The Economic Value Of Barge Transportation: A Case Study Of The Minneapolis Upper Harbor

The Minneapolis Upper Harbor is almost 1800 miles upriver from the Gulf of Mexico. To go the last 20 miles from St Paul to the head of navigation at the Minneapolis Upper Harbor, tows are limited to two barges and have to go through 3 small locks to pass the St Anthony Falls. In contrast, below St Paul tows consist of 15 barges and the distances between the 26 large locks on the Upper Mississippi River average over 35 miles. The Upper Harbor has a small number of private shippers but the largest land parcel is the 42 acres that contains the public barge terminal (Upper Harbor Terminal) owned by the City of Minneapolis. A number of proposals contemplate closing the Minneapolis Upper Harbor so that the Mississippi River Corridor area above the St. Anthony Fall Locks and Dams can be converted to housing, light industry, and recreational uses, which proponents consider the “highest and best use” for prime waterfront land. Depending on the ultimate mix land of uses, it is assumed that tax revenues and economic activity will dramatically increase. These proposals generally assume that that the barge traffic of relatively low value freight (such as cement, aggregate, construction materials and scrap) is of little economic consequence and can be relocated at little cost to the community. However, this study demonstrates that displacing many of these movements will cause monetary and environmental costs that previously had not been studied or quantified. There would still be a need to move materials such as sand and gravel, cement, steel products, and other construction materials into Minneapolis; and scrap metals from Minneapolis. Truck movements of grain, fertilizer and other commodities from and to northwest of Minneapolis would need to be rerouted to downstream harbors. This study estimates the monetary and public externality costs imposed by the 'modal shift', from barge to truck, that would occur if barge traffic to and from above the St. Anthony Dams was eliminated. These include haulage costs, differences in fuel consumption, changes in air emissions, highway congestion impacts, highway accident impacts, and changes in highway maintenance requirements. Coefficients from the FHWA Highway Cost Allocation Study (HCAS) are used to monetize the estimated public costs. Results from the "most likely" scenario indicate an addition of 66,000 truckloads traveling 1.2 million miles in the metro area each year. Increases in transport costs to shippers or customers exceed $4 million annually, while public cost increases, estimated with the HCAS coefficients, exceed $1 million annually