U.S. Transportation Advantage Is Narrowing

The superior quality of U.S. soybeans and corn is recognized around the world, and barge transportation plays a role in that. U.S. soybeans typically have fewer foreign materials, less breakage and better uniformity compared to many soybeans sourced elsewhere. This is largely because the United States uses extensive inland rail and barge systems rather than long truck hauls, and U.S. export elevators often clean beans before loading.

A lot of things affect international grain sales. Farmers have no control over some of these, such as a strong dollar that drives up the price of U.S. exports. For decades, though, U.S. farmers have enjoyed an advantage that partially offsets higher prices and a strong dollar: the transportation advantage.

The transportation advantage makes our ag exports more competitive in international markets. Efficient barge transportation doesn’t just deliver a cleaner (and greener) product. It also lowers transportation costs relative to many of our competitors.

Here again, our lock and dam system has provided a boost. For years, competitors like Brazil and Argentina had inadequate port facilities and supply chains that relied too much on trucks. That transportation cost offset the price of their grains, which were cheaper to produce.

But that transportation advantage is fast eroding as competitors build out their logistics. On November 4, Argentine Economy Minister Luis Caputo confirmed the approval of a major port project under the Large Investment Incentive Regime (RIGI), a tax-break program aimed at attracting large-scale investments. The project, developed by Terminales y Servicios S.A., involves constructing a multipurpose port terminal in Timbúes, in the province of Santa Fe, on the western bank of the Paraná River, approximately 20 kilometers north of Rosario. The port is expected to handle grain, fertilizer and other goods. The Paraná River, the second longest river in South America, has long been a major export gateway for both Brazil and Argentina. This marks the ninth RIGI approval, bringing the regime’s total cleared investments to $24.8 billion.

While all this South American port and infrastructure modernization is being announced, the United States is still struggling merely to maintain our lock and dam system at current levels of service. Much of the system was built during the Great Depression, and some components are showing their age.

America’s unrivaled river system, along with our coastlines, made the United States into a superpower, but that system still is not being used to its full potential. Maintaining what we’ve got is necessary, but that’s not a sufficient goal for the future of global cargo movements.