Severe Flooding Causes Widespread Damage to Ground Transportation Infrastructure and Threatens Industries Across the U.S. Great Plains & Midwest

Severe Flooding Causes Widespread Damage to Ground Transportation Infrastructure and Threatens Industries Across the U.S. Great Plains & Midwest

Executive Summary

  • A series of weather events in March 2019 triggered extreme flooding in eastern Nebraska, western Iowa, northeast Kansas, and northwest Missouri, causing widespread transportation and production disruptions.
  • Rail-dependent and single-road-dependent local producers in industries such as ethanol, medical devices, and agricultural equipment have been most severely affected.
  • Flooding to farmland and cattle-grazing land caused severe damage to assets in storage, assets in cultivation, and soil for future crops, likely triggering a wave of local agricultural insolvencies.
  • Railroad repairs are underway, but 3-4 day rerouting delays persist. Repairs to public road infrastructure will be a longer-term process, raising costs for local businesses and transiting truck shipments.
  • Significant risks of additional flooding along the Missouri and Mississippi River are likely to remain through spring 2019.

A Perfect Storm

As winter transitions to spring in the Great Plains and Midwestern United States, a succession of record- breaking weather events have produced cumulative effects with severe impacts to logistics, transportation, and agricultural operations in the region. These developments culminated in the arrival of Winter Storm Ulmer in Nebraska on March 13. Most severely affected has been eastern Nebraska, extending longitudinally into parts of Iowa and Missouri along the Interstate 29 corridor between Sioux City and Kansas City, where sections of road and railroad tracks remain submerged under up to 15 feet of water and over 350 miles of levees have been damaged. In total, Nebraska authorities currently estimate damages to roads, levees, and other infrastructure at USD 449 million, damage to agricultural crops at USD 440 million, and losses to livestock at USD 400 million (out of USD $12.5 billion in annual livestock revenues).

Initial assessments suggest that the flooding is the worst to strike Nebraska in 50 years. Heavy 2018 rains brought river levels well above averages before the 10th-coldest recorded February in Nebraska yielded 20-inch thick water sheets along rivers and produced a record-breaking 30 inches of total snowfall. With much of this snow still frozen on the ground, Winter Storm Ulmer developed between March 12 and 13 into an unusual explosive cyclogenesis, rapidly increasing in intensity and setting all-time record low barometric pressure readings in Colorado, Kansas, and New Mexico as it moved northeast. While temperatures were above-freezing in eastern Nebraska, the storm dropped 1 to 3 inches of rain on top of the existing snow, forming sheets of water that were 2 to 6 inches thick. As this water turned to runoff and rushed into the Platte, Elkhorn, Niobrara, and Missouri Rivers, these runoff sheets collided with existing river ice sheets, forming dams of ice that triggered rapid river and levee breaches, flooding surrounding areas.

Railway Companies Struggle to Restore Service as Delays and Outages Persist

Repairs are underway to address segments of track that were washed out by the floods, however many sections remain submerged underwater. Rail transporters affected by service outages currently face the following options: commit to rail transport with 3-4 day delays and increased surcharges for rerouting, transfer shipments to trucking, or delay shipments until rail service is restored.

The two largest rail transportation providers in Nebraska, Iowa, and Missouri are the Class I railroad operators Union Pacific Railroad (UP) and Burlington Northern Santa Fe (BNSF). As of this writing, Union Pacific has issued 6 service outage notices, in some cases declaring the company unable to deliver service due to flooding circumstances beyond its control. Below is a list of all segments that are understood to be affected:

Point 1Point 2Notes
Missouri Valley, IAFremont, NEOmaha Subdivision, reopened
Missouri Valley, IAFremont, NEBlair Subdivision, reopened
Grand Island, NEFremont, NEReopened, 3-5 day transit delay remains
Valley, NELincoln, NEReopening time unknown
Council Bluffs, IAKansas City, KSReopening scheduled for the week of April 1
Jefferson City, MOKansas City, KSReopening scheduled for March 30

Despite some segments reopening, 3-4 day delays are anticipated to persist for several weeks as repaired track is carefully monitored and embargoes are adjusted to require special transit permits; Union Pacific has advised that rerouted shipments are likely to face similar delays.

