Lower Mississippi River – Dredging Could Increase Traffic, Save Dollars – DTN

    ©Debra L Ferguson Stock Photography

    The high value of the dollar against some U.S. export rivals means more emphasis is needed on export logistics for American farmers to stay competitive.

    That translates into looking at U.S. infrastructure investments that allow American agriculture to save through cheaper, more efficient transit, said Mike Steenhoek, executive director of the Soy Transportation Coalition.

    “There’s not a whole lot we can do about currency valuations, but there’s a whole lot we can do about infrastructure,” Steenhoek said during the Commodity Classic show earlier this month. “Any time you can shave cents off the per-bushel price for our customers, it is going to make us more competitive or at least help preserve that competitive advantage.”

    That logic will soon be tested as expansion and a third lock on the Panama Canal are completed later this year. Panamanian officials announced this week the commercial opening of the third lock is set for June 26. The wider, deeper lock will allow larger, heavier ships to cut across the Americas. The current canal handles a 39.5-foot draft for bulk ships or container ships that can carry roughly 4,500 standard containers. The third lock will handle ships that can go to a 50-foot draft, which can translate into filling bulk carriers to heavier weights as well as handling cargo ships that can haul about 12,000 containers.

    The canal project has reignited port infrastructure investment in some areas, as ports such as Miami credit dredging to a deeper draft that has led to larger ships calling to the port over the last six months.

    After decades of inaction, the deeper canal is also rekindling the prospects of deepening the shallow spots in the Lower Mississippi River. The project was part of the Water Resources Reform and Development Act of 2014. The goal is to deepen the channel from 45 feet to hit a 50-foot draft.

    Roughly 600 million bushels of U.S. soybeans move through the Panama Canal every year, making soybeans the top agricultural commodity passing through the canal. The cost of moving a ship from southern Louisiana to Asia or elsewhere would still be about the same, but loading more commodity per vessel makes the economics more attractive, Steenhoek said.

    “We think that really could make us more competitive,” he said. “With the canal expansion allowing ships loaded to a 50-foot draft, you are able to substantially put more beans per vessel.”

    Other U.S. competitors may have a currency edge at the moment, but the U.S. can stay competitive with larger bulk carriers. Argentina, for instance, is somewhat disadvantaged because 80% of its soybeans come out of the city of Rosario on the Parana River, which only allows for a 36-foot draft.

    “Clearly, one of the things that are a concern to us are the strengthening of the U.S. dollar and the weakening of the South American currencies,” Steenhoek said. “Those things have frankly eliminated a lot of our competitive advantage that transportation has provided.”

    Heavier ships could carry up to $8 million in additional payload for soybeans alone and save Asian customers as much as 35 cents a bushel because of greater transportation efficiency. But getting that value out of shipping logistics is going to require deepening the channel on the Lower Mississippi River.


    The Lower Mississippi River accounts for roughly two-thirds of all corn exports and nearly 60% of all soybean exports. About 45% of animal feed — soybean meal, distiller grains and similar processed commodities — also is moved through the Lower Mississippi ports. Another 3.6 million tons of vegetables and 1.7 million tons of rice are also exported through the Lower Mississippi.

    Parts of northern Louisiana have been grappling with flooding problems over the past week, but those issues have not affected shipping operations in the Lower Mississippi River ports or navigation on the Mississippi River, according to an Army Corps of Engineers spokeswoman in Vicksburg, Mississippi.

    Steenhoek has taken farmers down to Panama multiple times to examine the canal progress. He said engineers were stress testing it in December when he and about 100 farmers visited the canal. The whole project is 97% complete, but there is some skepticism that the lock will be ready by June 30. Still, it’s anticipated the third lock will be moving ships through it sometime later this year.

    “Once that is done, we think agriculture is well positioned to benefit from that,” Steenhoek said.

    Tom Russell, principal for the Russell Marine Group in New Orleans, concurred with Steenhoek that a deeper canal will translate into more economies of scale and efficiency for bulk carriers going to Asia or elsewhere.

    “When it comes to shipping, we compete on logistics, especially on grain,” Russell said. “A big part of that is the Mississippi River. That river system is always going to dictate bulk products coming this way.”

    Maintaining that logistics advantage calls for investing in the river infrastructure, Russell said. “We’re going to have to get the funds to maintain this river.”


    A 2013 study funded by the Big River Coalition showed deepening the lower river would open up about 175 miles to those larger post-Panamax vessels. The study estimates that once the river is dredged to 50 feet, there would be roughly 18% more large ships moving through the Lower Mississippi River within a decade of completion.

    Those large ships would then accommodate and boost tonnage of top commodities from coal to corn and soybeans by roughly $12 billion in value. The Big River study cited that by 2024 American producers, mostly farmers, would see a potential direct positive impact of roughly $5.9 billion.

    To make that happen, rough estimates say dredging the Mississippi to 50 feet would cost an estimated $300 million initially, but also include ongoing channel maintenance of about $90 million a year, according to the Big River Coalition study.

    The Corps of Engineers started a study in 2014 to detail the costs, benefits and environmental impacts caused by deepening the Mississippi. The study is ongoing. “At this time, it is too early for us to speculate on either the costs or benefits,” said Ricky Boyett, chief of public affairs for the Army Corps of Engineers in New Orleans. “Once we are further along in the process, this information will be made available.”

    Sean Duffy, executive director of the Big River Coalition, said the group — made up of different elements of the port businesses — would begin approaching Congress and state officials to start identifying funds for the project.

    “When we have that, we will start leveraging to get funding,” Duffy said. “Still, the funding is going to be a challenge and we realize that.”

    While looking for government planning to move to a 50-foot depth, the shipping channel right now is being dredged just to recover from flooding earlier this year that carried in heavy sediment and reduced the available draft in some spots.

    “We were at 41 feet and that really cuts a wide swath of different cargo impacts,” Duffy said. “When we lose a foot or two, it’s a much smaller number of vessels affected, but we basically lost six feet of draft. We just went back to 42 feet, but we still have more to go, and we have an additional high-water period coming up that will have an impact too.”


    The West Coast will remain the top destination for container cargo, largely because it’s a straight shot across the Pacific. But several Gulf Coast and East Coast ports are anticipating the third lock will increase container capacity in their ports as well.

    “They are probably going to see an increase of about 15% in container capacity because of the bigger Panama lock,” Russell said.

    Still, some ports are already seeing the gains of a deeper draft. The port of Miami recently reported an 8% growth in cargo for the first four months of its fiscal year, according to an article in the Journal of Commerce. Port officials told the journal that part of the increased business was due to larger ships being able to deliver to the port.

    Russell said a wild card in container shipping stems from the labor strife in 2014 and 2015 at West Coast ports. The complications there could cause some shippers to consider the longer shipping routes for containers to eastern ports through the Panama Canal.

    “That really upset some container people, and they were saying ‘further distance to the East Coast, I don’t care; at least I don’t have to deal with these damned unions,'” Russell said.

    Chris Clayton can be reached at

    Follow him on Twitter @ChrisClaytonDTN

    The Latest

    Send press releases to

    View All Events

    [ecs-list-events limit="5" key="start date" order="asc"]
    Send press releases to

    View All Events