November 2, 2021
Justin Cauley, director of transportation for CHS, gives insight into the current shipping situation and how it’s affecting agriculture.
As harvest winds down around the country, the agriculture industry shifts its focus to crop transportation.
“Several things are happening in transportation right now,” says Justin Cauley, director of transportation for CHS. “First, we can talk about the barge freight market. We’ve had a lot of strong rains in the Midwest recently. While that is good for river drafts, meaning we can load more grain into barges, the rains have impacted harvest progress, and river barge loading has slowed down significantly.”
The picture for railroad and ocean freight looks a lot better, Cauley says. Prior to harvest, volumes were low, so there were questions about how railroads would handle the tremendous volume spike. So far, he says rail has performed quite well handling the harvest ramp up.
“The outlook for ocean freight also looks positive as the industry experiences some of the strongest prices seen in years,” Cauley says. “Higher shipping costs by sea favors shorter routes, making the Pacific Northwest competitive with destinations in East Asia.”
Supply chain impacts
Like many industries, agriculture isn’t exempt from supply chain issues brought on by the pandemic. Delays in shipping, combined with current freight rates, are giving farmers a lot to think about when planning for the 2022 growing season.
Cauley explains that the supply chain is under stress. As farmers think ahead about replacement parts for equipment and other goods sourced abroad, lead times will be noticeably longer than they have seen in the past.
“The costs are likely going to be higher, too,” says Cauley. “This is forcing everyone who participates in the supply chain to review inventory levels from a safety stock perspective and farmers will want to stay in close contact with their suppliers as we look to the year ahead.”