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A distribution system brought to its knees As ports remained closed from Louisiana to Florida on Wednesday (Aug. 31), some 300 barges containing grains and other products were left homeless, according to this report by Alexei Barrionuevo and Claudia H. Deutsch published by the New York Times. Under the management of Cargill, a large agriculture producer and exporter, the barges were caught in a bottleneck caused by the devastation of Hurricane Katrina. Now they are floating on rivers north of New Orleans with nowhere to go. Two days after one of the worst storms ever ravaged the Gulf Coast, large parts of the nation's distribution system were feeling the effects. Major transportation arteries were clogged, and imports and exports had slowed to a crawl. The logistical logjam could delay the production of hundreds of everyday products. The result is that consumers, even those far from the storm's epicenter, might have to pay more for everything from coffee and bananas to paint and tires. Many of the Cargill barges, for example, were loaded with corn, soybeans and wheat, for shipment out of the country, before the storm struck early Monday. With the harvest season for grain less than a month away, grain processors said they were concerned over how long shipping would remain constrained before they must begin their busiest export time of the year, to Europe and Asia. Grains are the largest export likely to be affected by the devastation to the ports, because they are so dependent on the river barge system. In July, about half of the country's grain exports were shipped from the Mississippi River gulf outlet, said David D. Lehman, managing director for commodities at the Chicago Board of Trade. "Those facilities are all without power and could be impacted by the flooding," he said. "If this is a 5- to 10-day problem, it won't significantly impact the grain markets," Mr. Lehman said. If it is longer, then importers will start switching to buying from other ports, mostly likely along the West Coast. But with gasoline and diesel prices being sharply affected by the loss of refining capacity caused by the storm, shifting to other ports will create costly logistical complications that will probably be passed to consumers in the form of higher prices, shipping firms said. David Feider, a spokesman for Cargill, said it was "not feasible" to divert grain shipments to trucks or trains because of the high cost and the loading infrastructure required. Imports are not faring any better. Shippers were scrambling to arrange alternative ports for incoming shipments of oil, chemicals and steel additives. Millions of pounds of coffee remained in storage in New Orleans. "Everything is at a standstill right now," Mr. Feider said. Government officials struggled Wednesday to assess the scope of the damage to the port of New Orleans. Coast Guard officials said that they were finishing underwater surveys of shipping channels. So far they have found an unusual amount of soil and sand build-up, and a number of buoys and other navigational aides either missing, destroyed or misplaced, creating the potential for ships to run aground, said Petty Officer John Miller, a Coast Guard spokesman. Some ships struggled with the question of whether to divert to other ports. The Port of Houston Authority said it was receiving inquiries from carriers about possible diversions. A cargo ship laden with rubber and timber, originally slated to make calls at New Orleans and Pascagoula, Miss., was diverted to Houston Wednesday night, the port authority said. Chiquita Brands International said it had no choice but to reroute shipments of bananas and other fresh produce to ports like Freeport, Tex., and Port Everglades, Fla. Chiquita's facilities in Gulfport, Miss., which last year handled about 25 percent of its banana imports to the United States from Central America, were too damaged to receive shipments, the company said. Meanwhile, companies struggled to get products out of New Orleans. More than 700,000 bags of coffee, each weighing 132 or 150 pounds, remained in storage in New Orleans, said the Chicago Board of Trade. Procter & Gamble said it suffered a heavy loss of coffee production. About half of its Folgers brand of coffee comes out of New Orleans. The facility has been shut since Saturday, and Doug O. Shelton, a Procter spokesman, said the company had no idea when it could reopen. "We're still in the process of trying to re-establish contact with the people who worked in the area," he said. In recent years, ports in Long Beach, Calif., and in the Pacific Northwest became so congested that some companies began importing container shipments of consumer products directly from Asia to gulf ports to more easily distribute to customers in the South and Midwest. Wal-Mart opened a mammoth distribution center outside Houston this summer as part of a direct-import strategy. Christi Gallagher, a spokeswoman for the company, said that while two distribution centers were affected by the storm, the Houston facility and Wal-Mart's many other distribution centers spared the company any major disruptions. Others were not so lucky. Damage was so heavy at one of DuPont's largest titanium dioxide plants, which supplies whiteners and brighteners to paint and coatings manufacturers, and to a plant that makes a chemical precursor to the polyurethane foams used in car dashboards and appliances, that the company has invoked legal clauses used to shield itself from liabilities when it inevitably has to renege on some supply contracts. "It's too early to say how much we've lost, but we've had extensive flooding," said Kelli Kukura, a DuPont spokeswoman. Truckers are also feeling the effects. Shipments in and out of the New Orleans region represent about $1 million a day for Yellow Roadway, a $10 billion trucking company, "and since commerce in the area has pretty much stopped, it will affect those revenues," said William D. Zollars, the chairman. But Mr. Zollars is more concerned about costs than revenues. Yellow Roadway has 20 terminals in the area. "Our terminal in New Orleans has been reduced to a concrete slab, and with communications so bad, we don't know how much damage we've had at others," he said. (The preceding report by Alexei Barrionuevo and Claudia H. Deutsch was published by the New York Times on Thursday, Sept. 1, 2005. Alexei Barrionuevo reported from Chicago for this article and Claudia H. Deutsch from New York. Jeff Bailey contributed reporting from Chicago, and Melanie Warner from New York.) September 1, 2005 From UTU Site
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