Following a strong performance in late 2020, barged grain volumes continued to be high in the first half of 2021. However, weekly movements declined sharply in the third quarter, falling far below 2020 levels and the previous five-year average (2016-20).
Despite a modest recovery in the fourth quarter, tonnages were notably lower than in the fourth quarter of 2020. Total 2021 downbound barged grain movements were 36.8 million tons, 8% lower than in 2020 and 4% lower than the five-year average. In the first half of 2021, St. Louis barge spot rates followed their historical trend, but rose more sharply than usual in the third and fourth quarters. The steep rise mostly reflected limited barge supply and logistical challenges related to Hurricane Ida.
Initial High Volumes Plunged in Latter Half of 2021
In 2020, high U.S. crop production and strong export demand (mostly from China) stimulated record-high tonnages, which persisted for the first half of 2021. Despite the typical winter closures of the Upper Mississippi River Navigation System, weekly barged grain movements reached a record high in mid-January (1.1 million tons). After river traffic stalled in late January and most of February, weekly volumes quickly rebounded.
Weekly volumes rose in March and trended even higher than the five-year average from March until the first week of June (week 23) (fig. 1). For the week ending July 3, 2021, year-to-date (YTD) downbound barged grain volumes on the Mississippi River reached 21.5 million tons, a record high since at least 2003 — 31% higher than the same week in 2020 and 27% higher than the five-year average. However, despite starting strong, third-quarter 2021 weekly volumes soon fell sharply — more sharply than their historical pattern — because of low stocks (depleted by high January-June grain exports) and Hurricane Ida.
On Aug. 29, Ida’s landfall ended 2021’s strong barged grain movements: the storm damaged the New Orleans region’s electrical distribution system, as well as the barge fleet and shoreside infrastructure. These setbacks introduced new logistical challenges and exacerbated existing shortages of barges and labor. As a result, barge operations and grain inspections in the Lower Mississippi River region mostly halted at the beginning of the harvest season.
By mid-September, weekly barged grain movements dropped to a record low 169,000 tons. Third-quarter 2021 weekly grain inspections in the Mississippi Gulf (a proxy for demand for Mississippi River downbound grain barges) mirrored the decline of grain movements. Weekly total inspections volumes had reached their annual peak in January, then gradually declined, bottoming at 238,000 tons in mid-September — roughly two million tons less than in the same week in 2020.
Recovering moderately from the previous quarter, fourth-quarter 2021 downbound barged grain movements totaled 8.2 million tons—29% less than 2020 and 15% less than the five-year average. The sluggish recovery suggested the ongoing struggle to move the freight to the Gulf, as shortages and other logistical challenges persisted. Recovering faster than movements, fourth-quarter Mississippi Gulf grain inspections totaled 23 million tons — 18% less than 2020, but 5% higher than the five-year average.
Limited Supply Spurred High Rates In Second Half of 2021
From November of 2020 through the first half of 2021, St. Louis barge spot rates trended slightly downward. However, in mid-August, rates started escalating, peaking at $33.7/per ton in early October. For the rest of the fourth quarter, rates oscillated between $14/per ton and $30/per ton. For the majority of the second half of 2021, rates were above the five-year average.
In 2021, the barged grain market performed unevenly. Despite a lackluster showing in the second half of 2021, the barge industry is optimistic for the rest of marketing year 2021-2022, as grain sales and export demand remain healthy. However, a variety of factors could alter market conditions, such as new Covid-19 variants, harvests in South America, new developments with U.S. trade partners and competitors, changing trade and monetary policies, and shifting domestic demand for ethanol production and soybean crush.