Grain exporters stymied by Gulf Coast “choke point”
With rail lines to Gulf Coast ports out of commission, ships grounded, and crews surveying ship channels for shifting sand and displaced navigation aids, cotton, sorghum and wheat growers fear a halt in deliveries will lower prices and force foreign grain importers to look for other markets.
As of Thursday, port facilities remained closed at Houston and Corpus Christi, and U.S. Customs and Border Protection also reported suspended commercial trade operations at the ports of Port Arthur, Galveston and Freeport through Friday. Union Pacific Railroad had tracks shut down along the Gulf Coast from Kingsville all the way up to Lake Charles, Louisiana. CBP urged exporters to try to divert their cargo.
“We are inspecting and repairing track, bridges and signals to return to service as quickly and safely as possible. We are beginning to inspect most areas in Houston and west of Houston,” Union Pacific said in a notice to customers. “In areas where we have no road access, we are utilizing helicopters and drones to inspect areas by air. The majority of areas east of Houston are still inaccessible at this time.”
Hurricane Harvey’s impact to the nation’s agricultural exporters was still unknown. Louisiana ports withstood the storm, which is good news to corn and soybean growers sending product down the Mississippi River to be shipped out to customers in Asia, Europe and Africa. But a good deal of the state’s cotton and sorghum heads out from Houston and Corpus Christi, and Texas Gulf Coast ports handle about a quarter of the nation’s wheat.
“You’ve got a lot of production in Kansas and Texas and Oklahoma and some of the western states where you’re far removed from the inland water system and so you just rail it down to the Texas Gulf,” said Mike Steenhoek, executive director of the Des Moines, Iowa-based Soy Transportation Coalition. “And so for those particular commodities, Harvey’s very seismic for them.”
“Clearly, the Texas Gulf is one big choke point right now,” Steenhoek, said. “And so how pernicious the impact is depends on how elongated it remains.”
Hurricane Katrina remains a very vivid example of how crucial shipping routes are, he said.
“A key link in our logistics chain was shut down for a prolonged period of time, and all of a sudden farmers in the Midwest really saw a real kind of a real compelling example of how linked their profitability is to the logistics system,” he said. “All of a sudden you saw farmers getting paid less for their soybeans and for their corn, not because of anything that they did wrong or due to the poor quality of the crop, but just simply because grain elevators in the Midwest weren’t in a position to receive any more. And if you’re a grain elevator, if you can’t move things out the back door because the lower Mississippi River is a choke point, you’re not going to be able to accept anything through the front door.”
Interstate Grain Corp., a grain elevator at the port of Corpus Christi, got its computers back up by the end of the day Wednesday, but there were no ships available to load the waiting sorghum.
“Everybody really didn’t come back to work until today, because of no electricity,” administrative assistant Sherry Bradley said.
Jarl Pedersen, the port’s chief commercial officer, said that the ripple effect stemming from refineries shut down due to the nonfunctioning shipping channel was enormous.
“If they don’t run, you have impact on fuel supply,” he said. “That impacts transportation including rail, so that’s why its so critical to get that channel open for business.”
He said the port was eager to be back in business, but couldn’t risk ships getting stuck in the channel.
“There could be some places where the draft has been impacted and they might need to do some dredging,” he said. “Rail is key, so similar to our focus is to get the ship channel running, their focus is to get rail service, so they’re doing similar assessments of bridges and so forth. We have a lot of record flood levels on the major rivers in Texas and that could have damaged some of the bridges and other infrastructure. We all want to get back into business but we also want to make sure that when we do we’re doing it safely.”
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