We have to move what we produce
It was partly Missouri’s spring pothole season that jarred me into this column. Road surfaces across the state suffered from our freeze-and-thaw winter, and if you have put many miles on a car recently, you can’t help but have noticed the rough ride. But mostly, I’m brought to this topic by the ongoing transportation challenges we face in day-to-day business and especially during farming’s busy seasons in spring and fall. I think all of us need to take a short-term and long-term focus on transportation—and agriculture needs to lead the conversation.
The short-term outlook is clear. The transportation market doesn’t have enough supply to meet demand.
Several factors have contributed to the imbalance. As electronic log devices became mandatory through federal regulation, a percentage of drivers dropped out of the business. Some agricultural haulers decided to only do business inside a 150-air-mile agricultural exemption zone for electronic log devices. In aggregate, both of these situations decrease the supply of long-distance trucks. MFA’s transportation division estimates a 35 percent reduction in available trucks over the past two years.
Pressure from regulation isn’t the only reason we face a short truck supply, though. E-commerce retailers such as Amazon are putting more freight into the transportation stream. As a result, van freight, which used to be one of the most affordable categories per mile, now comes at a premium. Top drivers for large freight companies are commanding up to 35 percent more in wages compared to five or six years ago. This demand puts upward pressure on freight rates and availability across the board, and trucks will move toward the most profitable opportunity. Many of the hopper-bottom haulers that serve agriculture have shifted to other industries.
Finally, for the truck market, an overall strong economy tends to shrink the driver pool because of other employment opportunities.
At MFA we are addressing the challenge in trucking a couple of ways. First, as we always have, we seek to be as efficient as possible. Our transportation employees do an exceptional job at communicating among MFA’s divisions to source backhauls and fine-tune logistics. However, spring seasons like this one put pressure on efficiency. Getting fertilizer to retail locations to meet demand becomes a top priority. Another way to address the current market is to keep pace with competitive pay and total compensation. Even so, securing adequate freight capacity continues to be a challenge.
The current situation in trucking is only part of a more substantial challenge agriculture faces with transportation infrastructure. I would tell you that we haven’t kept pace as a society. We have 24,512 bridges in Missouri. Some 2,116 are classified as structurally deficient by the Federal Highway Administration. Bridge conditions on the national level aren’t much better.
As I prepared this column, the Missouri legislature was working on details for a bridge bonding plan to secure repair and construction funds. That’s progress, to be sure, but it is only a start. Considerably more funding will be required to modernize our bridges fully. That’s to say nothing of our roads.
For agriculture, I believe it is essential to look at long-term trends when it comes to transportation infrastructure. You need efficient ways to receive the inputs it takes to farm. You need efficient ways to deliver what you produce to market. Efficiency in transportation is a critical competitive advantage for U.S. agriculture in world markets. However, much of the infrastructure in use right now was built when the average yield per acre of corn was half of what it is today. We need to be able to move that additional grain at a cost that keeps us relevant in international markets.
What we see through a shortage of trucks today is indicative of the increased pressure we put on transportation infrastructure across the nation and industries. I should also point out that we have added 142 million people to the country, mostly in urban areas, in the same time it took to double corn yield.
Those deficient bridges in Missouri? The most traveled are in urban areas. It makes sense that those might draw the most attention, and funding trends might follow. Whether it’s roads, rivers or rail, agriculture needs to be part of the conversation on how infrastructure repairs and expansion take place.
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