By TIM ALEXANDER
Illinois Correspondent

URBANDALE, Iowa — As things start to get back to normal in the Gulf Coast areas of Texas and Louisiana in the wake of hurricanes Ike and Gustav, so are barge shipping rates that affect the nation’s farmers, agricultural commodity shippers and consumers.

With nearly 5 percent of the nation’s available barges being used as temporary storage for damaged grain rescued from the hurricane regions, and with harvest season for much of the nation approaching, barge shipping rates began to creep higher.

Prices seem to have hit their peak in mid-October, when the Cairo (Ill.) to Memphis route rate had increased by approximately 95 percent over the same period in 2007, according to Mike Steenhoek, executive director of the Iowa-based Soy Transportation Coalition.

“Barge rates over the past few weeks spiked to levels not witnessed since 1990, as many barges were being used to hold hurricane-damaged crops rather than transporting them to market.
Approximately 350 of the 10,000 covered-hopper barges in the country were used to store commodities that did not meet export requirements after sustaining hurricane damage,” he said. “Not a large figure as a percentage of the entire fleet, but when capacity is tight, any number of barges taken out of circulation can have a dramatic impact.

“Grain elevators purchased commodities under the assumption that they would be able to load it and send it on to the export market. However, the low quality due to the storm damage resulted in loaded barges with no destination.”

About 37 percent of Louisiana’s soybean crop was damaged during the hurricanes, which made landfall on Sept. 1 (Gustav) and Sept. 12 (Ike), respectively. A late-season Midwest harvest exposed problems caused by the barge shortage as larger amounts of soybeans and grain were harvested in a narrower time frame, Steenhoek noted, making the bottleneck along the river system even more pronounced.

“The bottlenecks that have occurred this fall along the river system has added insult for producers who have witnessed commodity prices dramatically fall over the past couple months. Producers need every cent from their soybeans and grain, due to margins being so tight,” said Steenhoek. “When bottlenecks occur, this is reflected in the price producers receive.”

Higher barge rates are also affecting fertilizer prices, according to Steenhoek.

“The river system transports from the south much of agriculture’s fertilizer needs. Fertilizer costs are exacerbated by these high barge rates at a time when producers are busy determining how much fertilizer to purchase for the fall of 2008 and spring of 2009,” he said.

Crops stored on barges were most likely blended with recently harvested crops in order to attain an acceptable overall quality level, Steenhoek added.

“No records exist to verify that, but this is what likely is happening.”
As of the week ending Nov. 4, barge rates for many domestic shipping routes seemed to have stabilized, according to figures provided by the USDA.

“Barge rates have relaxed quite a bit,” said Steenhoek, but “they are still uniformly higher than last year.”

Barge shipping rates for the Cairo-Memphis route had “decreased” to a 34 percent increase over last year’s rates by the week ending Nov. 11, according to the USDA report.

The figure reflected a decrease from $31.81 to $13.75 per ton for the route from the week ending Nov. 4, compared to Nov. 11 rates.
Additionally, the rate for a barge bound from St. Louis to the mid-Gulf of Mexico region has increased by 31 percent over the same period in 2007, the report shows. Other Gulf-bound routes showing increases in rates since last year include Cincinnati (22 percent, as of Nov. 11), Illinois River (26 percent), Twin Cities (6 increase) and Mid-Mississippi (19 percent).