March 29, 2022
Ben Doane, CHS barge freight manager, discusses how global events are impacting barge traffic on the U.S. river system and how that logjam will affect input availability and grain marketing options.
Barge transportation is a critical supply line and crop outlet for farmers in the United States, connecting them to the global marketplace. Global events and regional weather are affecting barge traffic through U.S. waterways. Ben Doane, CHS barge freight manager, provides a spring update and explains the pros and cons of those effects.
Increase in Mississippi barge traffic
Since the invasion of Ukraine by Russian forces at the end of February, there has been extreme volatility in the marketplace, from freight rates to grain prices, says Doane.
At the same time, increased grain demand is adding to movement on the river. “Since Ukraine has been forced to back away temporarily from the global marketplace, this has provided incremental needs for U.S. grain exports that would otherwise come out of the Black Sea corridor,” says Doane. “We expect this will lead to a surplus of export opportunity for both the Pacific Northwest and the Center Gulf in the United States.”
Operating costs surge
Rising demand has been accompanied by rising fuel prices. Higher prices systemwide are causing an increase in transportation costs in general.
“A big operating cost for barge lines is the price of marine diesel,” says Doane. “When that cost goes higher, the variable cost for barge lines to operate also rises.
“On the other side, we’ve seen strong demand — whether it be for northbound fertilizer products or other products that traditionally flow northbound like cement, salt and construction materials,” he continues.
Welcome rainfall aids barge movement
From an operational perspective, rains sweeping across the Midwest have been helpful for the river system and the smooth operation of barges, Doane says.
“The [Mississippi] river has been untraditionally low for this time of year, so we’re assured by recent rainfalls,” says Doane. “This will give the St. Louis harbor, which is an important part of the transit system, a good spike in water levels. Spring rains will also improve water levels on the upper part of the Mississippi and Illinois river segments.”
