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Indiana Soybean Alliance trip to Panama highlights shipping issues at canal

By Clayton Baumgarth

Posted December 26, 2023

The Soy Transportation Coalition in Panama. (Courtesy of the Soy Transportation Coalition.)

A contingent of Hoosier farmers returned this week from a trip to view the Panama Canal in an effort to learn more about the problems that are causing a nearly month-long backup of cargo ships.

Representatives with the Indiana Soybean Alliance and the Soy Transportation Coalition said that a drought in the region is causing problems with the Panama Canal’s locking system, which requires nearly 50 million gallons of water each time it’s used.

Mike Steenhoek, executive director of the Soy Transportation Coalition, said that the low water levels have caused the canal to restrict how many ships may pass through.

“They have to restrict the number of transits on it on a given basis,” he said. “And while what we do in agriculture is obviously very important, we also do need to recognize the fact that we're not the customers that are paying the highest tolls to go through the Panama Canal. Those are things like containerized shipments full of electronics and things like several 1000 cars transported by a roll on.”

Steenhoek also said that while Panama tries to find ways to conserve water for one of their largest sources of income, producers in the U.S. should focus on diversifying their shipping methods.

“One of the cardinal rules when it comes to transportation is don't put all of your eggs in one basket, the more you can spread those eggs across multiple baskets, the better positioned you are for success, and the more resilient you are as an industry,” he said. “So, it should all the more redouble our efforts to make sure that we've got an adequate rail infrastructure to go to places like the west coast or the east coast or to further invest in the Great Lakes system.”

Mike Koehne, a farmer out of Greensburg with Indiana Soybean Alliance, said that at the moment, ships have to go around the southern tip of South America if they aren’t allowed through the canal, which adds time and money to shipping worldwide.

“If they go around, it's 15 days longer,” he said. “So that's more fuel, that's more time, so it impacts us that way. If we ship grain off to gulf, most of it goes bulk. Through canal, containers are always number one, going through their bulk ag commodities is number two. So it's a big impact for us.“

Koehne also said that through the Soybean Alliance, he was able to see the full process of where his goods go when he ships them off the farm.

“I got to meet in users in Tokyo, Japan, that are buying my beans, and it really is cool to see the whole process,” he said. “A lot of Indiana farmers or even farmers in the U.S., they take their grain to an elevator and, you know, they don't know where it goes or what the end user is. And it's just neat to know how the process works, and where it's going and to meet the people.”

Steenhoek said that the coalition holds their yearly board meeting somewhere of interest to worldwide commerce, and this year happened to line up at the Panama Canal.

“It's just one big reminder that drought can not only impede the ability to grow a crop, but it can also impede the ability to transport that crop,” he said.