Rollin’ on the river

Missouri River eases grain transportation crunch

Last fall, a huge grain harvest and a jammed transportation pipeline created a tricky situation at elevators. To ease the problem, MFA Incorporated loaded grain onto barges along the Missouri River for the first time in a decade.

“We began talking about shipping by barge last summer when we realized we were looking at a record harvest combined with a shortage of available rail cars and trucks to keep grain moving,” said Bill Dunn, director of transportation for MFA Incorporated in Columbia, Mo.

The company loaded 10 barges at Jefferson City, Glasgow and Lexington along the Missouri River in October, and another six in November. Towboats pushed the barges to St. Louis and then down the Mississippi River, ending up at ports in the Gulf of Mexico.

“Moving grain by barge opens a door for us,” Dunn said. “We haven’t dealt directly with Gulf shippers for 10 years.”

Benefits flow to farmers
Adding barges to the transportation mix benefited grain producers as well as MFA. “Farmers were able to bring more bushels out of the field to elevators,” Dunn said. “If we hadn’t secured the barges, after filling their own bins, many of our customers would have had to stop combining and let their grain sit in the fields until they found a place to take it. You can do that for a while with corn, but not so much with soybeans.”

Beyond enhancing marketing opportunities and mitigating delays, shipping by barge is more efficient than truck or rail. It costs less and uses less fuel, which is better for the environment. Compared to trucking, using barges reduces road congestion and leads to less road wear and tear.

Sixteen barges might not sound like a lot, but the Iowa Department of Transportation reports that one barge carries 52,500 bushels of grain. This compares to 13.4 jumbo rail hopper cars or 58 large semis that would be needed to carry the same amount. When MFA filled 16 barges with a total of approximately 840,000 bushels, it took about 210 fewer rail cars, or 923 fewer semis, to carry the load.

“All 200 of our grain trucks were running at peak capacity last fall and it still wasn’t enough,” Dunn reported. “Rail is the most disappointing mode of transportation these days, and no one predicts that it will get much better.” For example, in one week in October, Dunn’s team had ordered 140 rail cars but received only 15.

It took swift action
After MFA decided to ship via the Missouri, the problem became securing the barges. “A shortage of salt for roads in the northern U.S. last year, along with fertilizer movement up the river, tapped out all available barges,” Dunn said. “We had trouble finding them. If we could have found more, we would have used them.”

As Dunn explains it, MFA Incorporated hasn’t moved grain along the Missouri River recently because of the uncertainty of the river and a lack of towboats. But two companies, Hermann Sand and Gravel Co. in Hermann, Mo., and Capital Sand in Jefferson City, Mo., continued to haul sand, gravel and other products locally along the river, and were eager to push the grain over a longer haul to the Gulf.

MFA projects that it will take in 79 million bushels of grain from the record harvest of 2014, compared to a normal harvest in recent years of about 50 to 60 million bushels. “We will have leftover grain to move in the spring,” Dunn predicted.

Dunn oversees the logistics of moving grain out of—and bringing farm supplies into—145 MFA Agri Services Centers, along with 24 locally owned MFA affiliates and about 400 independent dealers. The company unloads fertilizer from barges at facilities in Caruthersville and Palmyra, Mo., along the Mississippi River. “We consistently market a total of 1 million tons of fertilizer—500,000 to MFA locations and the balance to locals, outside dealers and traders,” Dunn said.

Brunswick keeps product moving  
Lucy Fletcher is excited to see MFA Incorporated moving grain moving along the Missouri again. “We are Missouri River advocates,” said Fletcher, business development manager for AGRIServices of Brunswick, LLC. “We’ve encouraged shipping here for a long time. This is the longest river in the U.S., and it’s a vital resource for our country. River shipping is growing out of necessity in response to the nation’s transportation issues.”

