and 80 percent of the operation’s business is loading and unloading cargo generated by barge traffic.
“Right now my projection is that business will be down due to low water levels on the Mississippi,” Stone said. “… But we don’t know for how long. It all depends on the weather.”
In order to maintain a 9-foot deep channel for river navigation, the Army Corps of Engineers currently is removing rock formations below the surface of the narrowing river between St. Louis, Mo., and Cairo, Ill.
Since early July, there has been ongoing dredging to preserve the channel. There also have been continued surveys and channel patrols to keep commerce safely moving on the Middle Mississippi.
Even though the channel remains open, barges may have to reduce their draft from nine feet, to seven-eight feet, which means the amount of cargo the barge can hold would have to be reduced, Stone said.
“It affects our bottom line,” he said. “We charge by tonnage, if there’s less tonnage it will affect our revenue.”
Water levels on the Mississippi and on the Great Lakes are a serious concern for the Port, its companies and its customers, Peacock said.
“It emphasizes the need for dredging in many areas,” he said. “There’s an ongoing need but especially when water levels are low… . It shows the need for continued support of the Army Corps’ budget. It’s very important to the Port and Northwest Indiana’s economy.”
There’s always a concern when Congress talks about cutting budgets,” Peacock said. “The important thing for us is for people to realize how important waterborne shipping is to our economy.”