For BNSF, the following service outages have been reported (outages noted along both the Missouri and Mississippi Rivers; some locations are approximate):

Point 1Point 2Notes
O’Neill, NESioux City, IAReopening time unknown
Bellwood, NESeward, NEReopening time unknown
Omaha, NESt. Joseph, MOReopening time unknown
Lincoln, NEKansas City, KSReopening scheduled for March 30-31
Ashland, NERed Oak, IAService restored
Ashland, NESioux City, IAService restored
Keokuk, IAHannibal, MOReopening time unknown
Sainte-Genevieve, MOCape Girardeau, MOReopening time unknown

The Nebraska Central Railroad Company, a Nebraskan shortline company that operates 340 miles of track with interchanges in Grand Island, Central City, Columbus, and Yanka, also issued an embargo on all lanes on March 19. The company services trains with more than 250 cars at approximately 20 unit loading facilities in their network and mostly carries farm products, fertilizers, and steel.

Road Infrastructure Damages Decrease Routing Efficiency

The extreme weather phenomenon has also led to widespread infrastructure failures and road closures. In total, an estimated 200 miles of road have been damaged. On the Niobrara River, the Spencer Dam collapsed, closing the US-281 river crossing and triggering evacuations nearby. At least 13 other bridges have been compromised in northeast and north central Nebraska. Below is a list of the 14 specific bridge locations known to be compromised:

US-281South of Spencer
NE-57South of Stanton
NE-13East of Hadar
NE-14Between Highway 92 and Albion (2 bridges)
NE-39South of Genoa
NE-12Mormon canal, west of Niobrara town
NE-94South of Spencer
NE-116South of Dixon
NE-11South of Butte
NE-121South of South Yankton
NE-15Linwood Spur to South Schuyler (2 bridges)
US-275West Center Road near Omaha

Interstate 29 remains closed due to intermittent flooded sections between Interstate 80 (which also experienced blizzard-related delays and damage in western Nebraska in March) and US-Highway 71 near Amazonia, MO. As a result, transporters are forced to utilize I-35 and I-80 to circumvent the area, resulting in delays and out-of-route surcharges. Vehicles traversing affected areas are also at risk of delay as support facilities such as truck stops may be flooded (3 have been reported flooded around Nebraska City on Interstate 29). In addition, several entrance/exit ramps on Interstate 80 are reportedly closed.

Impacts to local transportation operations may be more severe, but are highly contingent upon an individual site’s elevation, proximity to breached levees, and access to clear roads. In the short term, affected sites may face delays, increased freight charges, or diversions to other sites, depending on the severity.

Uncertainty Over Barge Reliability Heightens

High water levels have forced barge transporters to slow traffic and reduce tow sizes in order to minimize risks of levee damage from wakes. Reports indicate that barge companies on the active portions of the Mississippi (south of Dubuque, IA) have reduced tow sizes from 40 barges to 25 or 30.

Even without compromised flood management infrastructure, high water levels can halt barge traffic completely due to unsafe reductions in visibility of the river fairway. Currently, beginning near Muscatine, IA on the Mississippi River, lock dams 16-18 and 20-22 are closed due to high waters, and locks 22-24 are closed due to bridge clearance issues near the town of Louisiana, Missouri. Overall, barge traffic on the Mississippi is currently restricted to southbound only, and during daylight only through the areas of St. Louis, MO, Memphis, TN, Vicksburg, MS, and Baton Rouge, LA.

Local agriculture commonly utilizes barge traffic for sending grains south and fertilizer shipments north. The month of April is typically the most active time of year for fertilizer shipments to farmlands along the Missouri and Mississippi Rivers. In turn, barge traffic disruptions may force some farmers to delay crop planting due to lack of access to affordable fertilizers, and increase the price or delay outbound shipments of grain to market. Already, U.S. grain shipments by barge are down; during the week of March 10 to 16, volume decreased by 58 percent compared to the same week in 2018 and prices have increased by 50 percent over the last 3 weeks. Where possible, some grain shippers are already pursuing alternative routes by rail to ports in the Pacific Northwest and Houston areas.

