By DOUG SCHMITZ
ANKENY, Iowa – According to research conducted by the Soy Transportation Coalition, shipping costs for soybeans from Mississippi Gulf export terminals would decline 13 cents per bushel if the lower Mississippi River is dredged (or deepened) from 45 to 50 feet.
“We are seeing results from this important work,” said Mike Steenhoek, executive director of the Soy Transportation Coalition in Ankeny, Iowa. “Due to the dredging work thus far, the Crescent River Port Pilots Assoc. (in Metairie, La.), Dec. 20, increased their maximum draft recommendation to 48 feet.”
He said the Associated Branch Pilots (or the Bar Pilots) of the Port of New Orleans, also in Metairie, La. raised their maximum draft recommendation to 49 feet, Dec. 17.
As a result, the allowable depth for over 150 miles of the lower Mississippi River is now set to 48 feet, Steenhoek said.
“It was always anticipated the draft increases would be incremental to the eventual 50 feet of depth,” he said. “It is great news to see the progress thus far.” Ultimately, he said, the project calls for a 50-feet channel all the way to Baton Rouge, La. (River Mile 232).
“We therefore have another 82 miles of deepening until the project is fully completed,” he said. “This remaining work will likely take 2 to 3 more years due to the increased complexity of the river at that section, including submerged pipelines under the river.”
He said the 256-mile stretch of the Mississippi River from Baton Rouge, La., to the Gulf of Mexico accounts for 60 percent of U.S. soybean exports, along with 59 percent of corn exports – by far the leading export region for both commodities.
“Soybean farmers and a large number of Mississippi River stakeholders have promoted the dredging of the lower river shipping channel from 45 feet to 50 feet in depth,” Steenhoek said.
The U.S. Army Corps of Engineers said ships, with their increased size, need improved navigation channels to enter and leave ports efficiently, quickly, and safely.
However, few rivers or harbors are naturally deep. Therefore, they require underwater excavation or ‘dredging,’ which is primarily performed by the U.S. Army Corps of Engineers.
After the initial excavation establishes a channel, periodic or ‘maintenance’ dredging must be done to keep that channel clear and safe for navigation, the U.S. Army Corps of Engineers said.
In July 2019, the United Soybean Board announced a $2 million allocation to help offset the planning, design and research costs of deepening the lower Mississippi River from 45 feet to 50 feet.
In February 2020, the U.S. Army Corps of Engineers approved the deepening project to proceed. A July 31, 2020, signing ceremony officially kicked off the project, with the dredging work starting Sept. 11, 2020.
Steenhoek said a number of state officials and members of Congress have also advocated for the dredging project to receive approval, with the State of Louisiana as the main non-federal partner in the project.
“More work is required for the project to be fully completed, but we can certainly claim that the #1 port region for U.S. soybeans and corn is now better positioned to accommodate the soybeans and corn that farmers produce and are in high demand throughout the world,” he said.
He said the overall project is estimated to cost $245 million, and is occurring in three phases.
He said a deeper river will allow both larger ships and current ships to be utilized, and to be loaded with more revenue-producing freight.
“Average vessel loads will increase from 2.4 million bushels of soybeans, to 2.9 million bushels – an increase of 500,000 bushels, or a 21 percent increase,” he said.
He said the coalition’s research also identified the impact on an interior basis – the difference between the local price a farmer receives and the market value established by the Chicago Board of Trade – for soybeans in the 31 connecting states if the lower Mississippi River shipping channel is dredged.
“It is well established that farmers located in closer proximity to the nation’s inland waterways and barge transportation enjoy a positive or less negative basis, versus soybeans grown in areas further removed,” he said.
“As a rule, the less-costly and more efficient the supply chain is – subsequent to farmers delivering their soybeans – the higher value a farmer will receive for the bushels of soybeans produced,” he added.
Moreover, the research estimated farmers in the 31 evaluated states will annually receive an additional $461 million for their soybeans due to dredging the lower Mississippi River to 50 feet, Steenhoek said.
“While those states located in close proximity to the inland waterway system will realize the most benefit, states further removed will also benefit from the increased modal competition (which is competition taking place over cost, time, reliability and niche markets) between rail and barge,” he said. “When modal competition increases, a downward pressure on shipping rates will often occur.
“With barge transportation becoming more viable for a larger percentage of the soybean-producing areas of the country, there will be a greater degree of overlap between areas served by railroads and barge,” he said. “Soybean shippers will benefit from this modal competition.”
As far as the environmental impact of dredging, he said, “One of the virtues of the deepening project is it is increasing wetlands along the lower Mississippi River.”
“The sediment that is being dredged is being deposited to fortify some of the shoreline in southern Louisiana that has eroded over the years,” he said. “Wildlife habitat is being restored. The shoreline is becoming more resilient.”