Drought Dilemma: Navigating Challenges in Major Waterways Impacting Soybean and Corn Shipping

Shipping on a couple of major waterways has been slowed by drought. The depth of the Mississippi River has rebounded since low levels last fall had a profound impact on barge shipping of soybeans and corn to the Gulf Coast. That has been coupled with delays in transiting the Panama Canal, where drought has limited the number of ships taking advantage of the shortcut through that Central American strip of land.

The shallow Mississippi River was a concern, especially last fall, but precipitation has since brought relief in the form of deeper water, according to Mike Steenhoek, executive director of the Soy Transportation Coalition.

“The Corps of Engineers has announced the conclusion of the drought conditions that have persisted starting in September of 2022…so we’ve been at it longer than a year,” said Steenhoek, during an interview with the South Dakota Soybean Network.

Worries, however, remain about the major north-south tributary. Steenhoek says farm ground in the nation’s Heartland is still considerably dehydrated.

“What that means is that it’s not going to take a lot of dry weather for really much of an extended period of time to all of a sudden see that pendulum swing back into drought conditions because any kind of precipitation that does occur, first of all, is going to be absorbed into the ground, but there’s not a lot of water that’s just getting fed into our streams and rivers because of that dehydrated ground,” he said. “That’s a concern for us.”

Steenhoek said he is happy the Mississippi River level has rebounded, but it might be somewhat late. The primary season for moving farm products to New Orleans is from September into January and sometimes beyond.

“That’s when you really need to have your river operating at full throttle because that’s when such a high percentage of U.S. soybean exports occur,” said Steenhoek. “It’s nice that we have water levels a bit back to normal, but this is typically the time where South America, they kind of assume the role of the preeminent soybean exporter at this time of the year and our spigot essentially gets turned off or moderated considerably so again some good news, but also some reason to remain a bit concerned.”

Drought elsewhere, specifically in Panama, has an equally profound impact on shipping, and unlike the Mississippi River, there has been no relief. An extended dry spell has lowered the level of Gatun Lake, which supplies the fresh water for the locks on both the Pacific and Caribbean mouths of the Panama Canal. Since it began operation in 1914, the Panama Canal has depended on fresh water to stairstep huge ships 85 feet above sea level to the highest point of transit through the canal.

“Every time a ship transits the canal, about 50 million gallons of fresh water is used for each transit, so there needs to be a real sizeable volume of water that’s available,” Steenhoek explained. “And unfortunately, in the country of Panama, throughout 2023, they had really severe dry conditions and that limited the amount of rainfall, therefore limiting the amount of available water to make the canal operate.”

The number of ship transits through the passage is limited because of the drought. Normally, 36 transits, with as many as 40 transits happen every day, but the short fresh water supply on Gatun Lake, midway through the canal, is currently allowing only 24 vessels to pass through the channel per day. And agriculture products, according to Steenhoek, are pushed farther back in the line of ships waiting to cross.

“There are still transits occurring through the Panama Canal, and when I’ve been there a number of times over the last couple of months, you’ll still see transits occurring, you’ll still see container ships going through the canal, you’ll see cruise ships going through the canal, liquified natural gas, automobile carriers,” he said. But Steenhoek adds this: “Over the last several times I’ve been there…the last couple months, I haven’t seen one dry bulk vessel that would transport soybeans or other agricultural commodities.”

There’s a reason. Adding to the challenge of limited transit slots on the canal is that higher-value vessels, such as cruise ships and container vessels, pay a higher toll to sail through. They can also more precisely plan their transit time and book it far in advance of their arrival date.

“Those customers that are better able to take advantage of those limited transits are the ones that will pay a higher toll, and number two, they’re able to book those slots further in advance and agriculture is, unfortunately, one of those industries that is not as able to do that. It’s a challenge for us; about 600 million bushels of soybeans go through the Panama Canal every year. It is an important link in our supply chain,” said Steenhoek. “But unfortunately, due to the drought conditions at the canal, it’s one of those options that’s not as available to us as it normally is.”