Flooding Disrupts Barge Traffic, Raises Rates
High water created hazardous navigation conditions
During the first quarter of 2018, less-than-ideal navigation conditions have affected the barge industry, including ice accumulations and both low and high water conditions at different times throughout the quarter.
Year-to-date grain barge shipments are 35% lower than last year and 18% lower than the 5-year average.
Barge freight rates were relatively steady for most of the first quarter, however, the recent high water events slowed barge logistics, tightening the barge supply while raising spot rates. As of March 13, barge spot rates for export grain at major origin locations increased 46% to 62% in the last two weeks. For example, on March 13, the spot barge rate for export grain at St. Louis was 458% of tariff ($18.27 per ton), 54% higher than 297% of tariff ($11.85 per ton) reported on February 27.
The current rates are at levels not seen since early October 2017, during the corn and soybean harvest. During the first half of February, stretches along the Mississippi River System faced low water conditions, as portions of Iowa, Missouri, and Illinois experienced moderate to severe drought conditions. However, river conditions drastically changed during the last half of February when persistent rains fell from the middle to lower Mississippi River Valley, eastward to the Ohio River Valley.
This sparked flash flooding and pushed creeks and streams out of their banks, bringing extensive flooding to major rivers in the area. By February 25, the Ohio River between Cincinnati, OH, and Evansville, IN, reached its highest water level since March 1997. At the same time, high water events also occurred on the Illinois and lower Mississippi rivers. The high water created hazardous navigation conditions on both rivers that, in some cases, temporarily closed a few locks and dams operated by the U.S. Army Corps of Engineers (Corps) or required restricted barge operations. Navigational restrictions, such as daylight only movements, are set by the Waterway Action Plan, which is a joint effort of the U.S. Coast Guard, Corps, and senior leaders of the towing industry.
Source: U.S. Dept. of Agriculture, Agricultural Marketing Service. Grain Transportation Report. March 15, 2018. For the full report, click here.