The war in Iran is having a significant impact on the energy markets, but that’s not the only economic segment feeling the strain. Mike Seyfert, president and CEO of the National Grain and Feed Association, said the grain and feed industry’s transportation costs have risen significantly.
“Yeah, it’s absolutely something that we’re watching and following. And you know, since the war in Iran started, what we’ve seen, and our members have reported to us, is on vessels out of the center gulf, let’s take the center gulf, they’ve been saying premiums of a million to a million and a half. That equates to about 50–55 cents extra a bushel. And when you think of where we’ve been dealing with competitive issues in the global market, and some of the margins that we producers, our members, are operating on, that’s tough. And you know, we’re seeing it in trucking. A dollar increase in diesel fuel is about a $20 increase in a 100-mile round trip, or about two cents a bushel.”
Rail shipping costs are about to head significantly higher too.
“The rail side, a lot of those contracts, fuel surcharges, if there are any in that, probably won’t go into effect until maybe more in the May timeframe, the way those contracts were written. But what we’ve been told back of the envelope, kind of taking a look at it, assume that that surcharge could equate to about $375 a railcar, which is 11 cents a bushel, which may not sound like a lot until you take 110-car shuttle train, and that’s $41,000, and so, a real impact there. And you know, we also have heard, even on the vessels that can get booked, do go out, challenges with what they call bunkers, which is where they get their fuel as they’re in transit in that, and so transportation is a big issue, I think, the longer this goes on.”
Speaking of transportation, Seyfert said there seems to be good progress on Capitol Hill for a forthcoming highway bill.
“Seems to be good progress being made on the highway bill, particularly on the House side. I think what we’re really hoping for, they’re working on, is some increased truck weights that would be more efficient for our members, for producers, and a lot of the trucks we have now are operating safer than what we’ve had in the past. And also looking at some more reasonable hours of service exemptions that are more reflective of how we haul grain and feed here in the country. And really, everybody thinks of at harvest, but we’re moving grain throughout the year. It’s really not seasonal, so looking at that.”
He talked about the Water Resources Development Act.
“Obviously, the waterways are the competitive advantage we have against South America and other areas right now. So, continuing to get the funding, the resources, we need to update that lock and dam system, many of which are past their 50-year lifespan on the Mississippi, but also looking out into the PNW and the Snake River dams, and making sure there that we maintain those dams, and that we don’t get language in the bills that would allow those to be breached at some point in time.”