Barge shipping rates on the Mississippi River are declining despite water levels remaining low and continued restrictions on barge movement, as reported by FreightWaves.
According to the United States Department of Agriculture (USDA) weekly grain transportation report published on October 19, the grain transportation indicator for waterway barge traffic in the previous week dropped to 326. This value of 326 represents a percentage applied to a base cost of 100 that was established in 2000.
In the previous week, the indicator was at 366, compared to 556 in the week ending September 27 and 549 in the subsequent week, as indicated in the October 20 report.
The USDA report notes: “Typically, restrictions drive up spot rates, as was seen in the third quarter of 2022. However, this year, with the exception of the last few weeks, spot rates have moved closer to the previous five-year average, due to low demand resulting from slow export sales.”
Challenges in river transport: Falling rates and concerns
Rates are declining despite there being little sign of improvement in the Mississippi's water levels at the main measuring point in Memphis, Tennessee, where water levels at the time of reporting had fallen to minus 11 feet (3.35 meters).
According to American Commercial Barge Lines (ACBL), one of the main barge operators on the river, the reading of minus 11.8 feet (3.6 meters) on October 16 was a record low. This measurement is for a base level and has since recovered to a slightly higher value of minus 11 feet (3.35 meters), but when it fell, it was below the previous year's water levels, FreightWaves reported. . At the same time, in 2022, the rate of grain transportation by barge on the river exceeded 1,000.
Mike Steenhoek, executive director of the Soy Transportation Coalition, depends on the river to transport products. Last year, high river transport rates were not repeated. This was due to the diversion of grain shipments to railways and storage. Farmers are waiting for river levels to recover in a few months.
Additionally, the weak export market has not increased barge rates recently.
Slow demand abroad and restrictions on river transport
Demand for soybeans and corn abroad has been sluggish this year, leading to greater demand domestically, says Steenhoek.
“Farmers are moving to the domestic market, processing [soy] beans and then possibly selling to the livestock or biofuel market,” he added.
The ACBL has made some slight changes to its restrictions, which have remained at the same levels since late September, as indicated by FreightWaves.
In the latest list of restrictions, cargo drafts decreased by 28% on routes between the Gulf and Cairo, Illinois. This affected the stretch where the Ohio River meets the Mississippi, as well as Vicksburg, Mississippi, south of Memphis. Restrictions were also reduced by 24% for barges traveling from Vicksburg to the Gulf.
As of October 10, there has been a 28% reduction in northbound traffic from the Gulf to Cairo. Additionally, there was a 24% drop in southbound traffic from Cairo to the Gulf, it was reported.
Persistent Mississippi Water Level Challenges Despite Slight Signs of Improvement
There was some prospect of improvement. Water levels in the Mississippi in St. Louis rose about 2 feet (0.6 meters) between October 4 and October 20. This was reported by FreightWaves.
However, at the time of reporting, a further drop in water levels was predicted.
The weekly drought monitor, published by the University of Nebraska-Lincoln and U.S. government agencies, showed improvements. The data for St. Louis is the exception. In the report published on October 19, the Drought Severity Coverage Index for the Midwest showed a notable drop, decreasing from 168 to 155. This area is primarily located in the Mississippi watershed.
In the region called High Plains, which encompasses the states of Dakotas, Kansas and Nebraska, all in the Mississippi basin, the index fell from 92 to 85.
Source: Oils & Fats International
