A recent dispatch of “Editor’s Notebook” outlining shipping issues at the Panama Canal (CLICK HERE TO READ) that could impact the cost and flow of rock salt through the canal resulted in some interesting reader feedback about potential transportation problems closer to home.
That initial contractor feedback to the Panama Canal story pointed to extensive renovation work planned for the Illinois canal system that could impact the tonnage of salt brought up through the Illinois Waterway for next winter and beyond.
According to the U.S. Army Corp of Engineers’ website, the Illinois Waterway, which provides a navigable connection between Lake Michigan and the Mississippi River, includes eight lock and dam sites which are long overdue for significant repairs. To facilitate much needed repairs, the Corp of Engineers developed a consolidated repair schedule, which includes a short closure to locks in 2019 followed by two extended closures in 2020 and 2023.
The 2019 closure includes bulkhead recess installation at Starved Rock and Marseilles Lock and Dam that will result in a partial closure June 1-July 3 and July 8-Aug. 15, and a full closure scheduled for Aug. 16-Aug. 30. Additional full closures along the waterway system are scheduled for 2020 and 2023`.
I ran this news by Snow Magazine’s salt and deicing columnist Rob English, who keeps a finger on the pulse of the deicing industry (CHECK OUT ROB’S LAST ARTICLE). Rob did some sleuthing and reported back these additional findings about potential blockades to the flow of rock salt.
According to Rob, the Illinois Waterway renovation work won’t have too much of an impact on the flow of rock salt. However, it will have an “absolute impact” on price because the cost to travel up the waterway will increase as ship owners manage costs related to construction delays.
Agriculture and the Impact on Shipping
The bigger, more immediate problem, according to Rob, are barges loaded with fertilizers sitting in New Orleans waiting to go upriver since around mid-March, when it normally opens, due to Mississippi River water levels. It finally opened in mid-May. So, these barges have been idle during what is normally a very busy time to transport fertilizer upriver for the corn industry to support ethanol production. If farmers can’t get corn planted by June 1, they’re out of luck. What’s worse, last year’s crops are rotting in silos while they wait for barges that are 60 days late. READ MORE ABOUT THIS TOPIC
If farmers change tactics and plant soy – which is risky considering the current trade war with China – this could put a strain on barge traffic, which is historically tight between Aug 15 and Nov 15, Rob says. You also need to take into account the potential impact on fuel that may lack sufficient amounts of ethanol. This could put a strain on the demand for diesel, coupled with lock renovation delays, and drive fuel costs higher. READ MORE ABOUT THIS ISSUE HERE
Then there’s the matter of the Tenn-Tombigbee Waterway, a 234-mile man-made waterway that extends from the Tennessee River to the junction of the Black Warrior-Tombigbee River system near Demopolis, Ala., and links commercial navigation from the nation's midsection to the Gulf of Mexico. According to Rob’s research, silt levels have forced the closure of a 16-miles stretch restricting barge traffic. MORE ON THIS WATERWAY CLOSING
Patillos Port, Chile
However, the big news surrounds German mining company K+S, which owns Morton Salt. One of their bulk salt loaders at Patillos Port in Chile had a catastrophic collapse on May 16 that fell on a ship that was loading up with salt and the balance fell into the sea. This is one of two loaders at the site and repairs could take as long as 15 months, Rob says. Even if K+S could do the repairs in 8 months, this still knocks out half of their loading capacity in Chile through the rest of 2019 and a good portion of Winter 2019-20, which is huge, he says. WATCH A VIDEO OF THIS LOADER COLLAPSE
According to K+S's 2018 financial report, Patillos is K+S's largest port in Chile, where 6.5 million tonnes of salt were loaded onto maritime vessels that year.
So, factor these components together and you come up with the following scenarios.
- Mississippi water levels have delayed shipments up to 60 days or more.
- Barge availability will be abysmal as shippers play catch up all summer, which could potentially drive costs through the roof.
- The Tenn-Tombigbee system is silted and inoperative, closing out an entire region to barge delivery.
- Morton’s Chilean loader collapse could sting the salt provider on many fronts, and the Mississippi River issues only add insult to injury.
Not to sound all doom and gloom, but we haven’t taken into account any number of weather scenarios that could brew this summer that would further hamper barge traffic and shipping.
While it’s extremely difficult to attach a percentage or cost-increase figure to these related news items, connect the dots and they will most likely lead to strains on supply for commercial contractors and higher prices for the industry going into next season. At this point, some commercial contractors from around the snow belt are reporting 15-22% increase in salt prices heading into Winter 2019-20.
Mike Zawacki is the editor of Snow Magazine.