According to Taylor, spring and early summer weather might change the picture for the coming crop year, but risk of less-than-ideal moisture exists, carrying with it concerns over yields, supplies and the ability to efficiently ship barge loads of grain down the Mississippi.
U.S. will benefit from Panama Canal expansion
Investing more than $5.25 billion will provide better ports, a deeper and wider canal system, improved locks and less environmental impact, while doubling capacity, reported Maria Eugenia de Sanchez, executive vice president for planning and business development, with the Panama Canal Authority. Sanchez presented “Panama Canal Expansion and Effects on River, Ports and Grain Shipping.”
With an updated completion target of mid-2015, her analysis shows the expansion will benefit U.S. grain shippers. Because the canal serves as the key route to ship grains to Asia and containerized ships back to the U.S., the ability to handle larger ships will benefit the United States, which is the top shipper and receiver of goods through the canal. Grain, in fact, while representing about 25% of the product going through the canal, represents about 35% of the traffic when you consider the number of ships heading to the U.S. to pick up grains, Sanchez points out.
In addition to moving larger ships, the expansion is expected to reduce the delays that can occur during peak traffic season. Ships sitting and waiting to move through the canal can rack up tens of thousands of dollars in costs due to delays, she noted.
Infrastructure hinders U.S. exports
The “Inland Transportation Issues” session delivered by Richard Calhoun, president of Cargo Carriers, a division of Cargill, immediately followed the presentation on the Panama Canal expansion. Calhoun quickly tied the two sessions together: “We can’t reap the benefits of the Panama Canal expansion if we can’t get products to it,” he emphasized. Calhoun has become an evangelist to bring attention to the issues the Unites States has with its interconnected transportation infrastructure and the competitive advantage it provides U.S. grain shippers to serve worldwide markets.
The nation is at risk of losing this advantage, he said, and the grain industry must take action now.
Because transportation is interconnected, he explained, it doesn’t matter if your elevator sits on a rail leg or if you have an ethanol plant just down the road to buy corn from. “When one mode of transportation in this country is in trouble, it affects the others,” he said. For example, in 2005 when Katrina temporarily shut down ports, the cost of a railcar increased $2,000 overnight in some areas, and the price a farmer received for corn dropped 30 cents/bushel overnight.
In this presentation, though, Calhoun focused most of his attention on the inland waterway system. “Awareness is high right now” because of the drought and how the impact of that drought was effectively communicated to the American people and to politicians, he said. Based on data he provided, risk is high, too. Many of the locks and dams in this country are more than 70 years old, 60% are more than 50 years old, well past their intended life of 30 to 40 years. Repair and upgrades to fix our transportation system (highways, bridges and the waterways), according to an independent study by the American Society of Civil Engineers (ASCE), are estimated to cost $220 billion annually from 2010 to 2040 to avoid an infrastructure shortfall.
Failure to invest in repairs and improvements, according to the ASCE study, will cost the U.S. 400,000 jobs by 2040. If the country maintains only its current level of investment in surface transportation systems, that nation will be hurt by increased shipping costs. The lost value of exports will be $270 billion by 2020 and will rise to almost $2 trillion by 2040, Calhoun said.
As important, countries such as China, Brazil and India continue to invest in infrastructure. The United States is risking a significant competitive advantage at a time when global demand is increasing. This is a call to arms, Calhoun says. “Get involved.”
The 2014 edition of the GEAPS Exchange will return to the Quest Center in Omaha, NE, Feb. 22-25, 2014. For more information, please visit www.geaps.com.