A perfect storm of adverse conditions has hampered shipping on a large section of the US inland waterways system and sent barge rates soaring. Low water levels and lock failures have forced closures at a time when barges are in high demand.
Low water levels have impacted shipping on the Illinois, Ohio and Mississippi rivers and led to closures in several sections, causing backlogs and exacerbating a shortage of barges due to record levels of grain shipments. A record grain harvest – notably corn and soybeans – had farmers scrambling for barge capacity to export their crop, and the closures added to the problem.
In addition, ailing infrastructure played its part in causing delays. The failure of a hydraulic system to open and close lock gates near Brookport, Illinois, led to the closure of the Ohio River in the area, trapping over 65 towboats at the lock.
Locks and dams have been an Achilles heel of the US inland waterways system for years. The infrastructure was built in the 1930s and is badly in need of a major overhaul, but lack of funding has limited repairs to emergency measures to patch up the worst problems.
The Trump administration had promised US$1 trillion in funding for transportation and infrastructure projects in the run-up to the 2016 presidential election, but subsequent comments from Washington have indicated that funding will fall short of that target, and that the money will have to be shared with energy, water and veterans’ hospitals.
According to a study published last November by Washington-based transportation research group TRIP, just fixing the network of deteriorating roads and bridges in the US would require an investment of US$740 billion.
The combination of high demand for barges and shipping problems has sent barge rates up sharply, with spot rates climbing 27-50%.
Meanwhile, in the St. Lawrence Seaway & Great Lakes system, pilots’ rates and their potential impact on shipping are the subject of an agitated debate. The US Coast Guard has authorized annual double-digit increases for pilots since 2015, but shipowners and port authorities in the system have argued that these increases threaten to undermine the viability of shipping through the Great Lakes and St. Lawrence and send shippers to other avenues.
The pilots have rejected this argument, noting that traffic has risen this year. From the start of the shipping season in late March to end of October, cargo volumes going through the system were up 10% from a year earlier, reaching 28.7 million tonnes. Iron ore shipments, one of the leading commodities, were up 44% from the corresponding period in 2016. General cargo and dry bulk shipments climbed 34% and 12% respectively.
The inland waterway system has played a comparatively minor role in containerized cargo, but it remains a vital conduit for bulk and project cargo.
By Ian Putzger
Correspondent | Toronto