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Ag shippers navigate around lock and dam repairs

June 24, 2020   Agri-Pulse

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Ag shippers navigate around lock and dam repairs


Agri Pulse – Washington, DC – 6/24/20 – Ben Nuelle


Agricultural shippers who use one of America’s inland waterways to move grain, fertilizer, chemicals, and other products through the nation’s midsection say they are ready for lock and dam project closures this summer.


The U.S. Army Corps of Engineers is scheduled to start five lock and dam improvement projects on the Illinois River beginning July 1. Some projects will last until the end of October before they are completed.


Many agricultural commodities rely heavily on the river as a major transportation route to connect Lake Michigan to the Mississippi River.


In 2018, grains (wheat, corn, soybeans, rice, sorghum, and oilseed) represented 31%, or 11.5 million tons, of the total tonnage sent down the river, according to Inland Rivers, Ports, and Terminals Inc., an association pushing for federal legislation and policy affecting ports and terminals.


Deb Calhoun, interim president of the Waterways Council, told Agri-Pulse the Army Corps chose to close the river during the summer months with harvest in mind.


“Particularly for ag shippers, that is really important that they will have this maintenance work completed and more efficient infrastructure will be there and available to ship their goods,” she said. Calhoun did not expect COVID-19 to delay projects and said high water would be the biggest threat.


Mike Steenhoek, executive director of the Soy Transportation Coalition, said the closures will likely force some producers to sell grain to a different terminal away from the river through the summer.


“You’re seeing that (terminals) are not offering bids at their location during those summer months because they don’t anticipate being able to ship anything out their back door,” Steenhoek told Agri-Pulse.


Steenhoek said the transportation cost for changing sales locations where a farmer hauls grain could easily be between $1 and $2 per mile.


“Now all of a sudden if the distance is no longer 10 miles, but 45 miles, that’s real money that will come out of a farmer’s bottom line,” he said.


Scott Sigman, transportation and infrastructure lead at the Illinois Soybean Association, told Agri-Pulse a “number of terminals” gave notice that June 15 was the last day they would be receiving grain for loading and transport through the locks.


But Scott Strickland, General Manager at Consolidated Grain and Barge Company in Hennepin, Ill., told Agri-Pulse he will still be buying grain; it just may not be as feasible.


“It will be against what space might be here or when we are able to ship, or if we have to put it back into a truck and ship it to another marketplace,” he said.


Strickland noted the company would not handle the same amount of grain it normally handles during the summer months, but he will continue to move grain between supply and demand points.


“We’ll continue to do that via rail loaders, ethanol plants, and other local feeders in the area and also connect to the Mississippi River, which will remain open,” he said.


CGB is one of 129 facilities along the Illinois River, including fertilizer companies.


Kathy Mathers, vice president of public affairs at The Fertilizer Institute, said the Army Corps provided members enough time in advance to plan for the closures.


“Although the river is by far and away the most efficient way to move a lot of fertilizer, we do have alternatives,” she said. Mathers said most of the fertilizer will be transported via truck. Since they were able to plan for the closures, Mathers thinks companies should have been able to negotiate decent transportation rates.


“But of course, you are talking about how they are not moving as much fertilizer in one fell swoop, and you have to factor that in as well,” she noted.


According to IRPT, fertilizer accounted for 1.9 million tons transported on the river in 2018 and 2.05 million tons in 2017.


ADM is another company who uses the river frequently to ship grain and other products. Chris Boerm, president of transportation for ADM told Agri-Pulse in an email the company is in a unique position because it can leverage their vast transportation network during this time to keep crops, products and supplies moving while the locks are down.


“For example, instead of loading DDGs on the Illinois River in Peoria, we can move it via rail to Mound City, Illinois, and load barges further south on the Ohio River,” he said. Boerm also said because the repairs have been well-coordinated, the company has been able to plan accordingly.


Allen Marshall, spokesperson at the Rock Island District for the U.S. Army Corps of Engineers, told Agri-Pulse as of Tuesday, repairs were still on schedule with no delays, but COVID-19 has changed communication methods with project managers.


“Most of them have gone into a virtual environment, but they’ve overcome those challenges and have been able to keep things on schedule,” he said, adding that he does not expect COVID-19 to delay projects.


He said one of the biggest improvements will be made to the LaGrange Lock and Dam, which is the southernmost lock and dam on the river.


Steenhoek expects that project to cost more than $70-$80 million. He said it “arguably is the poster child for a degraded lock and dam” that needs major rehabilitation.


While the lock and dam closures are a temporary inconvenience to the companies who transport goods through them daily, Steenhoek said it's better to do the repairs now than to have an unexpected failure in the future.


“It’s not a matter of if you are going to have a significant failure, it’s a matter of when,” he said.