US river freight system near breaking point as huge harvest looms
By Michael Hirtzer and Karl Plume
CHICAGO, Sept 25 (Reuters) - With a record U.S. harvest just coming in, the river transportation system that is at the heart of the nation's farm economy is overstrained by rising demand for shipping capacity, a low barge inventory, and a dilapidated lock system.
The pressure is building on an inland waterways network that is just one flood, drought or mechanical breakdown from calamity after decades of neglect, industry sources say.
Looming bumper corn and soybean crops are bringing to light issues that have built for years and which have been exacerbated by new entrants to the marketplace for river logistics, such as producers of crude oil from the nation's shale boom.
Rail congestion and truck shortages are shifting more cargo to the creaking infrastructure for floating heartland goods to market.
As a result, the U.S. Agriculture Department expects the cost to move grains from the Midwestern crop belt to export facilities along the Gulf Coast to reach a six-year high during October, the busiest harvest month of the year.
Concerns about transportation bottlenecks have eroded prices that farmers receive for their grain, reduced the competitiveness of U.S. supplies in the global marketplace and elevated expenses for food and energy producers who could ultimately pass the higher prices on to consumers.
Lower-cost grain suppliers in South America and eastern Europe are undercutting U.S. prices. South Korea and Taiwan, two top buyers of U.S. corn, recently purchased corn from exporters in Brazil. Shipments of corn out of Ukraine are the cheapest in the world, $8 per tonne less than U.S. grain. Continuación...