Home Cargo Low River Levels, Soaring Barge Freight Curb U.S. Grain Exports

Low River Levels, Soaring Barge Freight Curb U.S. Grain Exports

by admin
0 comment

Numerous barges have run aground on the lower Mississippi River, and grain barge shipping rates are soaring to historic highs this week, as drought has dropped inland waterways to levels not seen in decades.

And with little rain in the forecast, the low water levels are hampering already sluggish grain exports at the U.S. Gulf Coast, where some 60% of U.S. corn, soybean and wheat exports exit the country.

The logistical snarls come as the Midwest harvest progresses and the busiest crop export season starts, in a year when tight global supplies and strong demand for food and fuel are helping propel inflation to soaring highs.

“The projections for the water levels are going down, which means this situation is going to get worse,” said Mike Steenhoek, executive director for the Soy Transportation Coalition. “Unless we get a significant amount of rainfall soon, this season is going to be a challenge.”

Barge travel has long been one of the most cost-efficient means of getting commodity crops into the global market.

But cracks are showing. Shipping lines have sharply reduced barge drafts so that the vessels sit higher on the river, effectively cutting tonnage per barge by a quarter or more, shippers and traders said.

Tow boats on the lower Mississippi are forced to reduce the number of barges per tow by nearly 40% to squeeze through drought-parched shipping lanes, they said.

That has some grain elevators scrambling to find alternatives for moving their crops for export, according to sources at three river elevators. Some grain sellers are looking at rail freight, or scouting ports outside of New Orleans, they said.

The Mississippi River at the Memphis, Tennessee, gauge was at the eighth-lowest level on record on Thursday and was likely to challenge an all-time low set during the drought of 1988 by mid-October, according to a National Weather Service forecast.

One barge shipper said at least 10 boats have run aground south of Cairo, Illinois, in the past week, while others are carrying less cargo.

“Guys that thought they would be loading 12-foot drafts are now loading 9-1/2 or less, so you just lost at least 500 tons per barge,” he said.

That loss of volume and the slowed navigation has spiked barge shipping costs and made U.S. crops less competitive globally. The U.S. dollar near a 20-year high has further dampened demand.

Brazil, the world’s biggest soybean supplier, has overtaken the United States as the most competitive shipper of the oilseed to top importer China, the head of rail company Rumo RAIL3.SA said on Thursday.

Barge freight at the busy U.S. Port of St. Louis hit a record-high $49.88 per ton this week, up 58% from a year ago, the U.S. Department of Agriculture (USDA) said.

Since the start of this month, grain barge unloads at Louisiana Gulf Coast export terminals were 39% below the five-year average, USDA data showed.

You may also like

About Us

CargoNewsToday.com is a blog about the latest developments in the global logistics and transport industry.


@2024 – Cargo