Fertilizer Logistics: What To Expect This Spring

You’d think with all the modes of transportation available today, how could dealers ever end up in a shortage situation. It’s rare, but it does happen. Barges, trucks, rail — even international dry bulk ships sailing around the globe — are all intertwined at some level. A hiccup in one segment can sometimes affect another.

That’s most noticeable since last summer’s drought where major waterways saw levels drop like rocks, causing other transportation methods to kick in.

For example, throughout the late summer and fall last year, the usual 19- to 21-day trip for a grain barge to float from St. Paul, MN, to New Orleans, LA, increased by as much as 10 days.

Barge drafts, the amount of barge extending below the waterline, were at times reduced by two feet. According to the Soy Transportation Coalition (STC), every foot of draft reduction cuts cargo capacity by 5,500 to 6,500 bushels. Put another way, every inch of draft you can’t use reduces the cargo by about 30,000 pounds or roughly 500 bushels.

“The low river issue is a vibrant example of how the drought of 2012 not only hampered the ability of farmers to produce, but also the ability to deliver that crop,” says Mike Steenhoek, STC’s executive director.

About 80% of soybean exports occur between September and February, before the glut of South American beans hit the market.

“Given this six-month concentration of exports, a supply chain disruption then is analogous to a supply chain disruption for retailers prior to the Christmas season,” Steenhoek says.

To compensate for the reduced barge movement on the Mississippi River over the winter and spring, nearly half of CHS Inc. crop nutrient supplies shifted to rail using unit trains. According to Larry Cook, northwest regional supply manager for CHS crop nutrients, the per-ton cost for railing from Galveston, TX, into an Upper Midwest warehouse was comparable to barge transport.

“That’s the pricing benefit of dealing with greater rail volume in the form of 85-car unit trains,” Cook says.

This Year’s Outlook

So what does this spring look like from a transportation perspective and how might it affect you? Here’s what transportation specialists at CHS have to say.

Ocean Shipping. A record number of new dry bulk ships being brought into the global fleet are helping keep ocean freight rates low and fairly stable. That trend could last at least through the first half of the year, says Mike Klein, senior merchandiser of ocean freight for CHS.

He says the new dry bulk vessels arriving in 2013 should increase global shipping capacity by 8%. He adds that last fall, there wasn’t as much of a spike as usual due partly to the increase in new Panamax (60,000 to 80,000 deadweight tonnage) and Supramax (40,000 to 60,000 deadweight tonnage) vessels — ordered five years ago — hitting the water, plus a below-normal U.S. harvest.

“We’ve enjoyed fairly reasonable and stable freight rates for much of the past year, despite higher fuel prices. That could start to change later this year,” he says. “Typically, freight rates increase by fourth quarter, after the North American harvest is in.”

River Barge. Ben Doane, barge coordinator at CHS, has been encouraged by recent rains that have helped recharge the Corn Belt river system. “Those rains have added close to 10 feet of water on the stretch of the Mississippi River between St. Louis, MO, and Cairo, IL, where the Mississippi and Ohio Rivers converge,” he says. “This, along with good progress on rock removal in the channel at Thebes and Grand Tower, IL, is a plus for the entire river transportation system.

“This increases our confidence of navigable river north of Cairo over the next few months, which also provides some assurance we’ll be able to execute grain delivery on the river system into spring and summer,” he adds.

According to Doane, improved water levels on the Mississippi River also means:

  • Increased tow sizes.
  • Deeper drafts.
  • Faster transit times.
  • Less risk of groundings and dredge work.

“Still, the industry is hoping for widespread rains this spring to bail it out of what could be looked at as a long-term problem,” Doane says. “We need enough precipitation so we can maintain a deep enough channel between St. Louis and Cairo to maintain normal barge traffic. Usually, ice melts and the Mississippi River opens to the north the last part of March. That’s when we’ll know if there’s enough runoff to put water back into the system.”

Doane says inputs such as fertilizer, which is often imported, could get tighter if river levels are low and barges can’t be filled or transit times are slow. “You can’t just flip a switch and move to rail because most of the port facilities at the Gulf are set up to handle barge traffic.”

