Gulf Of Mexico Barge Traffic: A Delicate Balance and The $1 Million Question
Hurricane Idea brought a devastating hit to the Gulf of Mexico and the ag shipping industry—untethering and damaging barges as well as causing damage to important facilities.
According to the Soy Transportation Coalition, the 256-mile stretch of the Mississippi River from Baton Rouge, Louisiana, to the Gulf of Mexico accounts for 60% of U.S. soybean exports, as well as 59% of corn exports
Soy Transportation Coalition Executive Director Mike Steenhoek explains the 150 mile per hour sustained winds of Hurricane Ida packed quite a punch. The storm materialized in a just a matter of days, which underscores the importance of being able to rapidly take precautionary measures and build resiliency in the infrastructure system.
“We were happy to see the levee infrastructure hold,” he told AgriTalk host Chip Flory. “The time to respond to a catastrophe is before the catastrophe. Hopefully, as we continue to debate and design a strategy for our infrastructure, we can take the whole issue of resiliency and have it just be a way of doing business. Bake it into the cake, so that with resiliency measures you include it when you're actually constructing it not when you're trying to take corrective action after a storm like Hurricane Ida arrives.”
Steenhoek reports that all barges have been corralled. But there’s considerable damage to some, which is being reflected in shipping rates that were already reflecting their early harvest season uptick.
“Rates go up at this time of year, but when all of the sudden you take a decent number of barges just out of your inventory, and then you're still expecting that supply chain to be able to accommodate the throughput–we’re just really not able to do that right now and so it puts upward pressure on rates,” he says.
One barge can carry 55,000 bu. of soybeans, and with harvest getting started upriver in the upper Midwest, he sees high demand and the potential for delays.
“You've got harvest coming online in places like Mississippi, and then normally you want all of that to clear out of the system before the real tsunami of Iowa and Illinois and Kentucky and Missouri and all these other states come online so that it's always a real delicate balance.”
Adding to the barge issues is the infrastructure damage to the Cargill and CHS facilities in the region.
“There are 14 soybean and grain loading facilities between Baton Rouge, Louisiana past New Orleans to the Gulf of Mexico,” he says. “The one that's most notable is the Cargill facility in the town of Reserve, Louisiana and that's about 30 miles northwest of New Orleans. And it's the conveyer system is damaged pretty significantly and that's what actually loads the vessels.”
It’s reported 7% to 8% of all exports leave from this facility. Steenhoek says he is unsure of how long the repair work will take, but he thinks it’s the ‘million dollar question’ if it’s a matter of weeks or will take several months.
“It's clearly more than me toolbox in hand going down to fix it,” he says. “It's gonna be a pretty significant repair.”
The second facility of note that is still experiencing the effects of Hurricane Ida is the Myrtle Grove CHS facility that is in the area without full power restored.
Listen to the full interview here:
