BRIDGE REPAIRS (cont.)
ending May 13, almost 40 million bushels of corn were inspected for shipment out of New Orleans, compared to 7 million bushels of soybeans and nearly 4 million bushels of all classes of wheat.”
It’s not just regional or even national commerce that is going to be affected.
“Half the corn shipments were headed for China,” Stiles said. “For the 2021 marketing year, China is our No. 1 export market for corn. Normally, Mexico is our top market.”
Hauling agricultural commodities isn’t cheap. Barge freight lines contract out their barges to firms that need transport grain to the Gulf of Mexico. These contracts secure the cost and use of barges from one week to three months out.
Andrew McKenzie, agricultural
University of Arkansas System Division of Agriculture and the Dale Bumpers College of Agricultural, Food and Life Sciences, co-authored a 2018 paper on barge freight contracts, an area that hasn’t received much analysis.
In “The cost of forward contracting in the Mississippi barge freight river market,” the authors wrote that while the “level of price risk associated with grain transportation is not as large as the price risk associated with buying and selling cash grain, the costs of transportation are still significant enough to materially affect a firm’s profitability.”
“Bottom line, the Mississippi River is hugely important to U.S. commodity supply chains related to exports,” McKenzie said.
“When barge freight rates increase due to various demand and supply issues these higher costs are absorbed into price bids to farmers.”
“Had the river been closed for a longer length of time, we could have seen price impacts, with markets north of the bridge/river closure seeing price fall because of excess supply and markets south of the bridge/river closure experiencing price increases due to excess demand to lower supply,” McKenzie said.
“Given that most grain inventory is likely held north of the river, the biggest price impact would have been negative.”
The Arkansas Trucking Association last week estimated the closure would cost the trucking industry $2.4 million a day as traffic has to be routed elsewhere.
“Using GPS data, we can discern that a previous 8minute drive is now averaging 84 minutes. This additional transit time at $1.20 a minute for 26,500 trucks is costing the trucking industry more than $2.4 million each day that the bridge is closed,” said Shannon Newton, president of the Arkansas Trucking Association. “Freight is like water. It will continue to flow. Our industry will continue to make deliveries. But if the additional expense is prolonged, it is likely to be passed on to consumers.”
The ATA also cautioned that shippers should prepare for longer transit times and surcharges until the flow of traffic is restored.
The Tennessee DOT has a two-phase plan in place for repairing the bridge. The first step will be to add two 18,000-pound steel plates on either side of the fracture to make it stable for the second phase of repairs. Phase II involves removing and replacing the damaged beam. TDOT said repairs could take several months but better estimates will be available as repairs progress.
TDOT said it has dedicated two inspection teams and drones to work on the Interstate 55 Mississippi River Bridge, downstream from and in sight of the damaged bridge, and is using an overabundance of caution in reviewing new footage and previous inspection reports to verify the safety of the older bridge.