Rail. When it comes to moving commodities like grain and fertilizer via the rail system, it’s mostly good news. “Although the low river issues have added more demand for rail, the rail industry has enough capacity over the next few months to easily absorb that demand,” says Dan Mack, vice president of rail transportation and terminal operations at CHS.

However, he says the tank car market is a different story. “With the growth in demand for tanks inside the crude oil business, the tank car market is tight and values are reflecting that. However, tank cars used to transport UAN and ammonia fertilizer are different so we shouldn’t see major issues with their availability.”

Other Rail Issues

Longer term, Mack says rail issues will depend on several unknowns.

1. What will crop production look like this fall?

2. What will the export picture look like for grain?

3. Will crude oil by rail continue to grow?

4. Will coal come back into play? “Right now, electrical generation facilities have been switching to natural gas,” he says. “If that starts to ramp back up, it will fill the rail capacity quickly.”

Trucks. Last year’s short crop freed up a lot of trucks in the transportation system so the truck fleet is sufficient, says Scott Meyer, office manager, CHS grain marketing at Lincoln, NE.

But with low river issues on both the Missouri and Mississippi, he says it would be a “monumental task to move all the crop nutrients into place without them.

“The trend has been toward more just-in-time delivery for crop nutrients. So it’s important for dealers to have a plan. They’re going to want to have products in place well ahead of their customers’ needs,” Meyer says.

With an expected 98 to 99 million corn acres this year, Meyer believes there’s going to be a tremendous demand for crop nutrients. “Dealers need to get fertilizer into their warehouses so when Mr. Farmer comes calling, it’s in place,” he says.

