> The US doesn't have huge dredging capacity because it has good deepwater ports.
I suggest reading the article. Dredging the Mississippi five inches deeper would increase profits of the soybean industry alone by over $2 billion a year, IIRC. There’s a lot more than soybeans that travels on the Mississippi and reducing carrying costs would make all kinds of freight cheaper.
The big holdup on that was a deal which exempted Louisiana from the usual requirement that the state pay half the cost. Now, the Federal government is paying three-quarters of the cost.
There's a big barge lobby. Barges don't pay for US waterway use. There's a tax on fuel, but it pays maybe 10% of the cost of maintaining waterways.
> Barges don't pay for US waterway use. There's a tax on fuel, but it pays maybe 10% of the cost of maintaining waterways.
Do you have a citation for this 10%?
I operate a tugboat company. We move barges. We currently pay an excise tax of $0.29/gallon of fuel burned on inland routes. There is no good tracking or enforcement, but the tax is there.
This is a long-standing political issue. Much has been written on waterway cost recovery, but most of it is old. Congressional Budget Office study from the 1980s says "User fees now in effect recover approximately 10 percent of the Corps
of Engineers costs of operating and maintaining the inland waterway
system."[1]
The Waterways Council (the barge industry's lobby) talks a lot about cost-benefit ratios of barge operations and why their infrastructure should be subsidized.[2] They argue that lower pollution and less infrastructure cost per ton mile justifies Federal spending. They're probably not wrong.
Thanks for that CBO document. Yeah, I wish I knew what the percentage was now. Certainly the tax is higher than in the 80s.
There are some perverse outcomes. In South Florida, I see boats doing nothing but advertising, floating billboards, causing drawbridges to open. I have no idea if they are paying the excise tax.
Thank you for the correction. Re:barges and paying for infrastructure. Who cares? User pays is nice in principle but if there are massive positive externalities of doing something the government should do it. That’s what taxes and the idea of the public good are for. The benefits of cheaper transport do not accrue mostly to barge companies.
Command economies are simply inefficient. The US overuses highways for long haul trucking because trucks pay a lower percentage of infrastructure and externalities costs than trains do.
Barges are just another way to move cargo, if lower shipping costs are worth the investment they can pay for the majority of it.
Also because of the little-known Jones Act from 1920 which states that any shipping between US ports must be shipped solely aboard vessels that are U.S.-built, U.S.-citizen owned, and, registered in the U.S., which means crewed by Americans. It's incredibly expensive to ship anything domestically in the US even though the geography is quite good for it.
The Registered in the US bit seems like it would place it on an even footing with other forms of transportation which is definitely a good thing economically. U.S.-built and U.S.-citizen owned are presumably good to get rid of economically, though it has some national defense implications.
> The US overuses highways for long haul trucking because trucks pay a lower percentage of infrastructure and externalities costs than trains do.
Source? The US has a massive freight train industry. We have more railroad than any other country - and almost double second place (China). I guess "overuses" is subjective, but we use commercial freight way more than anyone else.
We don’t rank #1 by total freight, total fright miles, either of those per citizen, or percentage of fright carried by rail. We rank much worse in terms of passenger rail, or electrified rail.
Number of rail miles only really shows the size of the US not the utility of it’s rail network as we also have the largest road network. The relative lack of electrified rail demonstrates the issue, the US network is mostly single tracked which causes a lot of problems even with the total number of miles the utility of any given mile of track tends to be low.
To complete the triangle, if barges are subsidized more heavily than trains, some cargo will, as with your truck comparison, overuse the less-efficient transport, at cost to the general taxpayers.
"User pays is nice in principle but if there are massive positive externalities of doing something the government should do it. That’s what taxes and the idea of the public good are for."
That's always the big question though - where are we going to get the tax from. When we have a deficit and increasing debt, there using exactly extra money laying around to pay for this. Taxes need to be increased somewhere, but where depends on who you talk to.
Unless I missed something, the article said $461 million per year (See below). So if it’s going to make that much money per year and that’s “independent of supply and demand” then why should the U.S tax payer help fund the project? (I believe you said that gov would find 75% of the cost…edit: it was another responder actually). And if it reduces carrying costs for other goods then that seems like more reason for companies to cover the costs (imo)
> Digging the depth of the lower Mississippi from 45' to 50' could generate $461 million annually for the U.S. soybean industry — independent of supply and demand.
> So if it’s going to make that much money per year and that’s “independent of supply and demand” then why should the U.S tax payer help fund the project?
Because growing the economy by $461 million a year grows the economy and hence tax receipts, which then can be spent on good things or on reducing taxes. Note that that’s $461 million for one industry. Reducing shipping costs has benefits that accrue to everyone who uses goods that are shipped on internal waterways or sells them, i.e. everybody. Doing things that benefit everyone is very much in the bailiwick of the government.
The US soy bean industry isn’t one entity that can make a decision like that, it’s presumably thousands of discrete farms, each of which would have to pitch some in and then presumably endlessly bikeshed about precisely what needs to be done.
Coordination is hard. The overwhelming majority of traffic on the Mississippi is not soybeans. The soybean industry is not terribly concentrated. Why should they pay all the costs only to receive a small portion of the benefits? This kind of problem with large positive or negative externalities and myriad actors is usually the province of governments to solve. For another example see climate change.
Considering the soybean industry is a massive environmental and health disaster, I am glad they aren’t able to profit more and would oppose anything that encouraged its expansion.
I suggest reading the article. Dredging the Mississippi five inches deeper would increase profits of the soybean industry alone by over $2 billion a year, IIRC. There’s a lot more than soybeans that travels on the Mississippi and reducing carrying costs would make all kinds of freight cheaper.