Shipping Could Face Greatest Short-term Spill Impact
June 8, 2010 by admin
The biggest short-term economic impact from the Gulf Coast oil spill could be a disruption of U.S. commerce through the Gulf shipping channel. Reports say a full shutdown of shipping lanes is unlikely, but significant delays could develop if cargo ships must have oil washed off their hulls before moving upriver.
This disruption could also have broader transportation flow effects by affecting the barge, container, and tanker traffic in the Mississippi Delta and on the Mississippi River. If traffic is affected for any extended period of time, then the prices of all types of commodities could rise.
Some of the ripple effects of disruptions in and out of the Port of New Orleans on freight networks could be the diversion of some cargoes, such as export grain, to other destinations.
For instance, it could push more Midwest farm shipments off barges and onto trains headed for West Coast ports, or onto ocean ships at Great Lakes ports that move into the Atlantic Ocean through the St. Lawrence Seaway.
Aside from possible effects on the supply chain, the spill can hurt the Gulf region’s fishing and tourism industries, depressing both direct and indirect incomes from that activity.
The impact on overall U.S. commerce was hoped to be small if responders could contain the spill quickly enough. However the impact on local industries was feared to be large. Fishing in the Gulf is already hurt from a 10-day ban. Gulf fishing generates annual dockside sales of $660 million, employs about 27,000 people in Louisiana alone and is second in size only to Alaska’s fishing industry. If the closure lasts long enough, it could raise fish and shrimp prices nationwide.
As it turns out, both local and national economics will be significantly affected.
Higher transportation costs of using alternative shipping lanes and ports could also price the loads out of the world market, delaying shipments until conditions improve. Authorities are anxious to keep the operational for Gulf shipping to maintain vital U.S. exports and imports. The Lower Mississippi River ports export over 50 million metric tones of corn, soybeans and wheat each year, which is more than 55 percent of all U.S. grains inspected for shipment.