Water levels are down on the Mississippi River and its tributaries for the third year in a row, affecting transportation of ag goods set for export. Mike Steenhoek is executive director of the Soy Transportation Coalition, and says the impact is felt in two ways.

“Number one is the ability to put a lot of tonnage in individual barges, and then number two, the ability to attach multiple barges all together to form one single unit, and then you have the towboat pushing it from the back.  And when you have low water conditions, it has an impact on channel depth and on channel width. And so you no longer can put as much tonnage per barge, because you’re concerned about scraping the bottom hat even having a grounding. And then when you have less water, the shipping channel becomes more narrow, so you don’t have the luxury of attaching all these barges together to form one single unit.”

Steenhoek says the situation is exacerbated when you consider the amount of grain expected to be shipped this harvest season.

“All indications are that we’re going to have a significant harvest when it comes to soybeans and for corn, we’re going to have a sizable amount of soybeans and corn and other grains that are that are going to be demanding a transportation system that can accommodate their journey from the farm to its ultimate customer, and a lot of that is overseas.”

Fifty-five percent of US soybeans are exported via the Lower Mississippi region. These elements are combining to put upward pressure on the supply and demand dynamics. Thus Steenhoek is watching freight rates increasing.

“Anywhere from six to 8% higher than this last year, and again, last year was an unfavorable year, but it’s higher than this time last year. And then you’re looking at, you know, compared to the three-year average, anywhere from 40% higher, 60% higher than that three-year average.”

Steenhoek points out that transportation costs are a main ingredient in the secret sauce that gives us soy a competitive advantage over, say, Brazil.

“We’re able to do it more efficiently than they are, because one of the reasons being is we’ve got this very efficient maritime highway called the Mississippi River that can efficiently move product long distances to our export regions like the Mississippi Gulf. Well, when all of a sudden that that efficiency is diminished due to low water levels, then all of a sudden that overall competitive advantage erodes as well.”

And he adds that farmers have few, if any, cost efficient options.