Market Matters Blog

Barge Freight Higher; Rail Freight Costs Slightly Lower

Mary Kennedy
By  Mary Kennedy , DTN Basis Analyst
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(Chart courtesy USDA)

Soybeans export inspections at the Mississippi Gulf showed a record total of 1.26 million metric tons for the week ended November 7, according to USDA. During the last four weeks, the total of all grain inspections was 32% higher than last year at this time and 16% higher than the three-year average.

USDA's Grain Transportation Report stated for the week ended November 9, 459,000 tons of soybeans moved by barge, which was 58% of the total barge grain movements heading down river to the Gulf. The balance of the grain moved on barges was mostly corn at 39%. During that same week, a total of 790,600 tons moved down river, which was 7.7% lower than the prior week. There were 503 grain barges heading south, down 8.4% from the prior week.

Some of the barge slowdown could be attributed to the closure at Lock 52 on the Ohio River as repairs were made to the main lock and then continued on the auxiliary chamber. A barge company stated early this week that delays of "two to three days were possible." In the Upper Mississippi River corridor, locks are beginning to be prepared for the winter with closures starting around November 25 to November 29.

Gulf business has remained brisk with 934 grain barges unloading in New Orleans, up 1.4% from the previous week. During the week ended November 7, there were 45 ocean-going grain vessels loaded in the Gulf, which was 25% more than the same time last year. In the next 10-day period, 77 vessels are expected to be loaded, which is up 40% from the same time last year.

Barge freight rates moved higher late last week, especially in the Illinois and Ohio River corridors, as empties nearby were hard to come by. Rates for last week placements on the Illinois River rose 60% by Friday and rates on the Lower Ohio rose 175% as that area was the most desperate for empties due to the closure and slowdown created by lock repairs. Spot rates in the Twin Cities corridor were unchanged, mid-Mississippi corridor rates were up 10% and in St. Louis, spot rates were up 65%.

During the week ended November 7, the secondary rail freight market moved lower from historic highs reported during the last week of October. The average November non-shuttle railcar bids/offers were $525.00 above tariff, $383.50 lower than the prior week and $530.50 higher than last year at this time. Average shuttle bids/offers were $1,125 above tariff, $571 lower than the prior week and $1,369 higher than last year at this time.

Railcar costs remain high as the record soybean, corn and wheat harvests have stressed some rail lines' ability to place empty cars in a timely manner. Corn piles continue to be part of the scenery in the Midwest along with reports of wheat piles in Canada. Canadian newspapers reported the CN Railway was delivering approximately 5,500 cars per week, which is 15% more than last year at this time. The CP Railroad reported on their website that they were planning to deliver 5,049 cars to elevators for grain movement. As of Nov. 1, the CN website reported there were 8,091 outstanding grain car orders waiting to be filled. The CN said they cannot push more cars into the system because it will cause backups for railcars trying to get into Canadian ports for export. There were reports that as of Oct. 31, 20 vessels were sitting in Vancouver and five in Prince Rupert with many of those ships waiting for grain cars to arrive.


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