The channel is closed! More than 2,300 ships are stranded! The US "transportation artery" is in crisis, shipping is blocked and freight rates soar!

Time: 2022-10-13

The closure of the waterway has disrupted shipping

The Mississippi River has dropped to its lowest level in a decade as a severe drought in the Midwest has closed the vital waterway to barge traffic at a critical time of year for shipping U.S. crops.

The U.S. Coast Guard reported that as of last Friday, 144 ships and 2,253 barges were waiting in line due to the closure of the waterway. In addition, low water levels caused eight barges to run aground last week.

The report predicts that the route will not be restored until October 14 at the earliest.

The crisis has similarities to the sharp drop in water levels in Germany's Rhine River in August this year.

Factories along the Rhine River rely heavily on barge transportation. After August 12, the water level in the middle reaches of the Rhine River has dropped below 40 centimeters, and the water level in some parts of the river is even lower, causing serious disruptions to Germany's inland waterway transportation.

The Mississippi River, a vital U.S. waterway, also carries important commodities between the nation's heartland and the Gulf Coast.

Experts predict that the situation is likely to worsen in the coming week with no signs of relief as barges become stuck and shipping traffic is hampered.

It is understood that the Mississippi River is the fourth longest river in the world and the largest river in the United States. It is more than 6,000 kilometers long and its basin area accounts for 41% of the land area of the United States. It flows through 31 states in the United States and is also one of the busiest commercial waterways in the world.

Currently, inland river transportation is still the main mode of cargo transportation in the United States, especially for agricultural products.

According to the U.S. Bureau of Transportation Statistics, about 5% of U.S. freight, by weight and distance traveled, is transported by river barges, and shippers have few affordable alternatives to inland river barges.

The Mississippi River Basin accounts for 92% of the nation's agricultural exports, especially during the harvest season. The river is the "main artery" for U.S. agricultural exports and commodity transportation, and oil, fertilizers and imported steel also pass through parts of the waterway.

That has sent freight rates paid by shippers soaring, with the latest government report showing barge rates hitting $49.88 a ton on Tuesday, up nearly 50% from a year ago and the highest level on record.

The USDA shocked the market in late September when it released a report showing lower-than-expected U.S. wheat and corn supplies, while higher-than-expected soybean stocks.

The drought has pushed up barge freight rates, making U.S. corn extra expensive. Higher prices and reduced supplies could prompt the U.S. Department of Agriculture to cut its U.S. export forecast. With inventories still tight, any reduction in production or crop size could cause market volatility.

Here we would like to remind you that shippers and freight forwarders who have plans to ship to the United States in the near future must pay close attention to avoid unnecessary losses!

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