When it comes to exporting grain, the container shipping business of The DeLong Co. Inc. is well positioned to do business with Asian countries.
“We’re a backhaul,” said Bo DeLong, vice president of grain for the Clinton, Wisconsin-based company. “Products are imported into this country by container and in order to get those containers back to Asia they want to fill them with something and to fill them up they give us attractive rates.”
Of course, trade across the Atlantic Ocean is different, and DeLong noted container rates do not work the same way bulk vessels do for shipments headed to Europe, northern Africa or the Middle East. As a result, the company did little business in those markets.
Seeking to change that, The DeLong Co. identified dried distillers grain as a potential commodity. A byproduct of the ethanol industry, DDGs are often fed to livestock on farms. The U.S. exported $2.2 billion in brewing or distilling dregs and waste, the category that includes DDGs, in 2019, including more than $367 million to Europe, Africa and the near east portion of Asia, according to U.S. Census Bureau data.
As it stands now, most of the DDGs exported to Europe from the upper Midwest travel down the Mississippi River by barge before being loaded on ships in New Orleans, DeLong explained.
Enter Port Milwaukee and a new $31 million ag export facility that will be built with support from DeLong, state and federal money and port funds. Designed to handle a variety of agricultural products via truck and railroad, DeLong will initially focus on DDGs.
DeLong said that freight rates on the Great Lakes are competitive even though vessels are smaller than those leaving from New Orleans.
“By the time you add in the barge freight and take the vessel freight versus just the vessel freight out of Milwaukee, it’s actually a little lower cost coming out of Milwaukee,” he said.
DeLong said Milwaukee’s proximity to ethanol plants in Wisconsin made it an attractive place for the facility and the port had a piece of property available that fit the company’s needs.
“In fact, it couldn’t have been more perfect,” he said, adding that the port has rail service from two railroads and has committed to adding more track for the project.
To make room for the export facility, the port will demolish an out-of-date building that hasn’t been used in at least a decade. The installation and construction of the facility would then take place from 2021 to 2023.
“This showcases that we are flipping the paradigm,” said Adam Tindall-Schlicht, the director of Port Milwaukee, explaining the port is primarily thought of for imports in the supply chain and freight forwarder communities.
The announcement of the new export facility is a bright spot for the port in what has been a challenging year. Port Milwaukee suffered around $2 million in damage in January during a storm that caused significant flooding on its property.
The COVID-19 pandemic has also hurt activity at the port, but Tindall-Schlicht said he is pleased with the port’s economic resiliency. Total volumes were down around 3% as of Sept. 1, even in comparison to 2019, which bested the port’s five-year tonnage average by almost 8.6%. Tindall-Schlicht said some other Great Lakes ports are down 20% to 30% this year.
But the goal for Port Milwaukee is to thrive and grow, not just be resilient.
“When I look to the supply chain, I think it has to be a diverse supply chain,” Tindall-Schlicht said. “The port 50 years from now is not just going to be a port where we see a lot of salt piles. It has to be a port where there are dry bulk, liquid bulk and break bulk commodities being imported and exported on an ongoing, daily basis through robust activity and I think we are primed to realize that future.”
The port has invested in its infrastructure in recent years and in its marketing, adding Great Lakes cruises and seeking to attract more customers for products and commodities. Port Milwaukee is also embarking on a planning process to address its future infrastructure needs.
“The feedback that we’re receiving from new customers, both domestically and worldwide, is ‘We are giving Milwaukee and its port a second look. We haven’t thought about Milwaukee as a destination for our freight because it had just sort of fallen off the map,’” Tindall-Schlicht said.
In addition to the ag export facility, Port Milwaukee has also landed a long-term lease for parcels on the grand trunk site in the inner harbor with Michels Corp., which is already a tenant at the site. As of late September, Michels hasn’t announced specific plans but Tindall-Schlicht described it as a light industrial use.
“That parcel has gone underutilized for decades,” he said.
A major goal for the port also remains the return of intermodal container service, which left in 2012. The service could save Wisconsin companies from having to transport products to Illinois, but Tindall-Schlicht expressed concern that the pandemic has hurt momentum for demonstrating the need to railroads.
“It is up to us as the Milwaukee business community to say to the Class I (railroads), Canadian Pacific, Union Pacific, we have the tonnage, we have the need, we want to grow our business in connection with your work, and we have to continue to evidence that in good times and bad,” he said.