Barge Rates Surge As Demand Rises, Water Levels Fall

In response to increased demand and low-water concerns on the Mississippi . River, barge rates have jumped to their highest levels in two years.

The rates charged to shippers are expected to continue firm through the remainder of the harvest, which may push a small amount of grain to railroads and may motivate some grain merchandisers to hold onto their grain to await possibly lower barge costs. Clint Odell, president of Cargo Carriers Inc. in Minneapolis, Minn., said, "The harvest pressure will tend to keep rates up. We'll have our ups and downs, but I think overall rates will stay pretty firm through the harvest." Barge rates from the mid-Mississippi are hovering between 220 percent and 240 percent of tariff, which is about double the rates of May and June. (The barge industry uses a tariff established in 1974 as a benchmark for negotiating barge rates.) Over the last several weeks, a number of factors have contributed to the jump in barge rates—the granting of farm credit guarantees to the Soviet Union, the failed attempt to oust Soviet president Mikail Gorbachev, the approach to the new harvest, low water problems on the Mississippi River, and the displacement of some grain barges into other trades.

The catalyst that sparked the rally in barge rates ultimately was the Bush Administration's announcement of a $1.5 billion farm credit package to the Soviet Union, reversing the negativism that had held the market back all year.

Other stories from November 1991 issue


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