Barge rates on the Mississippi river are dropping despite water levels remaining low and ongoing restrictions on barge movements, FreightWaves reported.
According to the United States Department of Agriculture (USDA)’s weekly grain transportation report published on 19 October, the grain transport indicator for barge traffic on the waterway for the previous week fell to 326, with 326 a percentage applied to a basis cost of 100 that was set in 2000.
In the previous week, the indicator was 366 compared to 556 for the week ending 27 September and 549 for the following week, the 20 October report said.
“Normally, restrictions cause spot rates to increase, as was observed in third quarter 2022,” the USDA report said. “However, this year, except for the last few weeks, spot rates have neared the prior five-year average because of low demand from slow export sales.”
The rates were falling despite little sign of improvement in Mississippi water levels at the key measuring point of Memphis, Tennessee, where water levels at the time of the report had dropped to minus 11ft (3.35M).
According to American Commercial Barge Lines (ACBL) – a key barge operator on the river – the reading of minus 11.8ft (3.6M) on 16 October was a record low.
That number was a measurement against a base level and had since rebounded back to a level slightly higher than minus 11 (3.35M) but when it got lower it was below the previous year’s water levels, FreightWaves wrote. At that time in 2022, the index for moving grain via barge on the river exceeded 1,000.
According to Mike Steenhoek, the executive director of the Soy Transportation Coalition, whose members are highly dependent upon the river to move their products to market, last year’s high barge rates were not being repeated this year due to grain shipments being diverted to rail and to storage with farmers hoping river levels would rebound in a few months.
In addition, a weak export market was another factor behind barge rates not surging recently, the report said.
Demand for soyabeans and corn from overseas had been slow this year, pushing demand into the domestic market, according to Steenhoek.
“Farmers are gravitating to the domestic market, the [soya]beans are getting processed and then maybe sold into the livestock market or going into biofuels,” he added.
ACBL had made some slight changes to its restrictions, which remained at the same levels as at the end of September, FreightWaves wrote.
For example, in its latest list of restrictions, loading drafts were reduced by 28% northbound and southbound between the Gulf and Cairo, Illinois – where the Ohio River joins the Mississippi – and Vicksburg, Mississippi, south of Memphis. Restrictions were also reduced by 24% for barges going from Vicksburg to the Gulf.
As of 10 October, the reduction was 28% northbound from the Gulf to Cairo and 24% southbound from Cairo to the Gulf, the report said.
Other companies had also introduced restrictions and ACBL’s were generally in line with the wider industry, Steenhoek said.
ACBL also said it was restricting tow sizes to five barges across, which was a 17% to 38% reduction in capacity. That limit had been in place for several weeks at the time of the report.
There was some prospect that the situation would improve, with water levels on the Mississippi at St Louis rising about 2ft (0.6M) between 4-20 October, FreightWaves wrote.
However, at the time of the report a renewed drop in water levels was forecast.
The weekly drought monitor published by the University of Nebraska-Lincoln and US government agencies was showing some sign of improvement on top of the data for St Louis. The Drought Severity Coverage Index for the area that it defines as the Midwest declined to 155 in a report published on 19 October, down from 168 the previous week. That area was mostly in the Mississippi watershed.
In the region defined as High Plains, which includes the Dakotas, Kansas and Nebraska – all in the Mississippi watershed – the index dropped from 92 to 85.