Despite flood, Iowa producers meet demands

By Ryan C. Christiansen | July 08, 2008
Web exclusive posted July 9, 2008 at 3:53 p.m. CST

Ethanol producers in Iowa faced logistical challenges in getting their ethanol to market during last month's flood, but the challenges were not insurmountable, according to Monte Shaw, executive director for the Iowa Renewable Fuels Association. The Johnston, Iowa-based association has been surveying the situation with Iowa ethanol producers the past few weeks.

During the month of June, the nation's top ethanol and corn-producing state was inundated with heavy rainfall that caused record flooding along many of Iowa's rivers. The main railway lines and branch lines, especially east-west routes, were closed or curtailed due to washouts or tracks and bridges under water. Some railroads had trains stranded between washouts. Shaw said the situation was really bad around June 12 and 13, as well as a few days before and after that. There were delays, he said, and producers ended up paying more to ship their product to market using alternative rail routes through Canada or using trucks instead of railcars.

"Instead of being on plan B, the producers were on plan C and D," Shaw said. Despite producers having to use alternative transportation routes and having two ethanol plants in Cedar Rapids shut down entirely, overall the ethanol industry in Iowa was able to meet demand, he added. The IRFA's early assessment shows a shortfall of approximately 10 million gallons.

"We found that doing what we always do and operating a week to 10 days in advance gave us the amount of time that we thought the environment was going to need to get back to some kind of normal movement of product," said Scott Swanson, marketing manager for renewable fuels marketer Provista, which helps biofuels producer clients with railroad logistics.

"Each of the railroads needs to take a little bit of credit in this," Swanson said. "The railroads were working with each other, trying to identify whose river crossing was open and whose wasn't and who had trains that were available to be rerouted. The railroads did a very good job of working together to keep the system moving as best as they could. It is going to take a few weeks here yet to get back to whatever ‘normal' was like before the issue. They did a good job at keeping us informed."

Provista's trucking network experienced a 40-mile detour and the company considered rerouting product by rail through St. Louis, but ultimately decided against the reroute, said Mark Thompson, logistics manager for Provista. "We decided not to do that," he said, "because once you start making all of those changes it seems that—what has happened in the past—when you make those changes, the situation resolves itself and you've just created another mess, another delay, and cars are just congested in other spots."
Overall, logistics and marketing personnel handled the Iowa flood in stride, he said.

"I take my hat off to the marketers and logistics folks in the industry," Shaw said. "We took a 500-year flood and, from the customer's standpoint, we didn't miss a beat, but that doesn't mean we didn't work really hard to make that happen. I don't want to minimize a flood of Biblical proportions, nor to minimize the impact it has had on my friends and the people of Iowa, but after taking a step back, the decimal point [for production] doesn't change. The amount of production that was offline for a few weeks is almost back up to full capacity."

Shaw added, "I can't say things are back to normal, but things never left normalcy for our customers."