As the ice melts, river levels on the Missouri and Mississippi Rivers are anticipated to remain significantly above average, and in some cases, near or above crest over the coming 1 to 2 months. At the same time, strong currents from unusually high winter snowfall may bring sediment down-river, decreasing river depth in sections by around 4 feet and reducing overall permitted weights per barge (1 foot of depth = approximately 71,000 bushels of soybeans). The combination of high river levels, dams under severe strain, and 350 miles of already-broken levees suggest that intermittent service disruptions to barge traffic are likely along the Missouri River throughout the spring.

Rail-Dependet Manufacturers and Food Processors Most Severely Hit

In the region, manufacturing operations in industries such as ethanol refining, agricultural equipment, medical devices, and food processing that heavily utilize direct rail access or depend on a single local access road (especially those made of gravel) may be severely affected. Temporary staffing shortages due to evacuations or blocked roads at employee domiciles may also affect production and transportation activities. In one case, irrigation equipment manufacturer Valmont Industries was forced to halt production from March 18 to 22 at its Valley, Nebraska facility after flood waters in the vicinity blocked access to the plant.

Most notably, producers of ethanol, a corn derivative, have been forced to halt production or reduce output at some facilities due to rail disruptions. Nebraska and Iowa account for 40% of U.S. ethanol production with an annual capacity of 2.519 billion gallons per year. The most prominent ethanol producers in Nebraska and Iowa are Valero, Archer Daniels Midland, and Green Plains, who operate a combined total of 18 production facilities and heavily utilize rail to ship product to the Gulf Coast, East Coast, and West Coast markets. Green Plains reported that its 5 facilities are not flooded, but facilities in Atkinson, Ord, and Central City are facing rail service outages. At Archer Daniels Midland’s Columbus, NE facility (which produces 413 million gallons annually), production is reportedly down to minimal levels due to flooding of a small rail line that serves the plant. In total, experts estimate that 13% of national ethanol refining capacity has seen a production halt or reduced capacity due to rail service outages in the region. While national corn market prices are unlikely to be significantly affected, locally-situated producers of ethanol, who benefit from proximity to corn producers, may ultimately raise ethanol prices due to the destruction of local corn stockpiles.

Grain, soybean, and corn markets may see some effects in about a month if planting delays due to soil damage are widespread, and particularly if an unusually wet season increases pests and reduces yield. However, futures markets have so far been virtually unaffected and analysts are generally not concerned due to near-record overall supplies of all 3 crops.

Overall, reports from the meatpacking and food processing industry, which are more flexible in their transportation options, have documented only minor disruptions. In some cases, livestock deliveries have been required to deliver to alternative processing facilities, and some animals have been held at facilities for above-average wait times at slaughterhouses.

Heavy Losses Likely to Trigger a Wave of Insolvencies

Agricultural producers in affected regions specialize in grain and corn production, while livestock producers in the area specialize in beef, pork, dairy, and poultry production. Early reports indicated that farms were also affected in western Iowa, a leading area for pork and egg production. For producers in the region, recent flooding has not only compromised transportation routes to markets, but in some cases, destroyed multiple years of harvests. Agricultural and livestock producers along the Platte, Elkhorn, Niobrara, and Missouri Rivers have reported detrimental impacts to harvested crops in storage, crops currently in the field, and soil viability for the coming year.

In the most affected localities, the floods are likely to reconfigure farm and cattle-grazing land ownership. Even for those who have not been directly hit, estimates suggest that viable crop holders are experiencing cumulative losses of USD 1 million each day due to the lack of access to water and continued transportation outages. One farmer who had 75% to 80% of his stockpiles destroyed near the Missouri River in Fremont County, Iowa estimated that a large proportion of farmers in the area will be financially unable to recover from the damage or to withstand increased transportation costs. This will likely bring many to consider selling their land to neighbors or agricultural investors.

