A Midwest Drought Is Creating a Supply Chain Crisis on the Mississippi River

was like, it seems a little high. Yeah, you're right. So, you know, the early days of the pandemic, there was all the shipping related chaos, and I guess lucky or unlucky, I don't know. Um I had a sort of front row seat to observe some of it in Asia because it became very very apparent that it was becoming not only more difficult but also more expensive to ship goods from China to the US. Right, so it's like, huh,

what is going on with that? And then we looked at international shipping and we started pulling on the string that got us to ports, and that got us to truck that got us to everything else. We pulled the thread into what you always think, there's going to be nothing left and then like you find something around the corner, right, But there's one big area that we've talked about doing for a long time that we haven't talked about. Oh yes, yeah,

well this is my point. There's always something new barges, right. So we you know, the inland waterways, rivers, the Mississippi River in particular, there's everybody is something we wanted to talk about and talk about. It's significance in the U. S. Economy, and you know how important is inland infrastructure, but we just haven't gotten around to it. However, now we actually have a very good reason to talk about it. It's

the barge episode finally here. But we do have the perfect peg, which is that at the moment there is a massive drought in the Midwest and it is affecting water levels on the Mississippi, which is of course the most important inland waterway in the country. And I think you know, I was reading a Bloomberg article it said waters in Memphis fell to negative ten points seven nine ft recently, which is slightly lower than the previous low of ten points seven zero from nineteen Did you say

negative there was negative water? Yeah, I'm not entirely sure how that works. It sounds bad, it sounds bad, it's bad. Yeah, Right, So there has been a very severe drought in the Midwest, and it seems like a double whammy, right because on the one hand, like if you depend on the Mississippi River or any of the inland waterways and the river's tributaries to move your grains or to move your goods,

that's a problem we're going to get to why. But also it's just bad because it's bad for growing, yeah, exactly. So if you're a farmer, you probably struggled to actually grow your harvest this year, and now you're struggling to get it out to the market where you're actually selling

it into. So, yeah, a double whammy. And also, you know, we're going to be speaking a lot about grains on this episode, but there are all types of goods and resources and commodities that actually move up and down these pathways on the water. Right. So we're gonna do this episode a little bit differently. We're gonna break it up into two different sections. But first let's start with someone who works in the grain business and talk about how

it's affecting them. Let's do it. We have the perfect guest to talk about grains and the effects of the drought on the grain industry and on shipping grains. We're

going to be speaking with Ben Shull. He is the president of Louis b Oster Burr and Associates, which works with specialty grain companies organic grains, non gmo grains, etcetera, to move their goods overseas or to sell their goods much of its destination overseas, and of course his clients are highly dependent on the functioning of the Mississippi River and the barges there on. So Ben, thank you so much for joining us. Ben, what do you just sort of tell us, like, what do you do? What's your

role within the grain ecosystem. I am the president of a specially grain company called Ostburne Associates. We buy especially grains non GMOs and the like in export um to Japan throughout the river system in the United States. Also come from a family farm, so I have a little bit of a farm background, and we are involved in production agriculture in central Illinois, in the production of specialty grains. So as a jumping off point, you know, we talked

a little bit about this in the intro. How bad things actually are on the Mississippi at the moment. But give us your sense of how things are at the moment and how they stack up against history. Well, this is certainly I've been doing this for about sixteen years, certainly the worst I've ever seen. As I talked to some of the other veterans and people with a little more experience shipping on the river, it seems to be about as bad as we've had since the nineteen eighties.

A lot of people are siting, uh, matching some of those records. Two thousand twelve was a dry year. We had some low, low water we had to contend with. But this is a lot really new compared to what we've been dealing with in the recent history, which is high water. That's interesting. So it's a double whammy. So if you're producing grains in the Midwest, you're contending with a imagine drought is extremely bad just for the growing

of grains, and then the actual logistics. Yeah, so we're kind of beholden to the weather all year round, especially if your main market is the export market, which for most would be on the river and river tributary terminals. We are usually pretty consistent on the river with river levels but you know, we usually have to deal with low water in the fall, high water in the spring, and it's just something that we usually have to keep an eye on. Very rarely does it get parabolic in

a situation like we're in today. Can you talk to us a little bit about the life cycle of a harvest or I guess the supply chain of you know, particular grain is grown in a few on a farm and then it goes down the river and it ends up in an export market like Japan or elsewhere. Like, how does that process normally work and where are these sticking points now? Typically farmers will want to get in

