Pioneering the West Michigan Agricultural Shoreline

Providing employment to almost a quarter of the workforce in Michigan, the agricultural sector is of substantial importance to the state. Although surrounded by the Great Lakes basin, waterborne transportation of agricultural commodities in Michigan is almost non-existent. This thesis aims to identify opportunities for out of state export flows of grain and oilseeds by water. The starting point of the analysis is the port of Muskegon since it is the only natural deep draft port on the west coast of Michigan. In order to assess the possibilities, the main goal is to identify substantial advantages of waterborne shipments out of Muskegon compared to current practices. The first part of the research involves a qualitative research. This reveals that transportation rate and transit time are the most important decision making variables in the process of freight modal choice. The qualitative research also identifies three specific agricultural commodities with the highest potential of waterborne exports: corn, soybeans and wheat. Moreover, five corridors for the economic assessment are designated. All corridors include a waterborne route via the port of Muskegon and at least one benchmark route. Two of the five corridors have Asia as final destination. Chicago, New Orleans and Europe make up for the other destinations. A quantitative economic analysis has been carried out in the second part of the thesis. All routes within the five corridors are assessed and compared on current transportation rate and transit time. In addition, CO2 emissions are accounted for and future oil price scenarios are included as well. A final scenario-analysis on combining transportation of agricultural goods with high-value goods is also conducted. Results show that in two out of five corridors waterborne transportation via Muskegon is able to provide a small cost advantage compared to the benchmark route. Transit time advantages are also present in these two corridors. Nevertheless, the qualitative research indicates that more decision making variables have to be taken into account as well. That is, switching costs are set at 14% of the transportation rate. Other factors as temporarily lower rates of current transportation providers, port reliability, frequency of operations and substantial amount of throughput are also at stake. Considering these factors including switching costs and the highest cost advantage of 13.1% the port of Muskegon has to offer in any scenario-analysis; waterborne agricultural export out of Muskegon has little chance of short-term success. In summary, the port of Muskegon is not able to provide substantial advantages over current transportation practices of agricultural commodities in the state of Michigan.