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Armada of Barges Cleared for Mississippi River Shipments After Floods

By Karl Plume

CHICAGO, June 21 (Reuters) - The upper Mississippi River reopened to barge traffic on Friday as vessels were cleared to ship through St. Louis harbor, the U.S. Coast Guard (USCG) said, and the situation quickly became a logistics nightmare as dozens of towboats and hundreds of delayed barges tried to maneuver upriver.

After what many grain shippers have called the worst river flooding ever in terms of timing, breadth, and duration, the vessels may finally be able to reach elevators in the heart of the U.S. farm belt to haul away export-bound corn and soybeans.

But the economic pain of this year’s floods on farmers, barge operators, and grain traders like Archer Daniels Midland Co , Bunge Ltd, and Cargill Inc will likely continue.

The Mississippi River, which transports 60% of all export-bound U.S. corn and soybeans to terminals near the Gulf Coast, has not been fully navigable since November due to winter closures in the north and widespread flooding this spring.

Shippers have moved some grain to port by rail, shipped it to domestic users by truck, or simply left crops in storage and dropped prices offered to farmers.

Shipping delays were the latest hit to a reeling U.S. agricultural sector, already clobbered by slumping farm incomes, delayed spring planting, and reduced exports due to the U.S.-China trade war.

Petty Officer Brandon Giles said the Coast Guard lifted its ban on northbound shipping through St. Louis harbor on Friday morning, allowing vessels to transit the busy port for the first time since a brief shipping window opened for a week and then closed a month ago.

Giles had no estimate as to when southbound traffic will resume. Barge shippers said southbound vessels may be cleared as soon as Saturday.

An armada of at least 50 towboats, each pushing multiple barges, was already converging on St. Louis harbor, a barge broker said. The vessels may experience lengthy delays at upriver locks that have also only recently reopened from flood closures.

Shipping restrictions due to strong currents and river-bottom obstructions from flooding were likely to remain in place for the foreseeable future.

More rain is expected over the next week, potentially slowing the river’s anticipated drop or triggering fresh restrictions on navigation.

“It won't be like in a car race, going from a yellow flag to a green flag. It’s going to take a while to get back up to the throughput that river is normally able to provide,” said Mike Steenhoek, executive director of the Soy Transportation Coalition.

“The worry is that this could be a very brief relaxation of restrictions, just a temporary reprieve,” he said.

BACKLOG OF BUSINESS

River closures delayed fertilizer deliveries earlier this spring as farmers prepared to plant crops. Now, as farmers are cleaning out storage bins to make room for the next harvest, the river woes have slowed the flow of grain to market.

Large agribusinesses that rely on efficient export shipments are likely to report a drag on earnings from flooding this spring in their grain trading, handling, and shipping businesses when they report in July and August, analysts said.

ADM, Bunge, Cargill, and Louis Dreyfus Co, known as the ABCD quartet of grain giants, all operate large export terminals along the Mississippi River near the Gulf Coast. ADM and Cargill also both own barge companies.

A backlog of grain business that has been on hold for much of the spring could have shippers and exporters playing catch-up through the summer.

“It will take me probably until the end of August to get caught up with all the freight I owe for April, May, and June when we were shut down,” one barge broker said.

The flood’s cost to the grain handlers likely totals hundreds of millions of dollars, traders and shippers estimated, due to lost grain sales, missed shipping and export opportunities, and increased costs for moving needed grain supplies via other means such as rail.

Weekly grain barge unloads at Gulf Coast elevators fell to just 349 barges last week, the least in any week in six years, according to U.S. Department of Agriculture data.

Although railcar shipments to the Mississippi Gulf have more than doubled, grain volumes have been minimal. It takes 15 railcars to move what a single barge can. (Reporting by Karl Plume in Chicago; editing by Caroline Stauffer and David Gregorio)

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