As More Grain is Produced, Demands on Shipping Infrastructure Increase

Chad Hart By Chad Hart,
Ag Economist, Iowa State University

Summary: The U.S. grain transportation infrastructure needs repair and modernization. The deterioration is showing up just as U.S. growers are trying to increase production to meet the demands of both internal and external users. Whether grain is sold to U.S. end users such as livestock feeders and ethanol plants or into the export markets, growers will need to move that grain over U.S. roads, rails and rivers.

Hart offers some background on the state of the transportation infrastructure and agriculture’s need to make use of the system. Some of his observations are derived from studies conducted in Iowa, but most apply across the United States.

Increased production and the rise of ethanol production are changing how we’re using the transportation infrastructure to move grain. A survey of ag market participants shows more corn and soybeans are moving directly to processors, rather than to elevators or river terminals. This may be putting more pressure on roadways instead of railways and waterways.

As growers produce more bushels per acre – and manage larger operations – they’re opting for larger trucks to carry those crops to market. For instance, two-thirds of the corn in Iowa moves by semi trucks, the remaining third by smaller trucks. For soybeans, semis are hauling almost 60 percent of the crop. Semis generally put more strain on roadways and require better-maintained roads. The trend is toward fewer but larger vehicles hauling crops to end users.

While some grain still moves by rail, few growers are located so close to a loading point that they can avoid trucking their crop a fair distance to reach a rail line. See how corn (PDF 85 KB) and soybeans (PDF 86 KB) are transported. In fact, much of the grain that’s moving by truck starts out on less-maintained rural roads. Surveys from producers and elevator operators rate the conditions of unimproved gravel roads and paved county roads significantly poorer than interstates, primary state highways or rail lines.

Underpinning our bridges
Iowa bridges are in need of attention. More than 5,350 (22 percent) are rated as structurally deficient, meaning they need repairs. Another 1,320 (5.3 percent) are rated functionally obsolete, meaning replacement would require newer, better construction. The totals for the entire United States are 11.8 percent structurally deficient and 12.9 percent functionally obsolete.

Continued corn demand for the livestock and ethanol industries likely will generate more demand for in-state grain transportation – most of which will occur over local roads and highways.

Can we add rail capacity?
Ethanol often travels on both highways and railways. Distillers dried grains (DDGs), a byproduct of ethanol production, move mainly by rail. See which products are moved via rail. (PDF 148 KB)

With rails nearly saturated, it’s questionable whether we can add capacity in sufficient volume to relieve traffic on roadways and rivers.

Needed rail improvements:

  • Large-scale corridor expansion projects
  • New intermodal terminal facilities
  • New, more-efficient locomotives and rail cars
  • Upgrades to railway track and structure
  • New technology and communications systems.

Helping river traffic flow
While domestic grain demand is strong, foreign demand also is increasing. And, if we continue to produce more grain, export demand will continue to rise as well. This will require more movement of corn and soybeans by rail (for export to the Far East) and U.S. rivers (for transport to the Gulf of Mexico and on to Europe).

Use of rails to move grain shipments to ports for exports has been growing this decade at the expense of barge shipments. Part of the reason is movement to the West Coast for transport by ship to Asia. Part is due to slowdowns of barge traffic caused in part by maintenance issues on the rivers.

In the past five years, unscheduled lock and dam repairs have risen from about 10,000 hours to about 70,000 hours. See graph. (PDF 64 KB) The cost to maintain and upgrade river traffic systems is immense. With tax dollars hard to come by, gaining funding for this work will be difficult in the near term.

Three issues barge companies are contending with now:

  • The need to repair an aging infrastructure
  • Expansion of locks from 600 to 1,200 feet to meet the needs of modern barge traffic
  • Environmental challenges from using rivers for shipping cargo

Most likely U.S. growers will need to take advantage of all three avenues to move grain – roadways, railways and waterways. The big question is how to fund the repairs needed for each of these alternatives.

Related Content

Products Moving by Rail (PDF 148 KB)

Lock and Dam Repairs (PDF 64 KB)

Transporting Soybeans (PDF 86 KB)

Transporting Corn (PDF 85 KB)

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