Over the near term, the U.S. Coast Guard, due to flood conditions, has reduced barge tow configurations from St. Louis, Missouri to the Gulf, which reduces tonnage per tow that in turn, increases the number of round trips to fill an export order and ultimately results in higher barge tariffs.
On the mid-Mississippi River, tow configurations have been reduced to 12 barges and on the lower Mississippi River, max tow configuration has been reduced from 40 barges to 25 or less, reports USSoy.org.
The flood conditions also increase wait times for shippers and increase the odds of demurrage fees.
Consolidation will eventually lead to higher barge rates. If crops need to be transported by barge, the resulting increase in transportation cost is two-fold as it forces country buyers to offer the farmer lower cash price bids and/or higher export FOB basis levels.
Read the full report here.
