USA may lose competitive edge in shipping soyabeans and grains

The USA is at risk of losing its competitive advantage in soyabean and grain exports due to under-investment in its aging inland waterways system, according to a study commissioned by the US Department of Agriculture (USDA) and conducted by Agribusiness Intelligence.

“The USA is in direct competition with Brazil for its agricultural export business, particularly for corn and soyabeans, two of our largest exports,” World Grain quoted Ken Eriksen, senior vice-president of Agribusiness Intelligence’s consulting business, as saying. “Therefore, infrastructure investments can have a tremendous impact upon a farmer’s profitability.

“Multinational corporations, including Chinese companies, are making significant investments in the Brazilian grain and soyabean transportation and handling systems,” Eriksen said in the 30 October World Grain report.

The study found that while the USA currently had a 5.35-per-tonne advantage over Brazil when shipping soybeans on the inland waterways system (from Davenport, Iowa, to Shanghai, China), aging US waterways infrastructure would increase the price to the end-user, lower the demand for US grains and soybeans, and make them less competitive in global markets.

World Grain wrote that the US inland waterways system comprised navigable areas of the upper and lower Mississippi River, the McClellan-Kerr Arkansas River, the Missouri River, the Illinois and Ohio river systems, the Tennessee River and the Gulf Intercoastal Waterway. These waterways fed the Mississippi River export grain complex of elevators which handled 57% of US corn export volumes valued at US$4.8bn and 59% of US soyabean exports valued at US$12.4bn.

Eriksen said the inland waterways infrastructure was quite old, with many of the locks 80 years of age and far exceeding their 50-year designed lifespans. Current funds did not enable the US Army of Engineers to keep pace with barge-volume traffic and growth or infrastructure maintenance, he added.

Last year, the China Communications Construction Co (CCCC) broke ground on a port in Brazil’s northeastern state of Maranhão that would ship millions of tonnes of agricultural exports, World Grain wrote. The CCCC was also considering the purchase of an infrastructure investment fund that planned to build a large port in the southern state of Santa Catarina, mainly for soyabean and beef exports.