Mississippi River barge delays could affect consumer prices

0 45

There’s a link between historically-low water levels on the Mississippi River and food prices at your dinner table, but don’t go canceling holiday meals just yet. The huge barge back-ups that only recently began to abate is among several factors likely to raise food costs, according to supply chain experts. Shoppers probably won’t feel the worst impacts for months.

“The current state of the economy is probably the biggest contributor to price increases, but this doesn’t help,” said Pawan Joshi, a vice president with supply chain software company e2Open.

Ben Lerner, a vice president with the American Waterways Operators in Arlington, Va., said under normal conditions, it might take a barge loaded with agricultural product 14 days to make the round-trip between Cairo, Ill., and New Orleans, a route strangled by pinch points throughout October and early November. Even now, that trip time has doubled.

Growers would be well advised to work with their grain and fertilizer representatives to plan for longer lead times and potentially higher shipping costs, said Ben Doane, barge freight manager at CHS — the Inver Grove Heights-based farmer-owned business cooperative — in a recorded interview released by CHS on Nov. 8.

Barge rates in some northern markets hit historic highs of over $100 per ton at the time, at least double what’s typical.

Since then, rains have brought up water levels in the lower river, said Sean Duffy Sr., executive director of the Big River Coalition, a New Orleans-based trade association that advocates for port industries south of Baton Rouge, La. Delays are still common, but “we’re in better shape than we were a month ago,” said Duffy, in an interview Monday.

River transportation industry experts say it’s more than just farmers and barge operators who should be alarmed by low water levels and widespread drought, given that 60 percent of all grain exported from the United States is shipped on the Mississippi River through the Port of New Orleans and the Port of South Louisiana, according to the National Park Service.

Impacts for consumers

Dredge Jadwin, a U.S. Army Corps of Engineers dredging vessel, powers south down the Mississippi River, Oct. 19, 2022, past Commerce, Missouri. (AP Photo/Jeff Roberson, File)

What’s that mean for consumers?

The impacts won’t be immediate. In general, transportation costs are a small fraction of the sticker price at the grocery store, averaging 4 cents of every consumer dollar spent on food, said David Ortega, associate professor at Michigan State University’s College of Agriculture and Natural Resources.

While processing, wholesale and retail trade are bigger cost drivers, Mississippi River back-ups aren’t helping on top of fallout from the war in Ukraine, pandemic-related supply chain delays and other climate-related food supply issues, Ortega said.

Still, many of the products common to holiday meals have been hanging out in warehouses or stockrooms for weeks, if not months, and are readily available in the Midwest.

A paralyzing drought

A barge passes below two bridges.
A boat navigates the Mississippi River in Vicksburg, Miss., Oct. 11, 2022. The unusually low water level in the lower Mississippi River has caused some barges to get stuck in the muddy river bottom, resulting in delays. (AP Photo/Rogelio V. Solis, File)

Midwestern droughts strangled the lower Mississippi River for weeks, dropping the nation’s primary commercial waterway last month to lows not seen since 1988 and heavily disrupting the country’s main artery for commercial crop exports.

At various points throughout last month, as many as 2,700 barges and vessels were queued in Kentucky, Mississippi and Tennessee, waiting for Coast Guard clearance in areas where barges overloaded for low water conditions had run aground. Receding waters revealed hundreds of miles of sandy riverbed, a 100-year-old shipwrecked steamboat in Baton Rouge and discarded cars.

Emergency dredging in pinch points tied up commerce for 12 to 72 hours at a time, said Duffy, and required the most heavily-loaded barges to effectively step aside. Those conditions have since improved, but as recently as mid-November, the U.S. Army Corps of Engineers was still overseeing emergency dredging in parts of the lower Mississippi River where tow barges were grounding.

“This is really pretty crazy,” said Roger Viadero, chair of the Environmental Science Ph.D. Program at Western Illinois University. “The last time we were in drought conditions like this was in 2012, and then in 2019 we had massive flooding, and now record low water. Having more extremes like this … is just where we’re at now.”

Source link

Leave A Reply

Your email address will not be published.