PIXABAY

Jan 13, 2023

Barge rates fall as Mississippi River conditions improve

Increased precipitation, completion of harvest and increased draft sizes have helped normalize the system.

The USDA Grain Transportation Report notes that for the week of January 10, the barge rate near St. Louis was 541% above tariff ($21.59/ton), down 25% from last week and down 20% from the same week last year.

This was the first time since the week of September 9, 2022, that the barge rate was below its same period last year.

The current barge rate is 80% lower than the all-time peak of 2,653% above tariff ($105.85/ton) during the week of October 11, 2022.

The 3-month forward barge rate dropped 7% from last week to 422% above tariff ($16.84/ton), but remains 35% higher than last year.

Rates reflect improved conditions on Mississippi River

The falling rates reflect improved navigation conditions on the Mississippi River System (MSR).

Increased precipitation on portions of the river, the completion of harvest and increased draft sizes (in most places) have all helped to normalize the system.

The area between Cairo, Illinois, and St. Louis, Missouri, will need more precipitation to maintain current water levels in the Upper Mississippi River, but there, too, navigation conditions have improved.

2022 was a tough year on the Mississippi

The barge industry faced many obstacles in 2022.

Low water levels for the Mississippi River not seen since the 1980s led to barge groundings, short supplies of barges, 17% to 28% reductions in draft size, and 24% to 30% drops in tonnage per barge.

For the first three quarters of 2022, the southbound weekly grain tonnage through the MSR was slightly above the 3-year average. In the fourth quarter, low-water restrictions caused weekly southbound grain to fall significantly below the 3-year average.

During the week of October 11, in response to low water issues, barge spot freight rates reached an all-time high of $105.85/ton in St. Louis.

On October 18, the water gauge at Memphis, Tennessee, reached an all-time low of -10.79 feet.

For the week ending December 24, YTD barged grain shipments were 11% lower than 2021 and 6% lower than the 3-year average.

Lisa Cleaver

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