Tuesday, September 7, 2010

US Barge And Rail Freight Set To Gain In Logistics Boost

Grain Harvest will put Pressure on Storage Facilities
Shipping News Feature

US – For the first time in almost forty years farmers in the country’s grain belt say that the elevators needed to load the crop have been completely booked up this year. The logistics of shipping America’s crop in what appears to be a bumper year means that barge and rail freight space to move the goods will be at a premium, hence rising rates for the shipping industry.

The US export crop of soya, wheat and corn is estimated at around 130 million tonnes this year and the disastrous floods in Pakistan plus the drought in Russia mean that farmers want to store all the cereals possible as the prices rise. Russian estimates put this years harvest down by as much as 40% and meanwhile the freight rates for American rail and waterborne cargo have risen to four year highs.

The US harvest means all covered facilities will be full and the farmers must then resort to outside storage in the hope weather will be clement. This is a dangerous gamble if the autumn proves wetter than usual so it seems the pressure to export whilst freight tariffs remain high will mean full inventories for rail freight companies like BNSF and barge operators such as the Consolidated Grain and Barge Company (CGB). Cynics may wonder if Warren Buffett has a crystal ball or deals with the Devil.

So with other grain crops, principally barley, sorghum and rice needing their share of warehousing facilities at a time of plenty in the fields it looks like a good time for one sector of the country’s logistics industry which may be able to make up ground lost during the overall downturn.

Photo: Courtesy of the Hanson Silo Company of Minnesota – constructors of grain storage facilities.