Gulf, River Shippers
Scramble to Do Business

For 25 years, Curtis Snider ran a clockwork operation that picked up Central American bananas in Gulfport, Miss. and trucked them to grocery warehouses across the Midwest. Then, Hurricane Katrina hit, and the clockwork went cuckoo.

Surrounded by a giant map and route charts in his Queen City, Mo., office, Mr. Snider, who runs R&O Transportation LLC, has been talking on two phones at once to reroute his fleet of 120 trucks to collect bananas instead at Freeport, Texas. As of yesterday, more than half his refrigerated trucks sat idle as he redrew routes and frantically tried to reach drivers. "This is a massive thing to create a new [transportation] lane," he says. "We went in 12 hours from something that worked to nothing."

It could soon get worse. The federal government is struggling to determine how soon Gulfport and other hurricane-ravaged harbors on the Gulf of Mexico can be repaired. Their biggest concern yesterday was the mouth of the Mississippi River, conduit for more than 6,000 ocean-going vessels a year carrying grain, oil, steel, coal, food and other goods.

The port of New Orleans remains closed to ocean shipping, awaiting an assessment of damages caused by Hurricane Katrina. If the river or the surrounding ports are unusable for months, problems like Mr. Snider's could be repeated a million-fold at companies across the country.

Survey crews for the National Oceanic and Atmospheric Administration yesterday began surveying lower Mississippi ship channels for potential obstructions, focusing on the southernmost 20 miles or so. Officials worry about the condition of the channel below the water's surface because aerial surveys show shrimp boats crushed together and numerous barges and vessels washed up on levees along the sides of the channel. Surveying was to resume today.

It can't happen too fast for George Duffy, president and chief executive of NSA Agencies Inc. of St. Rose, La., which handles logistics of chartering and unloading much of the 25 million tons of grain and five million tons of steel that come into New Orleans each year. As Mr. Duffy juggled a cellphone and a chainsaw to chop fallen tree limbs in his yard yesterday, his company had several tankers and cargo ships waiting at the mouth of the Mississippi with loads of grain and steel.

Mr. Duffy, 64 years old and a longtime veteran of Gulf Coast shipping, predicted his company and others would soon be cleared by maritime officials to move their goods other than by docking at ports. When the river was temporarily blocked after Hurricane Betsy in 1965, he says, the company used launches to get longshoremen out to cargo ships to unload stuff onto barges. Today his staff has been diverting crude oil and other vessels to Galveston, Texas and Tampa, Fla. He says he isn't worried shipping will be stymied long. "We have some ingenious people in this industry," he says.

Others aren't so sanguine. Grain exporters such as Cargill Inc. prefer to move as much grain as possible along the Mississippi because barges are typically cheaper, albeit slower, than railcars or trucks.

Cargill has 300 barges of grain, fertilizer and salt stranded on the lower Mississippi, but faces a nearly impossible challenge finding space elsewhere. One river barge can hold 55,000 bushels of grain, an amount that would fill 15 railcars and 60 semitrucks. "There really aren't any good alternatives," said David Feider, a Cargill spokesman.

Ingram Barge Co. in Nashville, Tenn., is dealing with a different problem: Only about half of its workers have showed up at its big operation near the base of the Mississippi, where it dispatches towboats and barges transporting coal, grain and chemicals. So tomorrow, Ingram plans to start moving down the river the first of three "crew barges," a sort of floating dormitory capable of housing up to 40 workers.

Ingram operates a sprawling barge fleeting and loading dock in Reserve, La., about 40 miles upstream from New Orleans. This has become a giant barge parking lot, since barges can't unload or load anything. There was little damage to the facility, but Ingram has notified customers that it won't load any more grain or other shipments until the port reopens.

By closing the New Orleans ports, Katrina effectively eliminated the cheapest way for American industries in the nation's heartland to do business overseas. Some economists figure that the competition of the river-barge industry with the railroads and trucking companies saves companies roughly $1 billion annually.

Agriculture-industry officials say other U.S. ports simply don't have the capacity to absorb the two billion bushels of grain that move annually through New Orleans. "The ports in the rest of country are already at capacity," said one federal official.

At Archer-Daniels-Midland Co., the commodity-processing giant in Decatur, Ill., executives are optimistic that New Orleans will reopen for business within weeks. But for now they're studying railroad maps to see how much of Midwest crops they could divert to ports on other coasts.

Lew Batchelder, ADM senior vice president of agricultural services, said that if ADM's four grain terminals near New Orleans remain idle, the company has the capacity to divert some grain by railroad to its facilities in Galveston and Corpus Christi, Texas. ADM already uses the rails to ship large amounts of crops to ports along the Pacific Northwest for export to Asia.

The problem for the grain industry is that executives have little idea whether the railroad companies, which are already running at a high level of capacity, have the space to carry much of the grain that normally would move by barge to New Orleans. Some industry officials are guessing that perhaps one-fifth of the grain that normally moves through New Orleans could move to other U.S. ports for export.

New Orleans also is a big rail center where lines from the East, West and North connect. Freight that normally travels through New Orleans between Eastern and Western railroads was being rerouted through other rail gateways north of the hurricane-damaged area.

Century Aluminum, of Monterey, Calif., hauls 2.4 million tons of bauxite per year to a plant in Gramercy, La., where the ore is refined into alumina that is then hauled to the company's smelting plant in Kentucky, where it's made into aluminum.

Company spokesman Mike Dildine said the Gramercy plant survived the storm without major damage but the company has no other practical way to move the ore to Kentucky except the river. He said he heard that the river could soon be open to barge traffic but that the company expects it to move slowly because of barges lost in the river.

"Even if traffic has opened up," says Mr. Dildine, "I still think there are going to be some bottlenecks."

Mr. Snider, the banana transporter, said he can't decide whether he should design an entirely new route structure around Texas deliveries or wait to see if Gulfport starts operating again. He would rather wait if he could. Because his drivers live strategically along the route to Gulfport, switching to Texas could require him to hire a new work force.

Email your comments to rjeditor@dowjones.com.