Mississippi River Experiencing Drought: Will it Impact Waterborne Trade?

When we think of shipping cargo via water vessels, most of our minds immediately go to ocean freight. We often forget about local channels within the U.S. that facilitate the movement of millions of dollars of goods. While the Mississippi River tends to live in our minds as a “landmark” sight-seeing waterway often used for canoeing and kayaking, it is actually one of the primary water channels used the movement of goods from inland to the Gulf. And currently, things aren’t looking great for shippers using the river.

Mississippi River Drought 2022

The Mississippi River is actually responsible for 92 percent of U.S. agriculture exports. Due to a massive drought that’s lowered the water enough to create entirely dry sand stretches along the expansive river, it has been closed near Stack Island and Memphis as of October 7. 2,000 barges at various locations along the way had been stalled due to the shutdowns related to the drought as of last week, though these conditions have slightly improved since. Officials have reopened the waterway with restrictions as certain sections of the river were deemed safe, though it is uncertain when the river will be fully reopened since there’s no assurance as to when exactly water levels will rise again.

The timing of the drought is truly unfortunate, as it comes immediately after harvest season as millions of tons of corn, soybeans, and other crops sit in containers with the threat of expiration looming as shippers scramble to find solutions. This has forced many shippers to make the tough decision of rerouting cargo and disrupting initial supply chain plans and processes, or sticking it out and hoping the channel resumes activity as soon as possible. Unfortunately, as demand for rail and trucks have gone up along the waterway, so have freight costs.

Conditions Improving Slightly

While there was a backup of over 2,000 barges on Friday of last week, these conditions have improved as Memphis resumed activity with restrictions to one-way traffic. Memphis currently has no backup of barges, and Mississippi is now down to a cue of 900. While this is significantly better than last week, it is of course far from smooth sailing.

The Mississippi is no small trade route. In 2020, it was responsible for the movement of over $70 billion of domestic cargo, and it continues to be utilized as one of the primary channels for inland cargo movement. Droughts have occurred in the past along the Mississippi, though it’s been nearly a decade since the last serious one. In 2012, a drought put a pause to millions of tons of cargo, causing $35 billion of losses for U.S. shippers.

Looking Ahead

How long the current drought will last is unknown, but shippers should be actively looking for alternative options in the meantime, and consult with their forwarders and other industry experts regarding updates to the situation.

Should you have any questions regarding this and how it could impact your shipments, please reach out to our team today. Additionally, we have our weekly market updates that can provide you with relevant freight news, updates, developments across the industry, and more.

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