With the 2007 harvest underway, some say it's transportation's Super Bowl. More than 13 billion bushels of corn have to move—the largest crop in history—and managers of elevators, railroads, barge lines and trucking companies are in for the biggest harvest season of their careers. It surely will provide challenges to the country's transportation infrastructure.
The Mid-South felt the crunch early in the game, with higher barge rates and reported five-hour waits to unload at the elevators. Farmers there planted 219% more corn acres to take advantage of ethanol-enhanced prices.
"It's been a phenomenal crop in terms of yield and test weight, but it came in really fast and has been hard on the system,” says Steve Nail, president of Farmers Grain Terminal, which operates 10 elevators in the area where Arkansas, Mississippi and Louisiana intersect.
Lower Mississippi River barge rates doubled to $30 a ton in early September—higher than just after Hurricane Katrina—due to a rapid harvest and reduced barge drafts created by low river levels.
"We knew we would face higher barge rates, but our biggest problem has been finding trucks,” says Nail. With a bigger harvest, truckers know they are in demand and have increased freight rates.
Midwest farmers should watch the Southern bottlenecks because they predict what will happen up river, says Ken Eriksen, senior vice president of transportation services for Informa Economics, based in Memphis, Tenn.
"The biggest challenge this year is we have a huge crop everywhere, not just in the Corn Belt,” says Eriksen. "It's a good problem to have, but every transportation sector is going to feel pressure, including rail, trucks and especially the river system.”
Barge turnaround ticking. High fuel prices, repairs to lock facilities, strong export demand and a bumper corn harvest in the Delta have constricted barge supplies along the major shipping corridors. Freight rates rose to unheard-of levels on some sections of the interior U.S. river system in late August.
Currently, the biggest worry about shipping is whether barges can recover from the huge southern harvest in time to reposition on the upper Mississippi. Barges need to be southbound before Dec. 15, when the river shuts down at Keokuk, Iowa, due to winter lock repair and ice.
"Southern elevators are going to have to stop sending grain to the river in order to get barges turned around and up river in 30 days,” says Eriksen. Loadings on the lower Mississippi may need to halt and resume later in the quarter or after the first of the year to meet the deadline. Corn not loaded will go to temporary storage or it will be stored on the ground.
The barge supply squeeze is heightened by exceptionally strong freight demand from grain exporters. Export inspections of U.S. wheat currently exceed year-ago levels by 42%, with soybean shipments up 18%.
"We've had a strong first-half export sales program for corn, and that is creating some rush to the market,” says Eriksen. "The biggest export demand is coming from countries that are Gulf oriented, so the Mississippi River will be an important transportation artery to watch.”
- OCTOBER 2007