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Logistics/Transportation

Logistics/Transportation

Riverports, docks and terminals large and small such as the 120-plus facilities included in the Port of Cincinnati and Northern Kentucky are critical to bulk transportation of coal, grain, metals and other commodities for manufacturing and food processing in the U.S. Here the Big Andy unloads coal on the Ohio River near Cincinnati.

Editor s note: In a two-part Lane Report series in 2012, Sean Slone examined the role of Kentucky s public riverports in regional economic. He checks in on what s changed over the last five years and what the future may hold for the industry.

Expanding riverports are adding Kentucky logistics capacity to support an ongoing rise of export business. At-capacity U.S. aircraft production and vehicle producers shift from steel to aluminum are factors, along with a world that wants Appalachian hardwood and every fourth row of commonwealth corn.

Kentucky shipped $29.2 billion in goods and services abroad in 2016, a 6 percent rise. Additionally, last fall s long-anticipated opening of an expanded Panama Canal initiated ripples in global freight movement that have yet to reach Kentucky s fourth-largest-in-the-U.S. inland waterway system. At the Owensboro Riverport, much has changed over the last five years but one thing has not. It is still the most successful of the state s public riverports, according to Brian Wright, the Owensboro native who took over as president of the Owensboro Riverport Authority in September 2013.

Based on the numbers that we see across the state, we re still the highest-volume public authority of the eight active ports that exist in Kentucky, said Wright, who also is chairman of the Kentucky Association of Riverports. Over the last three years we ve topped out at 960,000 tons fairly consistently, and that s combined river, rail and barge inbound goods. Two significant additions in 2014 set the riverport on a slightly different course and enhanced business.

The riverport partnered with Houston-based Solvay Chemical to build a $24 million facility on site to toll sodium bicarbonate, a commonly used laboratory chemical.

That (facility) employs seven employees right now, and it has made a significant change for us as it s related to revenue, he said. Tonnage-wise, because of the industry that it supplies, we re only averaging around 35,000 or so tons per year through that facility. But it was built primarily to feed the energy sector for emission control; several of the power plants in this vicinity are required to treat for emissions and sodium bicarbonate is one option to do that with.

The other 2014 development was the construction of a new $7.5 million, 210-foot cargo dock, which is now home to a mobile harbor crane purchased in February 2015.

The primary purpose of this dock is to help support multiple commodities but primarily the aluminum and steel sector, Wright said. With the depletion of much of the aluminum stockpile warehoused in the Detroit area after the 2008 recession, the Owensboro Riverport has found itself inundated with imported aluminum coming up the Mississippi River from New Orleans, Wright said.

Over the last several months we re running six days a week, 10 to 12 hours a day dedicated to aluminum off that new dock, he said. The purpose of that dock being constructed in 2014 and the purpose of that crane is now really coming into play in 2017, and we anticipate that to continue. The new dock has allowed the riverport to achieve some redundancy and avoid costly shutdowns due to high river levels.

Other developments at the riverport since 2012, according to Wright include:

Construction of a 1 million gallon bulk tank for a sulfur-based fertilizer called Thio-Sul that is used in side-dressing corn and other crops.

Construction of a $1.5 million facility adding 100,000 bushels of grain capacity to existing facilities and raising a conveyor belt to further reduce outages caused by high water.

A new inbound/outbound scale office allowing the riverport to optimize its ability to turn trucks faster and improve traffic flow.

Upgrades to the port security system, including control gates so that all traffic inbound to the port is via gate and/or security guard.

Addition of two rail spurs as part of the Solvay project. Another rail track expansion to the riverport loop is in the planning stages.

Designation of the riverport as an approved delivery site by the London Metal Exchange and the Chicago Mercantile Exchange for primary aluminum and other commodities.

The nomination of the riverport for Global Metal Service Provider of the Year in 2016 and 2017 by S&P Global Platts.

What being nominated tells us is that we ve always considered ourselves as a key strategic location for aluminum, (and) we continue to see our inbound and outbound aluminum grow, Wright said. We continue to take on new customers every month, all in efforts to supply the future of aluminum demand in Kentucky.

Recent months and years have seen the announcement of major in-state expansions by aluminum companies such as Braidy in Greenup County, Kobe in Bowling Green, Logan in Russellville and Aleris in Hawesville. The Owensboro Riverport s recent success has happened simultaneously with efforts to revitalize the city of Owensboro and enhance economic development in the area.

