Rising Barge Rates May Boost U.S. Seaway Grain Traffic
Tuesday, September 7, 2010 at 10:11AM 
Rising Mississippi River barge rates may provide an additional boost to U.S. grain exports through the Great Lakes-St. Lawrence Seaway System this fall. In recent weeks, the cost of barging grain from St. Louis to the Mississippi River Gulf have risen to $20.95 per ton, the highest level seen since November 10, 2009.
Rates have generally been increasing since early July as barge operators prepare for what are expected to be early and record corn and soybean harvests.
Sources within the barge transportation industry have indicated that a large number of barges in the New Orleans area are currently being used as storage for lower quality grain. This has had the net effect of effectively reducing the barge fleet’s cargo carrying capacity in the short term.
With fewer barges returning to the Northern Plains from the Gulf, the barge supply in the Midwest has tightened considerably, causing a substantial increase in spot market freight rates. This year the average number of empty barges traveling up the Mississippi River was 459 per week. Last August the average weekly up-bound number of empty barges was 552. These figures represent a nearly 17 percent reduction in the supply of available down-bound barge freight compared to 2009.
By contrast, St. Lawrence Seaway freight rates have been and continue to be a relative bargain in the freight marketplace. Dry bulk ocean vessel freight rates have stabilized from a rather precipitous drop early this summer but still remain well below normal.
For example, the USDA'a Grain Transportation Report cites the example of a vessel loading 25,000 dwt. of wheat bound for Morocco during the week of August 25-30 at a freight rate of $29.75 per ton. This freight rate bargain is just $8.80 per ton more than the price of moving wheat by barge from the St. Louis to the Mississippi Gulf.
All this is happening in the backdrop of an exceptionally strong U.S. wheat export market and the anticipation of the aforementioned record and early corn and soybean harvests. Accordng to the U.S. Department of Agriculture's (USDA) Argicultural Marketing Service, 2010 year-to-date wheat export inspections at U.S. Great Lakes ports are now running 112 percent above last year's levels on a tonnage basis and smart dry bulk shipowners and operators are beginning to position ships in the Great Lakes and St. Lawrence River to carry grain to export markets in Europe, the Middle East and Africa.