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Transportation Tangle

August 1, 2008
By: Charles Johnson, Farm Journal Editor
 
 




Washed out roads now force grain trucks from Nichols Ag to double the usual 12-mile trip to the Mississippi River terminal at Muscatine, Iowa. "Add the extra time plus fuel at $4.50 per gallon with trucks that get 5 miles per gallon, and it's a significant expense," says John Hester, the company's owner and manager.

This year's flood threw logistical curveballs to farmers, their buyers and shippers across eastern Iowa and other parts of the Midwest. The turbulent water damaged many rural roads and destroyed some bridges, as well. Transportation problems could linger into harvest in some areas.

"Some ethanol plants have been affected," says Craig Floss, Iowa Corn Growers Association chief executive officer. "Transportation of raw product into the plants as well as output has been disrupted."

Although it also experienced heavy flooding, Missouri reports considerably less damage than Iowa. Tim Kelly, executive director of the Missouri Farm Service Agency, says, "I haven't seen a lot of infrastructure damage but I assume some of the county roads have culverts out. There are rail lines washed out, with the rails twisted, but they got to work on that pretty fast."

Hot spot. Cedar Rapids was a hot spot for damage. Inundated by Cedar River floodwater, the city saw the collapse of its Cedar Rapids and Iowa City (CRANDIC) railroad bridge servicing ADM and Cargill processing plants. "That bridge was the connection to the Canadian National and Iowa Northern railroads," says Jeff Woods, CRANDIC spokesman. "Corn was the major thing that went over it.

"Our plan is to first salvage what's there, then replace the bridge," he says. "Soon after the flood we had design experts from several firms come in to assess the situation."

Iowa Northern Railway worked out a special haulage agreement on a Union Pacific line into Cedar Rapids, enabling it to supply its customers there. It adds 200 miles to the trip, however, says Dan Sabin, Iowa Northern's president. "We had $5.9 million in damage to our 165 miles of track. It's going to be a long process to rebuild."

Both the Union Pacific and BNSF railways returned to normal schedules after initial track problems in the flood zone. They sent work crews out in boats to repair damaged rails, speeding recovery.

River woes. Barge tow-size restrictions cut productivity 20% for American River Transportation Co., ADM's barge subsidiary, reports Royce Wilken, president. "We could only run 25 barges where we'd normally run 35. We had the same dollars in labor and operating cost with 15,000 fewer tons to spread it across."

Mississippi River traffic has rebounded, though at a slower pace than rails. "We're very concerned, and being very careful about, wake damage against the levees, so we're running at slower speeds than normal," says Larry Daily, president of Alter Barge Line, Bettendorf, Iowa. "We have maps and charts from the Coast Guard and Army Corps of Engineers about potential dangers."

However, he adds, "These marine infrastructures are pretty resilient. The locks and dams were modernized about 25 years ago so machinery can be pulled out before a flood, then reinstalled after the event to get back to work reasonably fast."

Marketing headache. For many farmers in the flood zone, the longest-term transportation problem will be finding alternate routes to market grain—and higher transportation costs that will be reflected in cash bids.

A number of producers with contracts to deliver grain in the Cedar Rapids have had those contracts pushed back to the fall, says CRANDIC's Woods. "That is creating a problem for farmers who need to get bins cleaned out prior to harvest."

"This close to the river, farmers store the grain. We pick it up and deliver to river terminals," Hester adds. "The road problems and extra miles we have to drive are exacerbating the fuel cost problem. We have a 200-bu. corn crop from 2007 to haul in. Not only is it taking more time, but it was disrupted when we couldn't get barges up and down the river. There's no alternative but to charge fuel surcharges. It all goes down to the farmer somehow."

One solution might be a service like the cash grain optimizer tool offered by www.cashgrainbids.com. It provides market prices within a 200-mile radius, including a calculation for mileage and fuel price, showing net returns for each market, says J.C. Hoyt, the company's vice president and director of risk management. "Three-quarters of the time, the closest market is not the best place to go with grain. We can locate better solutions," Hoyt says. Now, if the roads are open....

To contact Charles Johnson, e-mail cjohnson@farmjournal.com.

Top Producer, Summer 2008

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FEATURED IN: Top Producer - Summer 2008

 
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