Hedging Transport Bets In An Uncertain Age
Back in the days when students read books, there was a famous line from the opening paragraph of Charles Dickens’ novel about the French Revolution, A Tale of Two Cities, that most students knew by heart: “It was the best of times, it was the worst of times.”
On the one hand, floods of federal grant money landed on many ports and terminals, and the end-of-year Water Resources Development Act included the long-term industry goal of switching the federal cost-share of lock and dam construction to a 75/25 ratio.
But just in case anyone was tempted to celebrate, the year also saw multiple unscheduled closures of locks and dams and aging components literally crumbled, along with the lingering effects of a three-year-long drought that reduced tow loads on the Lower Mississippi River.
The reliability of the inland waterways system as a pathway for the export soybeans and soybean products is of concern to some customers, and soybean growers are hedging their transport bets. In 2019, soybean growers made a $2 million contribution to an important study that led to the deepening of the Mississippi River channel to 50 feet between Baton Rouge, La., and the Gulf. Now, they are offering support to the planning and engineering of a major expansion of a soymeal facility in Port Houston by The Andersons, a commodity broker and shipper, whose products will arrive by rail. Growers cited the need for “spreading [transport] eggs in more than one basket” as part of the reason for the project.
Mike Steenhoek, executive director of the Soy Transportation Coalition, reassured that “the Mississippi River will always remain a key link in the soybean supply chain,” but added that having other options is “essential.”
With a new administration on the horizon and as international trade moves into an uncertain new world of tariffs, American ag exporters have more need than ever of cheap, reliable water transport. While no one can blame them for being concerned about export supply chains and the impacts of unscheduled lock closures and draft restrictions on their logistics plans, the truth remains: Barging remains the cheapest, most cost-effective mode of transport.
