By Mike Steenhoek, Soy Transportation Coalition
It’s always a good day to try to diversify your supply chain. It’s particularly a good day to do so given the current supply chain challenges. The low water levels throughout the inland waterway system, unreliable rail service – exacerbated by the threat of a railroad strike in mid-November, truck driver shortages, and port congestion are all seeming to conspire to impede the ability of farmers to connect with domestic and international customers. One of the cardinal rules regarding supply chains is to avoid “putting all your eggs in one basket.” When a shipper can access a variety of transportation modes and providers, the more competitive that shipper will often be in serving its customers.
In the effort to continue promoting a more dynamic and diverse supply chain for U.S. soybean farmers, the Soy Transportation Coalition (STC) has continued its partnership with The St. Lawrence Seaway Management Corporation (SLSMC) to encourage the greater utilization of the Great Lakes-St. Lawrence Seaway (Seaway) in accessing international markets. Specifically, the partnership extends the SLSMC’s “Gateway Incentive Program” – a 50% reduction on shipping tolls – for new shipments of soybeans and agricultural freight via the Seaway.
The Great Lakes-St. Lawrence Seaway is a deep draft waterway extending 2,340 miles from the Atlantic Ocean to the head of the Great Lakes at Duluth, Minnesota. The Seaway includes 15 locks – 13 in Canada and two in the U.S.
During this time in which supply chain challenges are being encountered from multiple directions, it is very timely to consider the Seaway as another option for U.S. agriculture to access international customers. The Seaway is open for business and is willing and able to be an effective lifeline for farmers and agricultural shippers in a number of regions of the country. A number of key soybean-producing states are adjacent to the Seaway:
|Illinois||683.2 million bushels||1st|
|Minnesota||356.3 million bushels||3rd|
|Indiana||338.4 million bushels||5th|
|Ohio||278.2 million bushels||6th|
|Wisconsin||113.9 million bushels||13th|
|Michigan||109.1 million bushels||14th|
|Pennsylvania||31.5 million bushels||19th|
|New York||17 million bushels||22nd|
While less than 2% of U.S. soybean exports currently utilize the Seaway, any opportunity to increase supply chain diversity and resiliency will benefit soybean farmers. Given the significance of the inland waterway system and the freight rail network in transporting U.S. soybeans and grain, the Seaway is not able to simply absorb all that these other modes regularly accommodate. Moreover, there are regions of the country that are too far removed from the Seaway for it to be a viable option. However, there are a growing number of farmers and agricultural shippers who are increasingly exploring supply chain alternatives. The Seaway is certainly an option that should be explored and utilized for certain agricultural regions.
Under the agreement with the Soy Transportation Coalition, multiple U.S. soybean and agricultural exporters can avail themselves of the toll reduction. To be eligible for the toll reduction, cargoes must currently be moving between a specific origin and destination via another supply chain route. The key highlights of the Gateway Incentive Agreement are as follows:
- Must be new freight utilizing the Great Lakes/St. Lawrence Seaway
- Toll reduction of 50%
- 75,000 metric ton minimum threshold
- Separate exporters can be aggregated to achieve the 75,000 metric ton threshold under the Soy Transportation Coalition agreement and all receive the 50% toll reduction (for example):
- Exporter #1: 25,000 metric tons of new business
- Exporter #2: 25,000 metric tons of new business
- Exporter #3: 25,000 metric tons of new business
- Eligible commodities: soybeans, soy products, grain, or grain products
An application must be submitted by the shipper prior to the proposed movement to confirm eligibility. U.S. based soybean and agricultural shippers interested in exploring the program further can contact Mike Steenhoek, executive director of the Soy Transportation Coalition at 515-727-0665 or firstname.lastname@example.org.