USW readies customers for Columbia Snake River System upgrade

by Eric Schroeder
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Bonneville Lock and Dam
Bonneville Lock and Dam should re-open after 8 weeks, which would open facilities up river to The Dalles.
Source: U.S. Army Corps of Engineers
 
WASHINGTON, D.C., U.S. — Although still several months away, U.S. Wheat Associates (USW) is laying the groundwork for smooth operations when the Columbia Snake River System (CSRS) closes for extended maintenance later this year and into next.

The CSRS will be closed from Dec. 12, 2016, to March 20, 2017, during which time the U.S. Army Corps of Engineers will make essential renovations to all the navigation locks on the Columbia River and the Snake River. No barge traffic will be able to pass during this time.

The CSRS is a vital transportation link for wheat producers in the states of Idaho, Montana, Oregon, and Washington, and serves as the No. 1 U.S. wheat export gateway. The deep draft channel supports 46 million tons of cargo each year, valued at $20 billion. The inland system supports more than 9 million tons of cargo.

Extended closures are unusual, but USW said the investment in the Pacific Northwest grain chain is a “critical part of our country’s long-term position as the world’s most reliable supplier to our customers.”

“USW and supply chain participants take any customer concerns about supply, cost impact and logistical options seriously, and is working with customers to help them minimize any possible impact before, during, and after the river system closure,” USW said.

The last extended closure occurred in 2010-11, and USW believes the grain industry will consider every logistical option to keep wheat, especially soft white (SW) wheat, flowing to export elevators.

“Significant changes will help make this closure more manageable,” USW said. “For example, total export terminal storage capacity on the Columbia River has grown substantially since 2011. The addition of an entirely new terminal, plus the construction of new storage at several others, has increased storage capacity from 564,000 tonnes to 866,000 tonnes today. The PNW’s total up-country grain storage capacity has also grown to 17.3 million tonnes from 16.4 million tonnes.”

USW said rail shipments made up 54% of SW sourced by rail during the outage in 2010-11, and rail shipping is likely to make up most of the barge capacity shortfall during this closing as well. An estimated 80% of hard red winter (HRW) and 90% of hard red spring (HRS) exported from the PNW already are sourced by rail, according to USW.

“For SW to move west, rail sourcing will have to increase as much as 25%,” USW said. “Fortunately, railroads have been investing in capacity and there are now four shuttle train loading terminals in eastern Washington, compared to two that were operational in 2010-11. The system is even better prepared to meet demand in 2016-17.”

To deal with the transportation challenges during the upgrade, USW said exporters, grain originators, barge operators, railroads, and trucking lines already are planning to minimize interruptions and costs. Alternatives include:

• Pre-positioning the maximum number of barges to load SW before the closing (the Bonneville Lock and Dam should re-open after 8 weeks, which would open facilities up river to The Dalles, about 307 kilometers east of Portland, Oregon, U.S.);

• Moving more rail cars and locomotives into the region to handle increased demand from rail-loading interior elevators;

• Coordinating truck and rail delivery from the Willamette Valley, south of Portland, Oregon.

USW also said buyers can help prepare for the maintenance period by taking a longer view of their purchase needs. The association is advising its customers to consider:

• Consulting with PNW exporters as early as possible to help give exporters more time to respond to needs and to manage their logistical challenges.

• Scheduling a meeting soon with the local USW representative to identify buying strategies that fit specific needs and capabilities;

• Analyzing inventory needs and logistical capabilities;

• Increasing SW wheat and/or flour storage;

• Increasing SW purchase cadence in the harvest and immediate post-harvest period (July-November) before the closure;

• Deferring as an offset some HRW and HRS shipments from the immediate post-harvest period into the maintenance period. 
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