Port operator questions need for another port

by The City Wire staff ([email protected]) 164 views 

While the Fort Smith region and the U.S. Army Corps of Engineers are preparing for a $100,000 study to determine the viability of the Lavaca Slackwater Harbor, one Arkansas River port operator has had enough.

Steve Taylor, vice-president of Johnston Ports, told The City Wire he is tired of the “pork barrel” projects, a classification he assigned to the Lavaca Slackwater Harbor.

“It’s not going to create any more business. It’s just more than likely going to create more problems for the ports above and below. They’ll make you think it does create business, and that's the way they sell it, but that's not necessarily true. Why not utilize the existing facilities instead of spending the millions of dollars?”

Taylor operates Johnston’s Terminal in Muskogee, Okla., and Johnston’s Port 33, Inc., in Catoosa, Okla., which both have an interest in the Arkansas River. His initial frustration stemmed from last week's annual navigational conference, where he confronted members of the Corps about the topic.

“Our locks and dams are getting in worse condition. We’ve got a regular maintenance backlog of around $100 million, and to turn around and do studies of a new port on the Arkansas River, funded by the government, it’s just ironic as hell. Why are we doing it? We’re struggling to survive, to keep what we have and now we’re looking at something that will hurt all the existing ports. If things don't improve, we'll go backward instead of forward,” Taylor said.

Brad Shoemaker, chief of Navigation and Maintenance Section at the U.S. Army Corps of Engineers Little Rock District, confirmed that the total backlog maintenance Taylor referred to was “about right” in value, but that included both critical and non-critical issues.

The Corps defines “critical issues” as “maintenance that if not performed could result in a greater than 50% chance of failure of a critical component of the navigation system required to maintain basic project operation within the next five years; or, maintenance to clear a restriction that impedes navigation.”

The Corps submitted approximately $58.728 million across 38 projects (not all critical items) for the FY2014 budget. Describing how federal funding has worked in the past, Shoemaker said “about three or five of those projects could receive funding.”

He also said “it’s not as simple as moving money around” between departments.

“Most folks don’t realize how the Corps is funded,” Shoemaker said. “We don’t get a pot of money and set priorities. We’re funded line item-by-line item. We get more than one line item for the Arkansas River. That tells us where we can spend it, and we have very little discretion on shifting money around.”

When asked to elaborate on financial flexibility, Shoemaker said it was “very small, nothing that could address” the critical issues the River is facing. Shoemaker noted that in “emergency situations,” the Corps can move around more significant amounts of money, but “even then, we require federal approval before doing so.”

Taylor believes the Corps can do more than it is: “The Corps needs to get in the real world and start saying no to these projects that are pork barrel and not smart. If it's that good of a deal, believe me, the private sector would already be doing it.”

Mat Pitsch, project manager for the Western Arkansas-Regional Intermodal Transportation Association (RITA) and a supporter of the Lavaca Slackwater Harbor, would not respond to Taylor’s comments when approached by The City Wire, but he did issue the following statement: “We (RITA) decided to coordinate with the Corps of Engineers, at Congressman John Boozman’s urging, to further research (into the Lavaca Slackwater Harbor project) to see if we have enough private industry, and the study, when issued, should answer the question of its viability. I am more interested to see what businesses in this region feel about this study and the need for the Harbor.”

Pitsch is also a GOP candidate for the Arkansas House of Representatives District 76 seat. He faces Rep. Denny Altes, R-Fort Smith, in the May 22 primary.

But for Taylor, all the studies that are necessary can be found in the performances of existing facilities, such as the Port of Fort Smith and Five Rivers Distribution in Van Buren. Referring to the existing ports, Taylor said, “They have port facilities that are way underutilized, above and below where they're doing the studies for another public port.”

Taylor continued: “There is only so much of the pie to go around. When you put another player in, you slice that pie into a smaller piece. If the government could show me a study where this made sense and make me believe it, I would build it (the port) and own it, and they wouldn't have to put any money in. And we even pay taxes, which public ports do not.”

Marty Shell, Five Rivers owner and operator of the facilities in Fort Smith and Van Buren, admitted that his ports are not at capacity and that there was “some truth” in what Taylor had to say about “only so much of the pie to go around.”

Still, he’s keeping the long term in mind. “I’m trying to stay as neutral as possible, because with us private guys, it’s different because it’s a straight-up business, and we have to turn a profit, while the federal government tends to operate in the red.”

Shell continued: “But if you look at the Port of Little Rock, it sat empty for almost 15 years until they just recently put in a tenant that’s moving 300,000 to 400,000 tons per year. People can’t expect this to move fast. You’re not going to do the study, build it, and have a tenant waiting to occupy in the next 24 to 36 months. That’s not going to happen.”

Where Shell is encouraged by the Lavaca Slackwater Harbor project is in “Fort Smith’s unique placement.”

“We have a liquid highway. Interstates 40 and 49 will all converge from the east, west, north and south. We have three Class 1 railroads. We have a lot of assets already coming through. When you can offer all these running lanes, this brings economic development to the area,” Shell said.

Shell added that “the pie needs to grow” and that it will take “public and private cooperation to make that happen.”

For Taylor, it's not the idea of another port that is so troubling, but the idea of “financial waste” and what he sees as “the reality of what another terminal will mean.”

“If they build another port facility in that area, it would make sense as long as they attracted new tonnage and increased lockages, and that's what they say they're going to do. But they can’t tell you who, or what company, or what commodity. They just say, ‘We know they'll come.’ But they're not coming to Tulsa or Muskogee.”

Taylor continued: “I believe in the building of infrastructure. But when we can't afford to maintain what we've got, I can't see undertaking this until the government is lined out better than it is. I wouldn't be so aggravated and vocal, but after 35 years in this business, I’ve been told to sit in the back seat and shut up long enough, and I’m not doing it any more. When you’re affecting my personal paycheck, and the 70 people making money at this one facility and another 30 at Muskogee, I care about what's going to happen to them and their livelihoods. Stop trying to buy a new Cadillac when you just need to overhaul the Volkswagen.”