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Storms drive up shipping costs
Paper reports rising expense of moving goods in and out of damaged Gulf ports; could slow growth.
October 3, 2005: 7:36 AM EDT

NEW YORK (CNN/Money) - Hurricane damage to Gulf Coast ports is driving up shipping costs, which in turn could further slow the nation's economic growth, according to a published report.

The Wall Street Journal reported that the rising expense of shipping along the Mississippi river and through U.S. Gulf Coast ports from Houston to Mobile, Ala. could hit agriculture, paper, steel and other products that typically flow through the region.

The shipping problems mean imported steel that will have to come into the nation through alternative ports could add to the prices paid by U.S. manufacturers, maritime transportation consultant John Martin told the paper. The rising cost of moving forest products like lumber could add to the mounting price tag for rebuilding the region as well, according to the paper's report.

Some businesses facing shipping bottlenecks could simply slow or halt production. The paper reports some mine operators are temporarily leaving the coal in the ground so it won't pile up at the port.

More than a month after Hurricane Katrina hit, the Port of New Orleans is operating at just 15 percent of capacity, according to the paper's report. Hurricane Rita reflooded a busy section of shipping terminals along the city's Industrial Canal, and port officials are weighing whether to repair or relocate severely damaged buildings and rail links crucial to normal operations.

The ports from Houston to Mobile normally handle more than a third of U.S. cargo by tonnage. The paper reports that beyond the physical damage done to ports, they are also running into severe manpower shortages. It reports many truck drivers that work at the Port of New Orleans are still displaced by Katrina, while mountains of debris that need to be hauled away has created competition for drivers the remain. Smaller ports in Lake Charles, La., and Pascagoula, Miss. have struggled to find the workers they need to reopen, according to the paper.

Even ports outside the storms' paths are struggling as they strain to handle cargo that would normally flow through the affected ports, the paper reports.

Dredging needed to be done by the U.S. Army Corps of Engineers to restore some waterways to their pre-hurricane depth must wait until the middle of next year due to a shortage of dredges, according to the paper. That could further reduce the capacity of the ports as barges and ships with petroleum and chemicals won't be able to carry their full loads until the dredging is complete, the paper reports.

For the latest on how long hurricane damage could affect energy supplies and prices, click here.  Top of page

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