High Water Persists but Barge Rates Falling

The Mississippi River continues to have high water levels disrupting barge traffic. The opening of the upper Mississippi River for commercial traffic continues to be delayed, while the rest of the Mississippi River and Illinois River have reduced tow configurations, reducing tonnage per tow and increasing the number of round trips to fill an export order. The effective reduction in capacity increases wait times for shippers and increases shipping rates.

Source: U.S. Army Corps of Engineers, ACBL River Currents

In early March, barge freight rates along the Illinois River were up 90 percent from last year and 54 percent from the three-year average for early March. In one month, barge freight rates along the Illinois River fell to 63 percent above last year and 20 percent above the three-year average. The forward three-month barge rate indicates that barge rates will continue to be above the three-year average rate into summer.

Source: USDA

Weather patterns will affect the forward rate. With impressive snowstorms slamming the Northern Plains and Upper Midwest in early April, high water conditions will persist into May or even June. If the U.S. and China reach a free trade deal that results in a rush of export business, towboat availability could become an issue. Expect barge rates to stay above the three-year average but not explode higher.

Alan Barrett
Alan Barrett

Director of Consulting

Doane Advisory Services

Alan Barrett is Doane’s project consultant and accomplished commodity economist with more than 25 years of experience in futures and cash markets with a focus on cotton, commodity projects, non-traditional agricultural products, transportation and supply chain studies. Alan spent six years as a commodity futures broker. His expertise encompasses feasibility studies of oilseed crushing plants (soybean canola, and cottonseed), grain elevators, export elevators, shuttle elevators, grain container operations, flourmills and other processing facilities. Alan also has conducted transportation supply chain studies for grains, oilseeds, fertilizer, coal, natural gas, crude oil, and petroleum products. Alan has considerable experience in non-traditional agricultural products such as coal, coke, natural gas, chemicals, hydraulic fracturing fluid, hydraulic fracturing proppants, glycerin, fertilizer, micronutrients, salt, limestone, cement, iron ore, pig iron, and steel, especially feed ingredients. Mr. Barrett has a BS and MS in Agricultural Economics from the University of Tennessee.