the field and plant their crops in April May. If those are the ideal times to get in you would typically begin harvest in that scenario September, which would last through October and into the beginning of November. Now, for export, soybeans are usually the first thing to leave the United States, and a typical harvest, which is where we're at right now, soybeans move about of exports will happen between September and February. A half to might move by barge. That's where we

are today. Corn usually follows maybe at the turn of the calendar year. That's when our big export program for corn will happen. So right now it's pretty much all hands on deck in terms of the shipping to get the soybeans out. Are big buyers, obviously China. We want to get those out and in overseas as fast as possible because we will have a South American crop come online somewhere January and February where we will no longer be as competitive to the market. When you ship something,

depending on where you ship from. I will use St. Louis because it is the biggest origin port out of the Center Gulf. That might take in a normal scenario ten days to get to New Orleans, maybe another thirty to get to a place like Japan after it's loaded on a boat. Right now, what we're seeing is at least double the amount of time to get from a St. Louis to a New Orleans, but that varies day by day. There are land mines and pitfalls all over the place

on the river. Right now, it's legitimately a day to day situation. So is the issue for farmers that the longer it takes to get the crops out and exported to market, the less competitive they are, or is the issue that if you wait too long the crops them start to spoil. We're both so this is where it's interesting. While the dry weather is actually a hindrance to shipping and moving the crop on the river, it is hugely beneficial for the farmer getting their crops out of the field.

We are making very good pace on harvest because there's been no rain to stop the harvest progress. So they're coming off an extremely extremely fast paced in the West, even faster because they don't have as much of a crop because of the dryness and some of the drought issues out there. Where the bottleneck occurs is at the shipping point. Most farmers have built ample storage over the last few years, as in the last ten plenty of storage to store on farm, but the bottleneck becomes at

the origin port. So now we cannot move as many barges because of reduced toes and barge is getting stuck all along the river segment, and that creates a backup at origin where it hurts the producer. Is a basis level, or the difference in cash prices versus the Chicago Board of Trade continue to drop off. So whereas a farmer might see something relatively equal to what you see quoted on the board. They might be getting a dollar less because the transportation costs and risks are so high. Can

you talk a little bit more. You mentioned the logistical land mines. Right now, what actually happens in low water and how does it slow down the shipment of these goods or the ground. So low water causes two problems channel depth and channel width of which you can take barges down. How this is being slowed down on the river currently you have a tugboat that will push a pa pack of barges from a St. Louis to New Orleans, and they might typically push forty barges. Well, right now

the max is twenty five on the river. The amount of grain that we can actually put in a barge is being reduced. So right now everybody is a nine ft draft. We can only sink a barge nine ft down and ship it. That's that constitutes somewhere between less

than normal. Uh. Some of the other issues longer turns where a lot of people are running daylight only hours right now, which means the primarily the reason for that is so they can dredge or dig out the bottom of the river at night, so it just continues to make longer turns down to the gulf and back. We

have stoppages which are day to day. It could be five six blockages on any given river segment and uh, all of that really you put all that together and what that means for shippers uh, and grain dealers and and people that move product on the rivers high shipping costs. So what are farmers actually doing to offset some of

these issues? Like have they potentially built up I mean, I guess if you were prepping ahead of time for climate change in major drought, maybe you would build up your storage capacity for instance, so that you could store a lot of your grains if you can't move them. Are there things that farmers can do to offset some of these challenges? Well, farmers, you can always price ahead.

You can price before the issue gets here. This issue really started well early in the year, but it really came to a head in September and October, So you're their issue. There are ways to mitigate that risk by pricing ahead, taking some of that risk off your off

your table. You also have a huge build up in storage on farm so a lot of these producers can tuck away the grain until there's more beneficial river system, a better chance and a better opportunity to sell better values once we get some of these issues sorted out. Do farmers have any alternative ways of shipping goods? Is there any rail or trucking nearby or do any of them have that option when they can't get a spot on a barge. Absolutely, farmers by and large have their

own trucks. They can move their own product. Uh, there are railhouses. Rail even before these river issues was pretty taxed, and they've had their own issues and performance and otherwise in certain markets in certain parts of the US. So I don't know that rail is in a position to

really help out the river market. And we already have a huge demand pull by rail to move corn and beans and other products to the West where we had a substantial drought, into the Southeast where there's good demand for for rail in product, and it really isn't economically feasible to truck your grain to the New Orleans, which at the end of the day, for export is where all this what it needs to be. It's really a sit in wait. Look for other markets like a railhouse.

