Grainnet

Midwest Flooding Disrupts River, Rail, and Road Transportation

This article is reprinted from the USDA's June 26 Grain Transportation Report.

In mid-June, heavy rainfall from Wisconsin to Oklahoma—concentrated in central and eastern Iowa—caused the Mississippi River to rise to near-record levels.

While spring flooding in the upper Midwest had caused problems for barge traffic earlier in the year, the extreme rain in June stopped navigation on a nearly-300-mile stretch of the Mississippi River.

Major parts of the rail network in the Midwest were damaged, and rail traffic was significantly delayed.

Rail traffic is slowly recovering as repairs continue and shipments are rerouted.

Several major highways in Iowa were closed, but most have been reopened.

Alternate routes and temporary structures have been established until road and bridge repairs can be made.

Mississippi River Closings

On June 12, the U.S. Army Corps of Engineers began closing 12 navigation locks on the Mississippi River, from Lock 13 at Fulton, IL, south to Lock 25 at Winfield, MO.

Locks were closed in advance of the rising water so that the Corps could remove vulnerable machinery that was not designed to be submerged.

As of June 26, Locks 13–16 have been reopened, but 8 locks continue to be closed due to flood conditions.

Grain Exporters Work Around Lock Closings

Grain exports have continued despite Midwest transportation snarls.

Although almost 90 percent of grain exported from the Mississippi Gulf is sourced via barge, last week exporters began buying corn via rail to cover Gulf export commitments and in some cases switching vessel loadings to Texas Gulf ports.

Corn export sales commitments for the week ending June 12 totaled 59.5 million metric tons (mmt)—94 percent of the USDA June 10 crop year total forecast.

However, unshipped export balances of corn totaled 10.3 mmt—25 percent higher than last year at this time.

Transportation demand for shipping corn to port is likely to remain strong through the end of the crop year.

The graph below shows the grain volumes affected by Mississippi River closings. In 2008, year-to-date traffic at Lock 25 (the southernmost lock closed) has amounted to 3.6 millions tons of grain, a 75-percent decrease over the 5- year average for the same period.

Traffic has been down mainly due to harsh winter conditions that reduced traffic earlier in the year and previous high water conditions that shut down locks north of Lock 25 for brief periods in April and May; as well as the most recent lock closures in June.

On average, 488,000 tons of grain per week transit Lock 25 during a typical June.

June and July are typically a busy period for Lock 25, as grain is cleared from storage in anticipation of a new crop later in the fall.

The graph below shows 2008 traffic significantly below average.

Flooding Effects on Railroads

Flooding in the Midwest has resulted in the closure of major rail routes.

The most extensive damage and traffic disruption was in Iowa, especially in the Cedar Rapids region.

Other states affected by floods include Illinois, Indiana, Minnesota, Missouri, and Wisconsin. At one time, the east-west routes across Iowa of three major railroads—those of BNSF, Canadian National, and Union Pacific (UP)—were out of service due to flood waters.

In addition, lines of the Canadian Pacific (CP) and Norfolk Southern (NS) were closed by the floods.

Major railroads reporting lines that are still out-of-service include CP, BNSF, and NS. On July 25, UP reported renewed flooding on its line in the Trenton, MO, region due to heavy overnight rains.

The damage to short line and regional railroads was very severe.

Small railroads affected by the flooding include the Burlington Junction Railway, Cedar Rapids and Iowa City Railway, Iowa, Chicago & Eastern Railroad, Iowa Interstate Railroad, Iowa Northern Railway, Iowa River Railroad, Keokuk Junction Railway, and Wisconsin & Southern Railroad.

Although many of the tracks on these railroads have been or soon will be repaired, major bridges that were washed out on the Cedar Rapids and Iowa City Railway and on the Iowa Northern Railway will require 6-8 months to replace.

On June 25, there were reports that an Iowa, Chicago & Eastern locomotive fell through a bridge at Columbus Junction, IA, southwest of Muscatine.

Although many of the affected lines have been repaired and are back in service, velocity on the rail system will continue to be slowed due to reduced train speeds, rerouting of traffic, and ongoing repairs to track and signal systems.

Flooding Effects on Ethanol Transportation

One of the two ethanol plants in Iowa that closed due to the flood resumed partial operations on June 24.

Logistics may continue to impact operations in the near term.

During the recovery, transportation of ethanol to the East and West Coasts may continue to experience difficulties.

However, rising corn prices and relatively low ethanol prices are a significant long-term concern for the industry.

This week, West Coast ethanol prices were still showing some strength in the wake of Midwest flooding that has severely slowed shipments to the region.

Prices into July are showing some downward pressure, indicating that transportation issues may be resolved by then.

For more information, call Surajudeen (Deen) Olowolayemo, USDA, at 202-690-1328.