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Barge rates rise as river levels fall

Like last year, water levels on the Mississippi River system are creating an expensive and slow kink in the supply chain.  Mike Steenhoek with the Soy Transportation Coalition tells Brownfield it’s getting more difficult to move commodities downstream from St. Louis. “You can’t load as much per barge. You can’t get as many barges together to form one single unit. You know, the supply chain is getting constricted due to this low water condition.”

Steenhoek says the inevitable result of lower water levels, lighter loads per barge, and fewer barges to a tow is upward pressure on shipping prices, just as the U.S. harvest is beginning. “For freight originating in St. Louis, we’re at 42% higher than we were last year. Out of Memphis, we’re actually 81% higher than we were at this same period last year.”

Steenhoek says when the supply chain has problems like this, farmers end up paying for it. “Those costs are disproportionally passed on to farmers in the form of a more wide or negative basis, so it’s a good example of this big macro issue, low water conditions on the Mississippi River that has an impact on an individual farmer’s wallet.”

Steenhoek says other transportation systems like the Great Lakes and the railroads now have plenty of capacity, but the U.S. is also struggling with fewer export sales, which are also holding volumes down.