September 1, 2023
By Tarso Veloso
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 — and the forecast for below-than-average rainfall offers 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 3-year average, according to data from the Department of Agriculture released Wednesday.
The data comes just as the U.S. prepares to begin its soybean and corn harvest, signaling another tough year for U.S. farmers who already are struggling with drought and fierce competition from Brazil and Russia. Last year, extremely low water levels on the Mississippi River stranded more than 2,000 barges, crippling commerce on the vital waterway.
Water levels on the Mississippi River, which carries more than 45% of U.S. 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 barges 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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