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Update on historically low river conditions

Posted on October 13, 2022

As the historically low water situation on America’s inland rivers continue to impact river shipping and farmers, dredging operations are underway to help combat the deteriorating river conditions.

The Ohio River closed at Mile 974 yesterday afternoon due to multiple barge groundings near Mound City, Ind., according to American Commercial Barge Line’s (ACBL) American Currents newsletter. But that’s not all happening as water levels continue to deteriorate on inland rivers.

ACBL says that a dredge is in the area to cut a deeper channel, but it is unable to assist until the grounded tows are refloated.

On the Upper Mississippi River at Cape Girardeau, Mo., a river closure at Mile 44 was scheduled to reopen today after dredging operations took place yesterday to deepen the channel.

Mike Steenhoek, executive director of the Soy Transportation Coalition, said today that the barge and towing industry continue to institute a 25-barge maximum tow size south of St. Louis, Mo.  “Under normal conditions, a single tow in this region of the river can include 30 to 40 barges,” Steenhoek noted. “We continue to see reduced water depth limit the volume of soybeans and grain that can be loaded in each barge. Groundings due to decreased channel depth continue to be reported.”

Steenhoek said that because barge capacity has significantly decreased due to channel depth and width limitations, an increase in demand has resulted for barges, barge crews, towboats, etc., to transport this year’s harvest.

According to the U.S. Department of Agriculture, transporting a ton of soybeans (loaded in St. Louis) cost $90.45 per ton during the week ending on October 4, 2022. For the week ending October 5, 2021, (one year earlier), the same shipment cost $28.45. “We therefore have experienced a 218% increase in barge freight rates originating in St. Louis over the past year,” said Steenhoek.

“One of the well-understood phenomenon in agriculture is how the price a farmer receives at point of sale is influenced by how efficient or inefficient the supply chain is after the farmer delivers the soybeans or grain. If transportation becomes more costly or inefficient, many of those costs will be passed onto farmers in the form of a lower price (i.e. “more negative basis”).  In essence, if a barge loading facility along the river is less able to move bushels of soybeans or grain out their back door—due to less efficient barge transportation—the facility will be less able to accept bushels via their front door.

“The barge loading facility will often respond to such a scenario by decreasing the price offered to farmers (i.e. “having a more negative basis”) in order to mitigate deliveries to their location. We are seeing this phenomenon on vivid display due to the current conditions along the inland waterway system.”

Marine Log will continue to monitor this situation.


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