Look for other markets like ethanol and feeders, and just if you need to move grain, find something else other than the river at this point to find a home because the values will be much better to the producer. So this is one thing I was wondering. Actually, you know, we're talking about moving things like soybeans down the river so that they can get exported to markets like China and elsewhere. How much of the grains that are moving through the Mississippi, How how much of that goes to

the US versus the rest of the world. So if you're talking about it, let's just take corn for instance, because I deal in corn mostly but probably oh my gosh, that's all I hear in my house. My I mean, my kids have never cared one iota what I do. But since that came out, they've done so much for

the corn industry. Let me tell you, uh, I would say, of like the corn in the United States goes for export, the majority of that gets used in house for between ethan, all uh, feed of animals and just other domestic food products. Beans are much more heavy export, probably closer to half or something like that. So that's why there's such a big on It's not only is it our time to ship beans and to get them out. It's our window, the place where we're the most competitive, where we are

typically cheaper than Brazil and our competition in Argentina. That's why it's such a high priority to get those out now because they will be coming online with bigger crops. Is are especially Brazil continues to increase acreage year over year. They are becoming more of a force and a bigger player in the grain and especially soybean UH competition force in the world. Do farmers have to make a decision about Wait, this might be like a new normal that

if you know, because droughts can last a long time. Obviously, the drought in the Southwest has happened for several years and there like crisis of water levels there. Do farmers have to make a bet so to speak, on whether the drought is going to persist and constrained waterways is a new normal and there has to be a different way of exporting their goods. I don't know that they need to sit there and worry about drought into the future. And as it relates to the river system, they could

certainly look at diversifying some of their in use. Buyers maybe do a little eth and all. Do some river feeder maybe diversify it. But my my experience in weather and river conditions and rain is much like the economy, just like a drought in a recession. The best part about them is they will end at some point. What would be most helpful for farmers at the moment? Would it be like more coordination on the river or better dredging capacity? What would people like to see here? There's

no magic bullet right now for the river. The thing that we need is heavy rain, a flash flood type event north of St. Louis. The biggest problem with this event that we have right now isn't so much the low water, it's where the low water is located. The biggest problems are Memphis South. So if you had a flooding on the Illinois, some of the bigger companies and a d M or a Cargill could shift their operations to really push product out of the lower Mississippi or

the Ohio River and kind of ore that opportunity. The problem we have right now is where this biggest issue is located, and that's Memphis South, which affects every signal river segment. So there is no magic bullet what we need, or heavy rains, a flash flood type event, like I said, that would just run off into the rivers, the tributaries, in the in the in the main rivers to provide

us a little relief. The other would be a kind of just soaking rain and start knocking back this drought where we have soil moisture and every rain adds to it. That is obviously a longer process. It will be slower to bring the river levels back up, but absent of widespread rain, dredging is just a kind of a band aid on a bullet hole at this point. It's just keeping us going. Just the one last question for me, more out of curiosity. But you mentioned that normally the

problem that you face is actually too high water. Can you talk about some of the challenges that that poses. Yeah,

so high water. The one experience that I had that was probably the worst would have been the spring of nineteen where it just continually rained, and more than rain, it didn't it didn't ever get warm in the spring, and there wasn't a whole lot of sun to dry up the soils, and we were pretty much non operational on the river, especially the Illinois River, until from spring to June where there was a complete backlog at origin, a lot like what we have here, but just nothing

was moving. We're actually trying to move in this situation. With high water there, you can get to a point where you can't load anything physically because the water is so high that barges sit above spouts and product that you're trying to load on the barge. Neither or fun, but high water comes with its own set of challenges just like low water, and high water has definitely been the more prominent of the two in recent years. Ben, Thank you so much for joining us. This was extremely helpful.

So appreciate you coming out on ad lots. Oh, it's an honor and it's appreciate you guys having me. Yeah, absolutely, yeah, thanks man. That was really good. Well, Joe, that was fascinating and there is a lot to dissect there. But just before we do, we're gonna bring in two other guests to people who have actually been on the show before, kind of talking about barges, but this time we're really

going to get into it. We're gonna be speaking with Mercy Group CEO Anton Posner and President Margot Brock In just a few minutes after the break. So we're back and we are continuing our discussion of the Great Mississippi Drought and what it actually means for the economy, for transport and logistics. We are going to be speaking with Mercury Group CEO Anton Posner and President Margot Brock. Anton and Margot, thanks so much for coming back on our thoughts.

