Multiple Problems Pack a Big Punch on the River

November 23, 2008 06:00 PM

Sara Muri, Top Producer Business & Crops Online Editor
Higher-than expected yields, a delayed harvest and high demand on operating barges are all adding up to skyrocketing barge rates, which reached an 18-year high this fall. "The problem is there are only so many barges, which kicks in the free market,” says Larry Daily, president of Alter Barge in Bettendorf, Iowa. "What few barges there are, are being bid up to higher prices.”
Overall, it comes down to demand. Currently, Daily says, the large amount of crops being harvested is increasing the need for barges.
"When you have a lot of pressure on barges and a limited supply, the price goes up,” he says.
But, Daily says, this increased pressure is only acting on a small percentage of the barges. Most businesses that use barge transportation had their barges booked a few months ago, when rates were lower.
"Normally we'd be done with harvest by now,” Daily says. "That's why people didn't contract barges in November.”
Weather-related damage to the river, such as hurricane activity and flooding, has also delayed normal barge activity. "The barge industry is still trying to play catch-up with a lot of the normal northbound traffic,” Daily says.
This is difficult, since a portion of the U.S. barge fleet is setting idle in the Gulf of Mexico. Daily says barges, loaded with fertilizer and low-quality grain, are stalled, as they wait for the market to demand or accept these products.
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