The Take: Mississippi Water Levels Disrupt Grain Shipments

What’s News

The Mississippi river is a vital transport route for U.S. agricultural commodities, carrying 92% of U.S. agricultural exports and 78% of the global exports of feed grains and soybeans. But water levels in some parts of the river are now so low that commercial traffic has been halted and the U.S. Army Corps of Engineers has been called in to begin emergency dredging.

With no sign of an end to the drought in the Midwest, water levels in the Mississippi are now near 30-year lows because of a lack of rain in the Ohio River Valley and the Upper Mississippi. As a result, U.S crop exports at Louisiana Gulf Coast terminals were at their lowest level in nine years for the first week of October, according to U.S. Department of Agriculture (USDA), and shipping prices have soared.

SAP’s Take

Historically, shipping along the Mississippi river and its tributaries has been less expensive than other forms of transportation, but this hasn’t been true in recent weeks. As Richard Howells, vice president of solution management for digital supply chain at SAP notes: “We plan in the perfect world and we execute in the real world.”

With parts of the river unpassable for big barges, he says grain shippers in particular have been forced to look at alternative modes of transport to move the grain to the port. “You may be able to use trains to take the load part way and trucks for the last mile,” he says.

That, he suggests, is easier if the shipper has clear and up-to-date information. Providing that kind of data visibility, control and risk resiliency is the purpose of SAP Transportation Management. “With connected data — including freight, fleet and logistics — you can re-plan with an updated schedule based on available routes and vehicles.”

“When there’s a disruption, companies have to move quickly to identify which trucking companies and railways offer the right services and are available on short notice,” Howells says. In particular shippers need to establish whether they have contracts with these logistics service providers already, or contacts that could broker introductions to new vendors.

“Ideally, you want to foster relationships with a trusted network of business partners so you have more choices and a faster response when the unexpected happens,” he says. “If your grain is sitting in a stranded barge waiting for the dredger to deepen the water, which customers are expecting that order?”

Once contingency plans are in place, the next step is to figure out whether the grain will arrive on time for each handover between trains, trucks and the outbound ships sitting in the ports. “Updated information and visibility at every leg of the journey helps you keep customers informed, resetting their expectations so they can adapt their operations as well,” says Howells.


Contact:
Joellen Perry, Head of Global Public Relations, SAP
+1 (626) 265-0370, joellen.perry@sap.com, PT