We work really hand in hand with the economic development group here in Owensboro for multiple opportunities for expansion, Wright said. We re working on projects now where the manufacturer needs a mode of transportation other than truck, so we work to help develop those and give them opportunities for outbound rail, inbound rail, outbound truck, outbound barge, inbound barge. Madison Silver, former president/CEO of the Greater Owensboro Economic Development Corp. and now president of real estate development and property management company The Malcolm Bryant Corp., said the port has played a huge role in the city s recruitment efforts because it is multimodal and seen as a good aluminum delivery site.

It helps us attract companies that are using aluminum and support our (Kentucky) auto industry as they start transitioning (from steel) to more aluminum, so it s an incredible asset from that perspective, Silvert said. We use it all the time when we re marketing our community.

Meanwhile, the city s use of tax increment financing has allowed it to move forward with projects like Gateway Commons, a long-awaited residential and commercial development, and a downtown redevelopment that will include an 830-job customer engagement center for California-based company Alorica, along with a much-needed downtown parking structure. Improvements to the region s roadways are another factor expected to increase economic growth both at the riverport and in Owensboro as a whole in the years ahead.

We have two designated future (interstate) spurs the Audubon Parkway will be a spur of I-69, and the Natcher Parkway will be a spur of I-65, Silvert said. As far as what that means to economic development for Owensboro, I think anytime you have more industrial land options that are within 10 miles of an interstate, that provides us with better opportunities to respond to requests for proposals from site consultants that come into the state on a pretty regular basis.

Northern Kentucky Port re-designation

One of the biggest success stories involving Kentucky s public riverports in recent years was getting the U.S. Army Corps of Engineers to redesignate a combined Port of Cincinnati and Northern Kentucky to include 219 miles of the Ohio River and 7 miles of the Licking River.

Unlike some areas in Kentucky, the Northern Kentucky Port Authority does not actually have port facilities, said Roger Peterman, Northern Kentucky Port Authority Board chairman. The port authority still exists without a port, and the primary purpose is to provide whatever support we can to the private port developers in this Cincinnati area.

There are 68 docks and terminals on the Ohio side and 54 on the Kentucky shore plus seven on the Licking River. ( Putting the Ports of Cincinnati and Northern Kentucky on the Business Map was The Lane Report s June 2015 cover story.)

The redesignation has proven to be a great marketing tool, according to Casey Wells, who is freight, rail and waterways coordinator in the Kentucky Transportation Cabinet s (KYTC) Division of Planning in Frankfort.

It puts them in the top 15 of all U.S. water ports, including both ocean ports and inland river ports for freight tonnage, he said. It sent a clear message that that region is comfortable and capable of handling very large volumes of freight, and it further supports the fact that the Midwest is primed for logistics and distribution.

Cincinnati/Northern Kentucky is positioned to be a major multimodal logistics hub, Peterman said, with the world s first Amazon Prime air freight services facilities slated to join DHL s existing world hub at the Greater Cincinnati-Northern Kentucky Airport.

Our air freight services will be second to none, I would think, in volume, he said. You add to that the intersection of several interstate highways and rail service in this area, added onto the Ohio River transportation system. We think for transportation and logistics, that s something that makes this area very attractive and very competitive when moving products around the country and around the world. Meanwhile, redesignation of the Northern Kentucky and Cincinnati ports could have a significant impact for other commonwealth riverports by setting a successful example.

We re in the process of looking at the opportunity to do something very similar (with the Western Kentucky ports), said Owensboro s Wright. When you look at the tonnage report that s issued every year, even though we re a million-ton port, we re still listed down in the 20s and 30s (nationally). But if you combine the total tonnage of Western Kentucky (ports), then it makes it much more competitive and brings much quicker awareness of what the Western Kentucky ports do.

Such a move could serve the Western Kentucky ports region well, said Wells at the Transportation Cabinet.

I think that would be an exemplary situation because they have like industries, like geography, similar economics, culture, Wells said. They do similar services, same commodities. Most of them are agriculture-based, including fertilizer. I think it would be a great showing of their commitment to move by waterways but also their partnerships with one another, and I think it would further solidify the message delivered by our northern and northeastern Kentucky ports that the state is a major player in the waterways industry. I feel like it s a slam dunk. Northern Kentucky s Peterman believes it could work as well.

