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

Young Corn Field
Crop NutritionEnhancing In-Season Nitrogen Use Efficiency Is In The Details
May 5, 2016
Spring is here and crops are in the ground. Do you have a plan for your nitrogen during the growing Read More
Truck dumping dry fertilizer
FertilizerFertilizer Logistics Q&A: Southern States’ Joe Wlodkoski
May 2, 2016
Joe Wlodkoski, Director of Agronomy Procurement, Fertilizer, Southern States Cooperative, is a 40-plus year fertilizer industry veteran. He is quite Read More
West Central Dome structure
FertilizerFertilizer Logistics 2016: All Clear, So Far
May 1, 2016
After a relatively hairy early start to the spring fertilizer movement season with flooding in Louisiana and St. Louis, things Read More
Young corn plants in soil
FertilizerNutrients For Life Foundation Launches New Environmental Science Supplement For High School Teachers
April 13, 2016
The Nutrients for Life Foundation released the latest resource for high school teachers entitled Feeding the World & Protecting the Read More
Trending Articles
Eric SfiligojReasons For Hope In Commodity Prices
May 2, 2016
For many months now, the doomsayers have ruled the day in agriculture. Too much supply with too little demand would Read More
Eric SfiligojMissing The Family Ties In Agriculture
April 25, 2016
By its nature, the agriculture market is cyclical. Up and down cycles come and go with a regular pattern. For Read More
HerbicidesHerbicide Resistance In Waterhemp Continues To Grow
April 22, 2016
Twenty-five years ago, waterhemp was virtually unknown to Illinois farmers. Today, the broadleaf weed blankets corn and soybean fields across Read More
Eric SfiligojBiotech Corn Drop More Economics Vs. Consumer Rejection
April 18, 2016
Since their introduction into the agricultural marketplace, biotech crops has steadily grown in acreage in the countries of the world Read More
Crop InputsBayer: 5 Reasons We Disagree With Maryland Neonic Ban
April 12, 2016
We’re disappointed that the Maryland legislature chose not to stand up for sound science and the rights of Maryland’s homeowners Read More
Corn
OpinionChallenging Global Economic Conditions Putting More Heat On U.S. Ag Retailers
April 7, 2016
There it is. That vague, slightly sickening feeling in the pit of my stomach. Things are getting weird out there. Read More
Latest News
Young Corn Closeup
FungicidesSummer Fungicides: Still A Difficult Sell
May 6, 2016
About a dozen years ago, Asian soybean rust (ASR) was working its way up to the U.S. from South America, where Read More
ManagementGlyphosate, GMOs, and Plantings
May 6, 2016
Editors Paul Schrimpf and Eric Sfiligoj look at the latest news surrounding the ongoing glyphosate debate, biotech crops, and how Read More
Young Corn Field
Crop NutritionEnhancing In-Season Nitrogen Use Efficiency Is In The D…
May 5, 2016
Spring is here and crops are in the ground. Do you have a plan for your nitrogen during the growing Read More
ID3 Air Induction Flat Spray Nozzle | Lechler
Nozzles2016 Nozzles And Tips Report: Waste Watchers
May 5, 2016
Every year in the spring, ag retailers and their grower-customers prepare for the coming crop season. This involves prepping crop Read More
Industry NewsHELM AGRO Adds New Marketing & Business Development…
May 4, 2016
HELM AGRO US, Inc. has announced the hiring of Troy Bettner as the company’s new Marketing & Business Development Leader. Bettner Read More
Palmer amaranth in soybean stubble
HerbicidesWSSA: Billions In Potential Economic Losses From Uncont…
May 4, 2016
What losses would corn and soybean growers experience if they were forced to eliminate herbicides and other control techniques from Read More
Spray Drift
HerbicidesRoundup Ready Xtend: Silver Linings In Label Delays For…
May 4, 2016
Since 2014, Monsanto has trained more than 20,000 growers and retailers on all aspects of its new dicamba-tolerant system at Read More
Syngenta headquarters in Basel, Switzerland
Crop InputsSyngenta Board Appoints New CEO
May 4, 2016
Syngenta announced today the appointment of J. Erik Fyrwald, currently President and CEO of the U.S. chemistry distribution company Univar Read More
Crop InputsIntrexon Establishes Crop Protection Enterprise
May 4, 2016
Intrexon Corp., a leader in synthetic biology, has announced the formation of Intrexon Crop Protection (ICP), a wholly-owned subsidiary dedicated to Read More
Patriot 4440 Sprayer close up
ManagementFlashing Back And Moving Forward On Spray Drift
May 3, 2016
The potential for pesticide drift remains an unavoidable feature of modern agriculture. Here, too, history repeats itself. “When Roundup debuted, Read More
Giant Ragweed
HerbicidesSurvey Provides Insights On Giant Ragweed In The Corn B…
May 2, 2016
A new survey published in the journal Weed Science offers insights into the distribution and management of giant ragweed, a Read More
Truck dumping dry fertilizer
FertilizerFertilizer Logistics Q&A: Southern States’ Joe Wlod…
May 2, 2016
Joe Wlodkoski, Director of Agronomy Procurement, Fertilizer, Southern States Cooperative, is a 40-plus year fertilizer industry veteran. He is quite Read More
Eric SfiligojReasons For Hope In Commodity Prices
May 2, 2016
For many months now, the doomsayers have ruled the day in agriculture. Too much supply with too little demand would Read More
West Central Dome structure
FertilizerFertilizer Logistics 2016: All Clear, So Far
May 1, 2016
After a relatively hairy early start to the spring fertilizer movement season with flooding in Louisiana and St. Louis, things Read More
BAICOR
CropLife 100BRANDT Acquires Utah Specialty Fertilizer Company
April 28, 2016
BRANDT, a leading agriculture retailer and manufacturer of specialty ag products, has acquired a majority interest in BAICOR, L.C. BAICOR, Read More
Soybean field
Industry NewsVerdesian Life Sciences Adds Vice President Of Business…
April 28, 2016
Verdesian Life Sciences has announced the addition of Marc Treurniet to the plant health and nutrition company’s management team. Treurniet Read More
ManagementBiotech Crops Developments and Millennials
April 28, 2016
Editors Eric Sfiligoj and Paul Schrimpf talk about the latest activities in biotech crops and a major shift in the Read More
Industry NewsNachurs-Alpine, Pathway Biologic Extend Marketing Agree…
April 28, 2016
Nachurs-Alpine Solutions (Marion, OH) and Pathway Biologic (Plant City, FL) announce an extension to their exclusive marketing agreement specific to Read More