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June 8, 2012
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Kentucky’s Public Riverports

Commonwealth’s river transport resources being used to create regional economic engines

By Sean Slone

The Owensboro Riverport has 285 acres of river terminal operations with 200,000 s.f. of warehousing. Barges can discharge directly to rail, truck or storage facilities. It handles grain, fertilizer, anode coke, paper, and steel and aluminum coils.

Editor’s note: Part 1 of a two-part look at Kentucky’s public riverports in The Lane Report this month introduces these facilities and their role in regional economic development, plus takes a glance at the state’s many private riverports.

At Ohio River Mile 759, the Owensboro Riverport plays host to a daily parade of river barges, trucks and trains. Bulk and liquid fertilizer come into the port; grain leaves. Aluminum comes in by barge or rail and gets shipped out on trucks. Paper products are stored here and then shipped out, bound for office supply stores.

One of seven currently active public riverports in Kentucky, the Owensboro Riverport is perhaps the state’s most successful.

“The Owensboro port probably has a bigger footprint in terms of the region that it serves than the other ports might,” said Owensboro Riverport Authority President/CEO Ed Riney. “We clearly bring a lot more product through. And from a financial perspective, we’re much larger and we actually show a profit. It is our goal that we make money at the port, and we actually pay a dividend back to the city of Owensboro, the entity that sponsored us originally. Most of the ports are city and county sponsored. Ours is just city-owned.”

Most are on the 665 miles of Ohio River that gives Kentucky’s northern border its distinctive shape. One is on the state’s 49 miles of Mississippi River shoreline. Another is on Lake Barkley/Tennessee River.

Thirty miles west of Owensboro, along another bend in the river, is the Henderson County Riverport, which despite its close proximity, does not perform a redundant function, according to Henderson Port Director Greg Pritchett.

“Typically there is some adjustment in the mix of products that are being handled, because typically the products being handled would be supporting local and regional industries adjacent to whatever port we’re talking about,” he said.

Indeed, each riverport around the state serves a purpose unique to its region, said Chuck Knowles, of the Kentucky Transportation Center at the University of Kentucky.

“The ports at Hickman and Eddyville serve the farming communities in Western Kentucky,” Knowles said. “Then as you get up to the riverport at Louisville, they own many, many acres of land up there. And even though it has some facilities to move freight on and off the river, that riverport’s main business is developing the industrial property they have. They’re basically a major (landlord) for all the industries that have located on their property …

“If you go to Owensboro and Henderson, they have some grain, they have some steel, they have some aluminum that comes and goes. … And then we’ve got the one up at Greenup County, which is kind of a fledgling (port). It’s active, but it’s in the early stages, and it just has a couple clients. They’re bringing in raw sand that is used in some type of a process up there at one of the industries there in the local area.”

The common denominator among the ports, according to Pritchett, is economic development.

“The history of the public ports in Kentucky was really driven by the need for economic development across the state,” he said. “So these ports were constructed with the idea of trying to recruit and support industries that may not have been in the area at that point in time … There weren’t any other providers.”

The ports introduced logistical efficiency by allowing cargos to be unloaded from one mode of conveyance directly to another.

“No one else in the area was providing any services to support cross-docking of barges or cross-docking of rail cars and warehousing. None of those opportunities existed with any private business offering those services, and so the whole idea of the port being situated here and the idea for constructing it was to enhance economic opportunity and to be able to use it as a tool to recruit industries into the area.”

While Pritchett and Riney do not see themselves as competitors, Knowles says in many cases, they and their counterparts are after many of the same clients and industries to locate in their communities and make use of their facilities.

“Having a port is a very competitive business,” he said. “The seven public ports are financially making it … in this tough economy, but some of them don’t make a whole lot of money – just enough to pay the bills and pay their staffs. And if they have issues, I guess the local communities that set those (port) authorities up … probably have to financially support them.”

Developing riverports seeking business

In addition to the seven active public riverports, another five are considered “developing” riverports in Kentucky. In 2005, local officials in Western Kentucky established the Marshall County-Calvert City Riverport Authority.

“We have made great strides since … 2005 by way of infrastructure development and property acquisition,” said Marshall County Community and Economic Development Director Joshua Tubbs in describing the port’s status. “Additional funding from federal, state and private-sector entities is a must in order to establish an operational port that can service existing industries as well as prospective industries that would need port services.”

It, too, shares a close neighbor riverport – the active facility at Paducah. Although they both share the goals of attracting industry and serving existing industry, it would be a mistake to view them as a competitor, Tubbs said.