While 2014 was the first time in a while that MFA Incorporated directly barged grain along the Missouri, the company has shared a stake in barge shipping for some time. MFA owns half of ASB, and Brunswick River Terminal owns the other half. In 2007, ASB began leasing a towboat to keep grain flowing out and fertilizer flowing in. In 2010, Bill Jackson, ASB shareholder and general manager, took the next step and purchased a towboat called the Motor/Vessel Mary Lynn. Today, Hermann Sand and Gravel operates the M/V Mary Lynn and handles the logistics and crew.

The river is in Lucy Fletcher’s blood. Her dad, Butch Fletcher, helped start Brunswick River Terminal along with Bill Jackson in 1978.
“We had really good river conditions in 2014, and ASB shipped 25 to 50 percent of our grain on the waterway,” Fletcher said. “Even in the flood of 2011 and the drought of 2012, we were still operating. 2004 was the only year in the last 35 years that we haven’t moved barges out of Brunswick. That’s pretty reliable!”

Without access to the Missouri River, Fletcher added, ASB customers might have seen fertilizer shortages and higher fertilizer prices. She agrees that moving grain by barge provides better access to grain markets.

MFA invests in the river
Dunn applauds Fletcher’s work to increase river use, and also gives credit to MFA employees for a job well done in 2014. “It took a lot of people working together to get this going again,” Dunn said.
“We’re making infrastructure improvements to facilities in Lexington and Glasgow to allow them to load onto barges,” he added. “These locations loaded barges in the past, but they needed improvements.” Capital

Sand fills barges from its facility in Jeff City.
MFA storage facilities were booked up early in the 2014 growing season. Many locations stored grain on the ground in tarped, vacuum-sealed tubes designed to maintain grain quality. Recent big harvests and a shortage of storage facilities add momentum to the shift toward barging grain.

“We believe that we’ll reap benefits from these investments in 2015 and beyond as we move product at a lower cost by barge,” Dunn concluded.

Why do we have a shipping problem?

The oil industry has received much of the blame for delays in shipping agricultural products, but oil makes up only a small share of total rail volume in the U.S., according to Andrew Walmsley of the American Farm Bureau Federation.

“The railroads are moving more coal than ever, competing with grain for rail cars, locomotives and track space,” said Walmsley, director of congressional relations for AFBF. “With record harvests in 2013 and 2014, agriculture plays a role.” More companies are moving cargo by rail rather than by truck because of a shortage of long-haul truck drivers, he added, and the improving economy and cold winter weather has bumped up shipping across the U.S.

While railroads suffer from aging cars, tracks and infrastructure, Walmsley doesn’t lay all the blame there. Burlington Northern Santa Fe Railway and Canadian Pacific move a large share of grain in the western U.S., while Norfolk Southern and CSX move a lot in the East.
“BNSF has invested $5 billion in new locomotives, and added new capacity and staff,” Walmsley said. “They’ve been communicating with Farm Bureau and other stakeholders about these concerns since delays began a year ago.”

One reason that U.S. agriculture is competitive internationally is our transportation infrastructure, including our inland waterways, Walmsley added. “This helps us compete against countries like Brazil and Argentina.”
Mike Steenhoek, executive director of the Soy Transportation Coalition, agrees. The soybean industry created the coalition because the U.S. exports at least 50 percent of its soybeans, and efficient transportation keeps exports moving. The coalition argues that increased barge use will diminish pressure on the freight system.

“When U.S. leaders talk about transportation problems, they usually use urban congestion as an example,” Steenhoek said. “A lot of them don’t think about the challenge of moving freight. We want to make sure agriculture’s best interests are part of the discussion. We’re asking, ‘What regulatory burdens are in the way that prevent us from making greater use of the river?’”

According to Walmsley, there’s little the federal government can do to fix the freight backlog, but Congress is considering legislation to:
•    improve laws governing the Surface Transportation Board that regulates railroads;
•    conduct an economic analysis of rail service challenges faced by agricultural shippers;
•    boost funding for highways and bridges.

“This is a complex issue, and there are no easy answers,” Walmsley concluded. “If we don’t have a strong transportation network, it’s hard to get a crop to market.”