Leave a Reply

Fertilizer Stories

FertilizerNutrient Management, Conservation Among Topics Covered At Indiana CCA Conference
November 23, 2016
Certified crop advisers, consultants, farmers, agribusiness professionals and students will learn more about nutrient management, soil and water conservation, pest Read More
NutriSphere-N Application
Crop InputsVerdesian: NutriSphere-N Making A Water Quality Difference In Midwest
November 18, 2016
Farmers sitting on the largest aquifer in the United States have learned a thing or two about managing nitrogen (N) Read More
FertilizerThe Fertilizer Institute Issues Statement On The U.S. Elections
November 10, 2016
The Fertilizer Institute (TFI) President Chris Jahn has issued the following statement on the results of the 2016 elections: “TFI Read More
Fertilizer Storage
FertilizerThe Fertilizer Institute Hires New Director Of Agronomy
November 4, 2016
The Fertilizer Institute (TFI) has hired Dr. Sally Flis as its director of agronomy, a new position created to support Read More
Trending Articles
R4023 Sprayer, John Deere
CropLife 100Ag Retail Equipment Report: The Green Party Continues
December 7, 2016
In the annual race for sales in the ag retail equipment marketplace, the color schemes for participants are a little Read More
Mike Stern
Precision AgClimate Corp. CEO Talks Retailer Support For Digital Ag
December 1, 2016
CropLife Magazine’s sister publication, AgriBusiness Global, recently sat down with Mike Stern, CEO of The Climate Corp., following the Monsanto subsidiary’s Read More
Precision AgTrimble Debuts End-to-End FMIS Platform
November 28, 2016
October’s inaugural PrecisionAg Vision Conference left this author with many thoughts and things to ponder in the coming months. Probably Read More
CHS Primeland
CropLife 100The 2016 CropLife 100 Report: Reviewing The Many Bulls And Bears Impacting This Year’s Marketplace
November 28, 2016
For virtually all of 2016, the nation was wholly focused on the big Presidential election. Some folks aligned themselves with Read More
Monsanto sign
Crop InputsMissouri Governor Meets With Bayer CEO To Discuss Monsanto Merger
November 21, 2016
Missouri Gov. Jay Nixon visited Bayer AG global headquarters in Leverkusen, Germany, on November 18 to discuss the proposed Bayer-Monsanto Read More
STS16 2017
SprayersHagie Manufacturing Releases 2017 STS16 Sprayer To Market
November 16, 2016
Hagie Manufacturing LLC’s largest full season applicator is now available with enhancements for the 2017 model year. Hagie is officially Read More
Latest News
Ryan Bartlett
Crop InputsCompass Minerals Appoints Vice President, Innovation An…
December 8, 2016
Ryan Bartlett, Ph.D., has joined Compass Minerals as vice president, innovation and product development. Dr. Bartlett will be responsible for Read More
HerbicidesHerbicides 2017: New Cropping Systems Set For Debut
December 7, 2016
Herbicide-resistant weed are inching ever-closer to a potentially frightening saturation point here in the U.S. Heading into 2016, USDA planting Read More
CropLife 100Wilbur-Ellis Acquires Michigan Ag Retailer
December 7, 2016
Wilbur-Ellis’ Agribusiness, a recognized leader in precision agriculture technology and the distribution and marketing of plant protection, seed and nutritional Read More
Fertilizer storage The Andersons
CropLife 1002016 Fertilizer Report: Another Really Rough Year For A…
December 7, 2016
In many ways, the fertilizer category cannot seem to catch a break. During the early part of the 2010s decade, Read More
R4023 Sprayer, John Deere
CropLife 100Ag Retail Equipment Report: The Green Party Continues
December 7, 2016
In the annual race for sales in the ag retail equipment marketplace, the color schemes for participants are a little Read More
Winter wheat
HerbicidesTalinor Herbicide Approved For Wheat And Barley
December 7, 2016
Talinor herbicide from Syngenta has received federal registration from the U.S. EPA, giving wheat and barley growers a new option Read More
Forage Sorghum
UncategorizedMilestone Achievement Continues For Dow AgroSciences, A…
December 7, 2016
New and innovative forage products are on the horizon driven by continued collaboration between Dow AgroSciences, a wholly owned subsidiary Read More
Palmer pigweed seedhead in cotton
HerbicidesNew WSSA Factsheet Explores Weed Seeds And Their Longev…
December 7, 2016
Did you know some weed seeds can lie dormant in the soil for more than a century and then sprout Read More
Crop InputsARA 2016: 5 Developments Worth Monitoring Into 2017
December 6, 2016
You can pretty much set your watch to it (do people even still wear watches? I know I do…but I’m Read More
Tim McCardle, ARA Chairman
CropLife 100BRANDT COO Named ARA Chairman
December 5, 2016
BRANDT EVP and Chief Operating Officer Tim McArdle has been named chairman of the Agricultural Retailers Association (ARA) during a Read More
Crop InputsWilbur-Ellis Receives ResponsibleAg Certification At Mo…
December 5, 2016
Wilbur-Ellis Co., a recognized leader in precision agriculture technology and the distribution of crop protection products, announces the ResponsibleAg certification Read More
Young Corn Closeup
Eric SfiligojThe Read On 2017 For Agricultural Fortunes Is Anybody’s…
December 5, 2016
As I (and others) have written in recent months, the nation has just experienced one of the most offbeat election Read More
Acceleron B-300 seed coating
Crop InputsThe BioAg Alliance Launches New Yield-Boosting Microbia…
December 5, 2016
As part of their commitment to develop and commercialize innovative microbial solutions for farmers through The BioAg Alliance, Monsanto Co. Read More
ManagementCorn and soy planting update; Takeaways from Climate Co…
December 2, 2016
AgriBusiness Global Editor Dave Frabotta Joins Paul Schrimpf for a discussion of global corn and soybean planting trends, and a Read More
Radish cover crop taproot
Crop InputsSoil Health Institute, Datu Research Receive Grant To E…
December 1, 2016
The Soil Health Institute (SHI) and Datu Research have announced a $626,000 grant from the Walton Family Foundation to quantify the Read More
Mike Stern
Precision AgClimate Corp. CEO Talks Retailer Support For Digital Ag
December 1, 2016
CropLife Magazine’s sister publication, AgriBusiness Global, recently sat down with Mike Stern, CEO of The Climate Corp., following the Monsanto subsidiary’s Read More
ManagementAg Industry Comes Together To Address Climate Change
December 1, 2016
Addressing climate change — and more specifically, decreasing greenhouse gas emissions from agriculture — can only be achieved through collective Read More
Young soybean field
HerbicidesLiquid Formulation Valor EZ Herbicide Available For 201…
December 1, 2016
Valent U.S.A. Corp. has released Valor EZ; a liquid formulation of the company’s leading herbicide, Valor. Named Valor EZ Herbicide Read More