Grain shipping from the CHS export elevator on the Gulf of Mexico at Myrtle Grove, La., could benefit long term from Panama Canal expansion. The broader impact of the wider and deeper third channel when it opens in three years remains to be seen for the U.S. shipping system, including East and West Coast ports and those on the Gulf of Mexico. Increased container shipments could be among the first benefits for East Coast ports, provided they are dredged deeply enough to handle the larger vessels that will eventually follow. Soybean transportation and other commodity groups are trying to assess the impact on agriculture, particularly on its primary grain export channels to Asia down the Mississippi River through Gulf of Mexico ports and the Panama Canal, or through Pacific Northwest ports via rail from the Midwest. CHS Has Options Grain exporters also have a vested interest in these new capabilities. That group includes CHS, with a ship-loading elevator on the Center Gulf and two terminals in the Pacific Northwest (PNW) that could all feel the impact of increased Gulf competition. This multiple export-channel capability, which also includes St. Lawrence Seaway access from its Superior, Wis., terminal, continues to give CHS the flexibility to ship through the channel that gives the company and its grain shippers the best freight breaks and end-customer access. CHS grain merchandisers say the improvements should help Gulf export facilities like the one it operates at Myrtle Grove, La., remain competitive. That terminal could handle larger cargo ships with relatively minor improvements. For the foreseeable future, though, soybean trader Chris Pothen and corn trader Jason Marthaler say Panamax ships will continue to be used because the new channel will be deeper as well as wider. That means the same vessels will be able to handle more grain because of gains in draft. Pothen says the additional capacity could close some of the Gulf of Mexico competitive gap over PNW ports by $2 to $3 per ton. It also will increase the U.S. advantage over South American grain exporters. PNW Remains in Play CHS is involved in two PNW export facilities: an export elevator it owns at Kalama, Wash., and a joint venture operation at Tacoma, Wash. Those ports, connected by unit-train shuttles to western United States and Midwest growing regions, are expected to remain price-competitive. Plus, combined train and ship transport through the PNW takes about half the time involved in transporting goods from the Canal to the Gulf, even with reduced waiting times at Panama. It generally takes 18 days to ship soybeans to China through the PNW, says Pothen, compared to the 35-day voyage from the Gulf, where waiting times at the Panama Canal now can be up to five days. End customers in China could benefit immediately from Canal expansion, points out Pothen, because its relatively new ports can already handle mega cargo ships. In countries including Japan, Korea and Taiwan, though, Marthaler says much hinges on whether they decide to expand ports to handle larger corn cargoes. “The old limiting factor was the size of Panamax ships,” Marthaler adds. “The new limiting factor will be destination ports.” 24 July/August 2011 CHSINC.COM