The Waterways Journal
23 April 2007
By Nelson Spencer
Port and terminal operators might see a shift in shipping patterns and should plan now to deal with them, said a barge and towing company senior executive at the recent Inland Rivers Ports & Terminals Association annual meeting in Memphis.Mark Knoy, president of AEP River Operations, which operates more than 60 vessels, told conferees that the surge in corn-based ethanol production could change the dynamics of the agricultural markets. Corn prices are near a 10-year high.
A recent USDA report indicated there should be enough corn this year to satisfy both the ethanol and export markets, he said. However, it will be at the expense of soybeans. Farmers will plant more than 90 million acres of corn this spring compared to 67 million acres of soybeans, the smallest in more than 10 years.
"The dramatically increasing domestic demand for corn may ultimately shrink the exportable surplus of both corn and soybeans. While we may have forestalled this in the corn sector this year, there is little doubt that U.S. soybean exports will be pressured if current trends continue," Knoy told IRPT.
Since most of the increase in corn acreage is occurring outside the traditional Corn Belt, new shipping patterns could very well emerge, he continued.
Nationwide, corn acreage is forecast to increase by 15 percent, but in Arkansas, Mississippi and Louisiana, farmers plan to boost their corn acreage by 195 percent, 179 percent and 133 percent, respectively.
"As corn acreage expands in the South, we likely will see an increasing share of the export grain we handle originate from these locations, while more and more corn grown in the Corn Belt is diverted to ethanol production. Thus, to the extent we are able to maintain our corn export program, the distances that corn must move for export can be dramatically cut, with adverse consequences for the barge industry," he said.
However, the ethanol boom could also create opportunities, Knoy added."Corn is the most fertilizer-intensive major field crop grown in the United States. As corn acreage rises, fertilizer demand should increase proportionately," he said. "As an industry, we must identify how we can capitalize on these changes."
The barge and terminal industries also need to gain an understanding of corn byproducts, such as distillers dried grains and solubles, in order to benefit from their anticipated growth due to the rising ethanol production, Knoy added.
Opportunities for growth exist elsewhere as well, Knoy told IRPT.
Coal-fired power generators are amping up their generating capacity and retrofitting their plants with emission-control equipment, which will increase barge traffic.
He said there are "currently 19 existing barge-served power plants that are being retrofitted with new flue-gas desulfurization scrubbers, (and) once operational, (they) will require a total of 9 million tons of limestone annually, most of which should be delivered by barge."
Knoy appeared on an IRPT panel that included John Hallmark of
Osprey Lines, who said it would be five years before
container-on-barge traffic would be totally
"up and running." Other panelists were Charles
Derscheid, St. Paul Port Authority, and Misty Stine, Adesta.
The panel that featured Bill Stegbauer (see related article) consisted of Richard Peckham, International Dry Bulk Terminals Group, and Michael Carter, Giken.John Scialdone of Balch & Bingham LLP, James Bailey of Farris, Matthews, Brannan, Bobango, Hellen & Dunlap PLC, and John Nolan of Nolan Inc., comprised a third panel, on legal and insurance issues.