Ocean Freight Rates Reach Highest Level Since Last November
Ocean freight rates for shipping bulk grains have risen for 5 consecutive weeks. As of March 10, 2022, the rate for shipping a metric ton (mt) of grain from the U.S. Gulf to Japan was $79.00—12 percent more than the beginning of the year, 37 percent more than the same period last year, and 70 percent above the 4-year average.
The rate from the Pacific Northwest to Japan was $44.25 per mt—14 percent more than the beginning of the year, 36 percent more than the same period last year, and 72 percent above the 4-year average. At $29.50 per mt, the U.S-to-Europe rate was up 12 percent from the beginning of the year, up 39 percent from the same period last year, and up 75 percent from the 4-year average.
According to the March 10 issue of the Transportation and Export Report by O’Neil Commodity Consulting, the rate hike is driven by rising crude oil prices caused by the war in Ukraine, affecting trade throughout the Black Sea region.
According to Energy Information Administration’s Short-Term Energy Outlook, Brent crude oil spot prices averaged $97 per barrel (b) in February—an $11/b increase from January—and are expected to average $117/b in March.
Downbound Barged Grain Spot Freight Rates Rise Sharply
Over the past 2 weeks, because of Russia’s invasion of Ukraine, ocean vessel traffic (including for agricultural and energy commodities) has been largely halted through the Black Sea. Although U.S. barged grain volumes have not yet significantly risen, there may be signs global consumers are turning to U.S. grain (and other products) to substitute for imports from the Black Sea region that have become inaccessible.
U.S. barge freight rates have skyrocketed as both immediate (spot) demand and April freight demand have surged. Likewise, an already limited supply of empty barges has grown even tighter. Also, sharply rising fuel prices will likely pressure barge operators to transfer some costs to customers by raising rates.
Over the past 3 weeks, the spot rate for St. Louis rose from 470 percent of the benchmark tariff ($18.8 per ton) to 871 percent ($34.75 per ton)—220 percent higher than last year and 204 percent higher than 3-year average.
Similarly, the Upper Ohio River freight rate jumped from 505 percent of the benchmark tariff ($23.6 per ton) to 1,060 percent ($49.7 per ton)—262 percent higher than last year and 225 percent higher than 3-year average.
Missouri and Minnesota DOTs Request Input on State Freight Plans
The Minnesota Department of Transportation (DOT) seeks public input about its District 6 freight plan by March 21. Input will help finalize the District 6 Freight Plan’s recommended strategies to improve, long term, the movement of goods in southeast Minnesota.
In a similar vein, the Missouri DOT is soliciting public comments to help finalize its draft 2022 Missouri State Freight and Rail Plan, through March 31. Missouri’s Rail Plan was last updated in 2012, and its State Freight Plan was last updated in 2017.
The 2022 plan combines both to improve the State’s access to Federal funds and to become eligible for discretionary grants. The plan’s information and guidance for investment decisions will improve all modes of freight movement in the State.
Snapshots by Sector
Export Sales
For the week ending March 3, unshipped balances of wheat, corn, and soybeans for marketing year 2021/22 totaled 37.5 million metric tons (mmt), down 16 percent from the same time last year, and up 5 percent from the previous week.
Net corn export sales were 2.144 mmt, significantly up from the previous week. Net soybean export sales were 2.204 mmt, significantly up from the previous week. Net weekly wheat export sales were 0.307 mmt, up 2 percent from the previous week.
Rail
U.S. Class I railroads originated 24,880 grain carloads during the week ending March 5. This was a 12-percent increase from the previous week, 6 percent fewer than last year, and 10 percent more than the 3-year average.
Average March shuttle secondary railcar bids/offers (per car) were $1,450 above tariff for the week ending March 10. This was $896 more than last week and $1,122 more than this week last year. There were no non-shuttle bids/offers this week.
Barge
For the week ending March 12, barged grain movements totaled 567,522 tons. This was 11 percent less than the previous week and 30 percent less than the same period last year.
For the week ending March 12, 366 grain barges moved down river—29 fewer barges than the previous week. There were 682 grain barges unloaded in the New Orleans Region, 9 percent fewer than last week.
Ocean
For the week ending March 10, 32 oceangoing grain vessels were loaded in the Gulf—29 percent fewer than the same period last year. Within the next 10 days (starting March 11), 58 vessels were expected to be loaded—6 percent more than the same period last year.
Fuel
For the week ending March 14, the U.S. average diesel fuel price increased 40.1 cents from the previous week to $5.250 per gallon, 205.9 cents above the same week last year.