Shipping is an international business and being identifiable by potential customers around the world is important, he said. If they think, as the port facilities here thought, that that high-volume designation would make an area more noticeable, then that might make sense for them.

Panama Canal expansion impact

In 2012, much of the discussion about the future of the river commerce industry concerned the widening of the Panama Canal, then expected to be completed in 2014. Many expected a wider canal s capability to handle larger container ships would rearrange U.S.-Asia shipping routes and increase freight traffic to Gulf Coast ports, where their contents could be offloaded to vessels that could navigate the Mississippi River and connect to Ohio River ports in Kentucky.

After multiple delays, the canal expansion project finally began commercial operation in June 2016. There is still hope that Kentucky will see an impact, but most say the commonwealth has yet to feel it.

The Gulf ports have continued to develop significantly in support of the increased volume of the Panama Canal, Wright said. However, there is still currently an imbalance or has been an imbalance in shipping rates through the Panama Canal versus shipping around the south end of Africa versus rail rates. It s going to take some time for those to balance out (and) for some of the significant (international freight) volume to come into the Gulf. Perhaps that s just as well.

Although ports on the inland river system have made progress in preparing to accommodate greater container traffic, Wright said, Kentucky facilities aren t quite there yet.

Everyone wants to be there and that s obviously what s going to be coming through the Panama Canal, but there are still many obstacles from a regulatory, infrastructure standpoint that have to change for us to get there, he said.

However, one Kentucky public riverport last year made significant moves towards taking on more container traffic, said Paul Chip Jaenichen, a Kentucky native who served as maritime administrator during President Obama s second term.

In October 2016 (then-)Secretary of Transportation Anthony Foxx approved the Marine Highway Project designation for the Paducah-McCracken County Riverport Authority s proposed container-on-barge service to Mobile and New Orleans, Jaenichen said.

It is a green light for commercial shipping customers.

This project would establish Paducah, with its strategic location at the confluence of the Ohio and Tennessee rivers and just a short distance to the Mississippi River, as a transportation hub for barges loaded with both domestic and international shipping containers, he said. Containerized and unitized or break-bulk cargoes would be able to be moved via barge along the Tennessee River-Tombigbee Waterway, (and on the) Cumberland, Ohio and Mississippi rivers, with Paducah serving as the operational hub.

The Paducah Riverport, Jaenichen said, has recently installed a new waterfront crane capable of handling shipping containers and is working to secure regularly scheduled service between the region and New Orleans via the Mississippi and Mobile via the Tenn-Tom. Optimizing utilization of Kentucky s ports can be possible, Jaenichen believes, if they take on more of the characteristics of coastal ports. Paducah will host a conference later this year that will allow the riverport and the city to market themselves, said Bill Miller, executive director at the Paducah-McCracken County Riverport Authority.

The purpose of the event is to highlight the region s many benefits for economic development uncongested multimodal abilities, our innovative workforce training programs, and the available sites for manufacturing and distribution, Miller said. Owensboro s Riverport is ready, too, when container traffic comes to call. But Wright said patience may be needed.

You have to develop a sustainable container business and show over time that you can sustain it, he said. You have to have the appropriate investors, you have to have the infrastructure in place, the barge lines have to be on board to support the container movement. We have the infrastructure. We have the crane to support it. We have the cargo dock to support it. We have the systems here in place to support it. We re just looking for that right opportunity to latch on to sustainable container movement.

Kentucky Riverport Statistics

The commonwealth has more than 1,590 miles of navigable waterways and ranks fourth nationally in inland waterways.

Waterways and ports in Kentucky support more than 15,000 jobs and contribute $2.5 billion to the economy annually.

Commodities shipped to and from Kentucky through its waterways and ports include: $26 billion in manufactured goods, $10 billion in chemicals used in consumer products, $6 billion in agricultural and food products.

With 101 million short tons of cargo transported on waterways in 2012, Kentucky ranked 7th in the nation.

8 active public riverports

5 developing riverports

More than 100 private port terminals

Source: Kentucky Chamber. A Citizen s Guide to Kentucky Infrastructure.


Sean Slone is the director of transportation and infrastructure policy at The Council of State Governments in Lexington.

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