Infrastructure Envy

November 2, 2010 08:52 AM
Infrastructure Envy

Iowa farmer Mark Mueller describes it as “a sad state of affairs” when he considers
the current state of the U.S. transportation infrastructure. He says the country is letting its strongest competitive advantage slip through its fingers.

“I believe we’re going to need every competitive edge we have in the future. We have this wonderful infrastructure that was built by our grandparents with a lot of foresight 75 years ago, and we’ve put nothing back into it,” Mueller says. “The rest of the world, these small countries that don’t necessarily have our respect, are getting the job done. Why can’t we?”

Just look to South America to see how quickly the rest of the world is improving infrastructure compared to the U.S. Currently, the Panama Canal Authority is undergoing a five-year expansion project to add a third canal. The new canal will enable ships to carry twice the cargo load through the man-made waterway than can currently go through the system.

Top Producer hosted a group of farmers and members of the Soy Transportation Board on a study trip to Panama and Brazil this past spring to see infrastructure upgrades firsthand. The Top Producer Frontier Study Tour was sponsored by the United Soybean Board/Soybean Checkoff and co-sponsored by the Soy Transportation Coalition.

Shortsighted. On the surface, this sounds like a win-win for U.S. exporters and importers. Larger ships will mean increased efficiencies and lower shipping costs. However, Soy Transportation Coalition Executive Director Mike Steenhoek says the U.S. government operates in a mode where it considers only direct benefit. This creates a shortsighted mentality that does not factor long-range planning into the process.

Much of the current U.S. port system does not allow for Post-Panamax vessels (ships that are
larger than the current maximum size allowed through the Panama Canal) to enter its ports, because the channels are not deep enough. Panamax vessels require a 48' depth to navigate a channel, whereas Post-Panamax vessels require a 53' depth.

Couple that with the fact that the lock system on the Mississippi River can handle only 600' tows. Most barges are transported in 1,200' tows, requiring them to be broken apart as they pass through the lock on the river system. This leads Steenhoek to question how beneficial the new canal can be to U.S. grain and oilseed producers.

“My concern is that in the effort of alleviating the bottleneck that currently exists with the Panama Canal, we are simply shifting that bottleneck,” he says.

Alberto Alemán, the administrator for the Panama Canal Authority, says his organization is working with major U.S. ports to alleviate this issue. There is a memorandum of understanding with most of the major ports in the Gulf of Mexico and along the East Coast that will bring them up to standards to serve the new ships passing through the canal. However, this does not mean it is a done deal.

“Our entire logistics system from the farm to the dinner plate is only as strong as its weakest
link,” Steenhoek says. ”Right now, with the Panama Canal being expanded, that weakest link is more and more our lock and dam system.

“Congress has approved the Water Resources Development Act,” he continues. “But just because something has been authorized and Congress has offered a blueprint, that doesn’t mean checks are being written or that projects are now under way. Farmers need to be engaged in this. It impacts their profitability. Farmers need to look at transportation in the same way they look at increased yields: as a marketing opportunity for their ultimate profitability.”

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