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Barges make their way down the Mississippi River, where the water levels have reached historically record lows in Memphis, Tennessee, U.S. October 23, 2022. Photo REUTERS/Karen Pulfer Focht

FILE PHOTO: Barges make their way down the Mississippi River, where the water levels have reached historically record lows in Memphis, Tennessee, U.S. October 23, 2022. REUTERS/Karen Pulfer Focht

Freight Rates Surge As Mississippi River Water Levels Drop

Bloomberg
Total Views: 4761
September 2, 2023

By Tarso Veloso

(Bloomberg) –The cost to transport America’s harvest from the Midwest to the rest of the world is soaring as shrinking water levels on the Mississippi River drive up barge freight rates — with below-average rainfall forecasts offering no relief.

Barge spot rates as of Aug. 29 in St. Louis are up 49% from last week and 42% from last year at $23.34 a ton. That’s up 85% from the past three-year average, according to Department of Agriculture data released Wednesday.

The data comes as the US prepares to begin its soybean and corn harvest, signaling another tough year for American farmers who already are struggling with drought and fierce competition from Brazil and Russia. Last year, extremely low water levels on the Mississippi stranded more than 2,000 barges, crippling commerce on the vital waterway.

Related Article: Mississippi, Ohio Rivers Drying Up for a Second Straight Year

Water levels on the Mississippi, which carries more than 45% of US agricultural exports, have been dropping since June, restricting the amount of grain allowed on each barge. This led to a tightening of barge supply as more are required to transport the same amount of grain.

Transportation companies are “proactively reducing drafts as they are aware of the problems that heavier barges caused last time around,” said Susan David, a grain analyst for No Bull in St. Louis. “This year it feels like the market is better prepared to handle it.”

Low water levels in some locations are creating delays of up to two days and St. Louis loading drafts are approximately 15% below normal capacity, the American Commercial Barge Line said on its website.

© 2023 Bloomberg L.P.

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