Harvested Stockpiles Compromised

In anticipation of rising crop prices, many farmers in the area have been stockpiling grain, corn, and soy crops in recent years. An estimated 3.7 billion bushels of soybeans are currently in storage across the United States and 528 million of those bushels are in Iowa alone. These stockpiles are generally kept in silos on-site and are vulnerable to severe flooding. Damages to these stockpiles are likely to increase as assessments continue.

Floods Threaten Crops and Livestock

While localized assessments of crop damage have not yet been released, sources estimate that the total acreage of farmland underwater or at immediate risk of being underwater in Nebraska, Missouri, Kansas, and Iowa is in the millions of acres. Damages to the soil due to contamination from sediment and debris spread by flooding waterways may delay or ultimately prevent planting of new crops over the coming year. For livestock, cattle health may be compromised later in the season as ranchers send cattle out to pasture early due to excessively muddy pens, straining grass feed supplies. However, experts do not anticipate that total losses to cattle will be enough to impact market prices, especially in consideration of the current surplus.

Flood Risks Continue

Weather experts note that major risks for additional flooding along both the Mississippi and Missouri Rivers will remain for the duration of spring 2019, as depicted in the map below from the United States National Oceanic and Atmospheric Administration. This risk is particularly acute in Nebraska, where further rains may place extreme stress on already-compromised dams, levees, bridges, and other infrastructure along the waterways.

Figure 01: The U.S. National Oceanic and Atmospheric Administration anticipate major flooding along both the Missouri and Mississippi Rivers and their tributaries in spring 2019.

Separately, on the Mississippi River, experts warn that the combination of currently high water levels and the abundance of snow that has not yet melted in the Mississippi River Watershed areas of Minnesota and northwest Wisconsin may result in similar flooding events along the riverside areas of Minnesota, Wisconsin, Iowa, Illinois, and Missouri. As the snow melts in mid-to-late April, the potential for flooding over the next 2 months is high, and any heavy rain incidents may trigger further record flooding events.

Mitigating Immediate Risks to Your Supply Chain

Supply chain managers as well as transporters with road, rail, or barge shipments scheduled to transit the affected areas should:

  1. Ensure that truck drivers have adequate work-time and fuel to avoid unnecessary stops in the area.
  2. Account for up to 3 hours additional transit time for truck shipments passing between the Omahaand Kansas City areas, along with corresponding out-of-route surcharges (due to the I-29 closure).
  3. Anticipate 3-5 day delays for rerouted rail shipments and corresponding congestion surcharges.
  4. Contemplate risks associated with barge traffic reliability and explore options for overland trucking.
  5. Consider if temporarily transferring rail shipments to trucking is right for your supply chain.

Sourcing managers with suppliers in the vicinity of any point along the upper Mississippi River or Missouri Rivers and their tributaries should:

  1. Contact local suppliers to ensure that they are not experiencing staffing shortages, road blockages, or rail access blockages.
  2. Act quickly to assess site-specific flooding vulnerability (such as elevation, proximity to waterways, current condition of nearby levees, and access to multiple roadways) and ensure that suppliers have taken appropriate preventative measures.
  3. Verify that sufficient alternative suppliers exist should flooding cut transportation lanes or force a production halt.

Beyond 2019: Mitigating Long-Term Risks

The historic flooding still underway in Nebraska highlights the continued need for supply chain managers to pay special attention to flood risks and the variety of disruptions they can cause to supplier and transportation networks. Looking forward, supply chain managers should carefully evaluate the resiliency of suppliers in the region against floods by considering their use of flood-damage resistant structural materials, flood-resistant storage facilities, and access to alternate transportation modes in case of emergencies.

Transportation providers and state Departments of Transportation are eager to resume normal service where possible as waters recede. However, some pieces of infrastructure will require full reconstruction, with uncertain timelines for recovery. In the long-run, state, federal, and local authorities will need to coordinate and execute infrastructural repairs to bridges and roadways. Until damaged infrastructure is repaired, local producers and suppliers in eastern Nebraska and Iowa are likely to face higher ground transportation costs as shippers are forced to take non-optimal routes due to extended or repeated transportation lane closures.

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