“We are both located on different rivers (Paducah on the Ohio and Marshall-Calvert on the Tennessee River), and we both currently partner with one another to advocate for better waterway transportation and for regional economic development,” he said.

Even those at the active ports see room for the developing ports to serve a function in meeting their communities’ needs.

“There’s a developing (riverport) in Brandenberg-Meade County,” Pritchett said. “The challenge there is that most local farmers are having to move their grain all the way to Louisville in order to market grain. … They’re in the process of trying to work out with a grain company so they can actually put that stuff on the river without going to Louisville. That’s probably a good thing for that local community as a starting point.

“Then once you get your foot in the door, what else can you do with that facility? “ Pritchett said. “That community is going to be examining other opportunities as far as industrial recruitment… (and) as far as existing industry that they might be able to help support moving forward to keep those jobs there.”

Knowles believes economic development is the key that will allow the developing riverports to eventually become active ones.

The seven active ports have had some success in their communities “attracting businesses either through their own efforts or through the help of state economic development folks, finding clients to locate who need water transportation to either bring in raw materials or ship out finished products,” he said. “It has taken them years to get to the point where they are.

“The five developing ports, their authorities are established. In some cases they have land available to them adjacent to the river. But it’s a matter of finding clients or somebody to use that particular facility to move freight on and off the river. Water transportation as an alternative to rail and highway is a selling point to some particular types of manufacturers, and they look for that opportunity.”

Private ports more numerous, bigger players

The public riverports are not the only game in town when it comes to shipping raw materials and finished products along Kentucky’s waterways. In fact, they represent just the tip of the iceberg in barge traffic, especially along the busy Ohio River.

“We’ve identified something like 300 riverports on both sides of the river,” Knowles said. “The public ports are providing some economic benefits to their local communities through jobs and through other services. In the bigger picture, they are a contributor to the transportation system in moving freight, but they are by no means the major player. I would consider the major players to be the coal-fired power plants along the river that have coal shipped to them on the barges. That’s the biggest commodity that’s moved on the Ohio River.”

The fact that there are a large number of private port facilities reflects not only the desire of companies and industries to have more control, but also that Kentucky’s public riverports have limitations, Knowles said.

“In order for the public ports to handle a significant increase in the amount of tonnage that they handle, there would have to be capital investments done as far as loading and unloading facilities and docks and things like that,” he said. “The private companies want to have a little control over these commodities, and most of these private ports are strictly focused on a particular material or a particular business.

“Some of these private ports are general cargo terminals. They will contract with other folks to move (cargo). But a lot of these private ports are located specifically where they are adjacent to a manufacturing facility or a user of something coming off the river, such as coal.”

One of those private facilities is River Road Terminal, an independent commodity transfer and storage facility in Louisville run by the Buddeke Co., a one-time coal operator. Paul Lawson, operations supervisor at River Road, said the terminal facilities are “on par” with the public riverports and competing for the same customers.

“Our terminal here is a little different than some of the public ports in the way it is positioned by the river, which gives us a unique way of doing business,” Lawson said. “We are on the upper pool at Mile Marker 601, probably one of the (most stable) pools on the Ohio River, and we only sit about 10 feet above the pool. A barge will draft about 9 to 10 feet, so they sit pretty much level with our dock. Most of our competitors have to work off of a cell or off of the bank or off of the river to a conveyor to get back to the land. That gives us some advantage.”

In addition to private ports such as River Road, there also are ports owned by specific industries and manufacturers.

“Most large companies will end up building their own port if their activity is the handling of that product and moving it,” said Norb Whitlock, a member of the state Water Transportation Advisory Board, consultant and 40-year veteran of the river industry. “What you get at a (public) riverport is kind of a general commodity, where you handle many different kinds of products. And you may not be in the marketing of the product from a riverport standpoint, but you’re only in the transferring of the product. Whereas, private ports are more prone to be in the marketing and the sales chain of the product … The private port is in the business of marketing the product that they handle.”

Public riverport directors say competing in the current environment, preparing for and trying to attract future growth requires frequent upgrades of infrastructure and equipment at their facilities.

Next month: A follow-up article will examine the needs at the public riverports, where the money might come from to make the needed upgrades and how factors such as the 2014 completion of the expansion of the Panama Canal are likely to impact the customers and commodities Kentucky’s riverports will see in the years ahead.

Sean Slone is the Senior Transportation Policy Analyst at The Council of State Governments in Lexington.

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