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

FertilizerFall Fertility 2014: Forecasting Fertilizer Use
September 7, 2014
Great crops this year have tapped the soil, and fall work is definitely called for, but how challenging will that get? Read More
Aerial view of the West Fertilizer explosion site
FertilizerFertilizer Companies Blame City For West, TX, Explosion
August 6, 2014
El Dorado Chemical Co. and CF Industries contend the city failed to properly train the first responders and had insufficient protocols in place to battle the April 17, 2013, blaze at West Fertilizer Co. that triggered the explosion. Read More
FertilizerThe Fertilizer Institute: New President, Renewed Energy
February 3, 2014
Chris Jahn relishes the opportunity to lead the organization through the challenging times ahead. Read More
FertilizerA New Cycle For Fertilizer Demand
January 2, 2014
Changes in the corn market could have a major impact on the crop nutrients sector in 2014, say experts. Read More

Trending Articles

Matt Hopkins15 Best New Agriculture Apps Worth Downloading In 2014
December 16, 2013
These latest agriculture apps are sure to help ag professionals do their jobs more efficiently in 2014 and beyond. Read More
Seed/BiotechMonsanto Offers New Support For Ferguson, Area Communities
October 8, 2014
Monsanto Co. has committed $1 million in new support for several collaborative efforts in Ferguson, MO, and surrounding communities in North St. Louis County. Read More
Seed/BiotechUnapproved Genetically Modified Wheat Found In Montana
October 3, 2014
USDA reports that one year after discovery of Monsanto's unapproved wheat in a single Oregon field disrupted U.S. wheat export sales, the GMO wheat has again been found in Montana. Read More
Equipment2014 Product Of The Year Voting
September 19, 2014
Many new products were introduced to the ag retail marketplace this year. From this group, CropLife IRON and its consulting partners have selected five finalists for the Product of the Year award. Please cast your vote today to help us determine the winner. Read More
FertilizerFall Fertility 2014: Forecasting Fertilizer Use
September 7, 2014
Great crops this year have tapped the soil, and fall work is definitely called for, but how challenging will that get? Read More
CropLife 100CHS To Build $3 Billion Fertilizer Plant In North Dakota
September 5, 2014
The fertilizer plant in Spiritwood will be the single largest investment in CHS history, as well as the single largest private investment project ever undertaken in North Dakota. Read More

Latest News

Seed/BiotechEPA Approves Dow’s Enlist Duo Herbicide
October 15, 2014
The Enlist Weed Control System, breakthrough technology to fight resistant and tough weeds, has received the long-awaited green light from federal regulatory authorities. Read More
MicronutrientsGypsum On Farms Could Help Keep Water Clean, Not Green
October 14, 2014
Gypsum, which has roots in the past as a farm soil treatment, also may have a bright future, and not just as a booster of crops but also as a protector of water. Read More
Photo credit: The United Soybean Board/The Soybean Checkoff.
Crop InputsVerdesian Grows Sales Staff
October 14, 2014
The new account managers will drive sales growth and support relationships with key customers in the plant nutrition and seed treatment and inoculants product categories. Read More
WebinarsUpcoming Webinars
October 14, 2014
Register for one of our upcoming Webinars or access our archive of past Webinars to view recordings of presentations that may be of interest to you. Read More
CropLife 100The Andersons Purchases Six Grain Elevators, Four Agron…
October 14, 2014
The Andersons has acquired Auburn Bean and Grain of Auburn, MI, which will increase the storage capacity of its Grain Group by about 13%. Read More
StewardshipThree Ohio Ag Retailers Honored With 4R Certification
October 13, 2014
The 4R Nutrient Stewardship Certification Program has announced its first three agriculture nutrient service providers to achieve certified status. Read More
Eric SfiligojEntering Agriculture’s New Phase
October 13, 2014
The market’s giddy ride the past few years might be coming to an end in 2015, warns one industry insider. Read More
Eric SfiligojWar And Green Peace
October 11, 2014
A one-time member of Green Peace recently explained why he left the organization after 15 years. Read More
StewardshipCover Crops Add To Farm Sustainability
October 10, 2014
Farmers nationwide find cover crops to be a tool that helps groundwater, prevents erosion, builds soil quality and complements existing best management practices. Read More
EquipmentMeeting Changing Liquid Storage Needs
October 10, 2014
Tank and containment choices are expanding with shifts in farming practices and the economy. Read More
StewardshipEDF Launches Initiative To Reduce Fertilizer Pollution …
October 9, 2014
The effort will engage farmers and businesses throughout the supply chain to transform the way fertilizer-dependent grain crops are grown and sourced. Read More
ManagementMACA 2014: The State Of The Agricultural Industry, And …
October 9, 2014
The trade association’s annual gathering featured speakers from across agriculture and beyond. Read More
FertilizerASA: Drainage Tiles A Big Part Of Phosphorus Problem
October 8, 2014
A pair of studies published in the Journal of Environmental Quality today indicate that the buried network of drainage pipes known as the tile system can carry away as much phosphorus as surface runoff. Read More
FertilizerCompass Minerals Debuts Phosphorus Blend For 2015
October 8, 2014
The makers of Wolf Trax DDP Nutrients designed Nu-Trax P+ with the CropStart Nutrient Package, a blend of phosphorus (25%), zinc (20%), manganese (5%) and nitrogen (4%). Read More
ManagementIndiana Certified Crop Advisor Of The Year Nominations …
October 8, 2014
Indiana Farm Bureau and the Indiana Certified Crop Adviser Program are seeking nominations for the Indiana Certified Crop Adviser of the Year Award. Read More
Seed/BiotechMonsanto Offers New Support For Ferguson, Area Communit…
October 8, 2014
Monsanto Co. has committed $1 million in new support for several collaborative efforts in Ferguson, MO, and surrounding communities in North St. Louis County. Read More
Precision AgGoogle Glass: New Tool For Ag
October 8, 2014
New wearable smart technologies such as Google Glass show potential to greatly impact how we accomplish the business of feeding the world. Read More
FertilizerJ. R. Simplot To Build New Ammonia Plant In Rock Spring…
October 7, 2014
The new plant will supply both the Rock Springs, WY, and Pocatello, ID, phosphate fertilizer production locations while having the capacity to meet the company’s next phase of anticipated phosphate expansion plans at Rock Springs. Read More