Checkoff Investments Improve Transportation Diversification
Dredging of the lower Mississippi River pays dividends for soybean growers. Checkoff funds were used to further the deepening project that began a couple of years ago to increase the depth of the last 256 miles of the Mississippi from 45 feet to 50 feet. Soy Transportation Coalition Executive Director Mike Steenhoek says the progress reported earlier this year is an improvement.
“Anytime you increase a foot of water depth for these ocean vessels, that amounts to the ability of loading an additional 100,000 bushels of soybeans per vessel,” said Steenhoek. “So getting to that full 50 feet from 45 [feet], that’s an additional 500,000 bushels, so the difference of shipping 2.4 million bushels of soybeans versus 2.9 million bushels of soybeans, that will certainly improve the economics of your industry, and being able to get product from point A to point B at a lower price point enhancing our competitiveness.”
The greater the risk of an ocean-going ship scrapping the river bottom, the less load that vessel can haul. With every foot of draft cleared from the river bottom between New Orleans and Baton Rouge, Louisiana, ships can take on a more cost-effective cargo.
“It will amount to 13 cents shaved off the per-bushel delivered price to our customers,” Steenhoek said. “For an industry like the soybean industry where we operate on a pretty slight profit margin, but we make our money by having that slight profit margin multiplied by millions and billions of bushels. So anytime you can shave some meaningful cents – 13 cents – off the transportation costs, that’s going to position you all the more for success in meeting the needs of our global customers.”
Improving the lower reaches of the U.S. inland waterway system is an inspiration to complete other long-awaited improvements, according to Steenhoek. Construction bids are expected to be awarded in the next few months for the planned 2023 expansion of Mississippi River Lock and Dam 25 north of St. Louis, which Steenhoek says will enhance the efficiency of barge transportation by avoiding having to split barge flotillas to move them through smaller lock chambers. “It improves the economics of our shipping, but it’s also going to improve the redundancy and resiliency, and that’s very key because right now at Lock and Dam 25 you just have one lock chamber. And if something were to go awry, a mechanical breakdown, for example, that river just shuts down at that juncture point,” he said. “Whereas if you have an additional longer lock, then if either one of them were to have a mechanical issue, then you still have a degree of redundancy and resiliency so that transit can still occur.”
South Dakota growers rely primarily on westbound rail service to move soybeans out of state for export. But Steenhoek says he’s pleased with a cooperative that opened a barge loading facility between Council Bluffs, Iowa, and Sioux City, Iowa, making it the northernmost barge loading facility on the Missouri River. “And we want to see that continue,” said Steenhoek. “Will the Missouri River ever be a major conduit for soybeans produced in the state of South Dakota? No, that’s still going to overwhelmingly be a rail movement to the West Coast, but one of the things that we really try to emphasize is diversifying your supply chain. And the more options you have you benefit as a shipper and so we want to promote the Missouri River as much as we can.”