The slowdown in the US logistics grid was first highlighted in our March 20th post When The Levee Breaks. Due to increased snow melt in the Northern Plains, more rain this week in the Ohio River Valley and a potential snowstorm impacting parts of Montana, Iowa, Nebraska and South Dakota, it doesn’t appear the mess is over. US corn, soybean and wheat shipments through the first 14 weeks of the year have totaled around 23 million tonnes as compared to 27 million tonnes in 2018 and 31 million tonnes in 2017.
US logistics are not running at full capacity and this leads to slack loading rates in the key port region of the Gulf of Mexico. Our extensive database indicates that total dry bulk corn, soybean and wheat loadouts in the Mississippi Gulf region were about 55% of all US loading's in the first fourteen weeks of 2018.
The Upper Mississippi above St. Louis is still closed to navigation with Locks 12 through 22 estimated to reopen between April 17th and April 22nd. Barge tow sizes are also still reduced from St. Louis to Cairo. With over a foot of snow expected in St. Paul, and two to four more inches of rainfall expected for the Ohio River Valley region over the next week, we should expect these logistical obstacles to remain in place on the river. Furthermore, a snowstorm in parts of Nebraska, South Dakota, Minnesota and Iowa will leave railroad issues front and center.
- Corn tonnage by barge through Lock 27 totaled 179,000 tonnes for the week ending April 6th, up from 166,000 tonnes the week prior and down from 296,000 tonnes for the same period last year.
- Corn, soybean and wheat tonnage through Lock 27 totaled 218,000 tonnes, down 37 percent from the same period last year.
- Average train speed in miles per hour for Class 1 carriers sank to 21.5 for the week of March 6th, 2019 but has rebounded to 22.7 as of April 3rd. This speed is still down from the 2019 high of 23.9 but progress is being made, for now.
- Weekly average trains holding per day has skyrocketed with BNSF days on hold at 25.2, a new high for 2019 and the highest since last July. A similar pattern is seen on the Union Pacific. These issues might be exacerbated by the snowfall expected this week.
Competition remains robust in the global grain and oilseed trade and it’s clear that logistical issues are hampering shipping growth for the US. The bright spot for the time being is an uptick in Pacific Northwest soybean shipments and a strengthening US wheat shipment trend, which should last until July which is when Black Sea new crop wheat loadouts will accelerate.