Pleasure to be here, Thanks for having us. Yeah, great to be back. So I remember the last time we spoke, we did touch on barges briefly, and so Joe and I, you know, when we were prepping for this episode, we thought who do we need to call to talk about barges, and it was, of course Mercury Group. Just to begin with, give us a sense of your connection to the barge business. The river. River business is a huge part of Mercury

Group business and has been since our inception. Of course, millions of tons move of commodities and cargoes move on the river system every every year, northbound, southbound, east and west throughout the Mississippi River High river system, so it's been a big part of our business, primarily moving import commodities via coming in via New Orleans and mobile commodities like steel and aluminum and lead and zinc and on

raw materials for the steel and metals metals industry. UM. So it's such a significant part of the North American and American transportation UH system and a big huge part of the Mercury Rickery Groups business that we manage for for our clients. Can you talk about like you know, we've talked a lot out about logistics and shipping and ports and trucks and dredging on the show several times, but just like how significant I do feel as though

inland waterways specifically do not get that much attention. I guess maybe outside when they're in crisis, But how significant are they? To what degree do people need to appreciate the importance of our inland infrastructure. That's a great question because I think it is such an unknown in this country for people don't understand how extensive the river system is and how much of the US gets fed in

and out of materials on the river system. And you know, Anton and I are East Coast based people, so I didn't grow up on the Mississippi. I didn't see barges moving on the Mississippi, and I didn't know they existed growing up, and even Anton and I, who went to merchant Marine merchant Marine school, we are came out as licensed third mate. Even in college, we didn't talk about it. We talked about ocean freight and and bigger, bigger scale.

The river system is tremendous, and the amount of commerce that runs inbound, it really runs the gamut. There's barges that move liquids. There's an incredible, incredible fleet of barges that move dry materials. Inland. It can be you know, some interestingly enough, we at one point removing organic soybeans into Middle America because although we make soybeans here in the US, we don't have a great organic crop and

you have to feed your organic meat organic food. So to have organic cows, we need organic feedstock for them. We send raw materials into production facilities. So you know, when we're looking at what has happened in this market that we're all living of reduced availability of so many items that we think of that come from China in containers, you know, and the chips for our cars and Christmas gifts on our shelves. That's one part of the market.

But there's a lot of raw materials that feed up into the US that aren't able to reach these production facilities if the river is not working, and that's the next great shortage that happens when we can't get materials up to the production facilities. And then on the export side, we'll have discussed grain already for this podcast. Export grain is a huge part of the US is grain market.

So although we feed plenty of our of ourselves domestically with what we produce, it's a really big global market for US grain. And right now is the green season. So when rivers are not running well, which is what we're going to talk about today, and cannot get that grain out of the river system, that's a huge financial impact on our farmers. So it really is very extensive the reaches because the river system, you know, it all runs up off the Mississippi and feeds east and west.

It's a very big footprint of the US that the river system touches. So talk to us a little bit about what you've seen so far. How would you describe the current situation on the Mississippi. The current situation the Middle America is suffering from a huge drought, and typically about this time of year, it's a combination of we have self found grain coming out, which dominates the landscape because it's so important to the U. S economy to

be shipping that grain out. And usually they're fighting against weather systems that are hurricanes, and we're used to seeing, you know, this time last year they were recovering from Ida, which took out grain elevators, and then there's too much water on the river and it's running too fast and it's dangerous and there's so many impacts from too much water. And what we're seeing this year is we didn't see

any big weather systems come into the Gulf. The hurricane came in, came into the Gulf, it went to Florida, it didn't go to the river system. The river's did not see any of that rain water. The river is at historic lows and there are moments where you know, the gauge at Memphis, Tennessee reading water levels. They've been recording that gauge for the last eighty nine years and we learned through current events that was the lowest mark in that eighty nine year reading on the river. Well

we've surpassed that. We have set new lows on this river. It is significant on the lower Mississippi and what it has caused is a series of domino effects. Really, the water is low, we are getting channels evaporating where we just can't transit it because they're too low. And certain areas of the Lower Mississippi have been dredged already, there are other areas waiting for the dredge. The dredges are very busy right now up and down the river, trying

to keep keep traffic flowing. We're seeing when those rivers open, traffic is in one direction, so you've been waiting for days for the river to reopen. Your barges are stuck, and now you're sitting a few days more while traffic from the opposite direction passes through, and that dredge is now on its way somewhere else to salvage another location that's having problems. It's almost doing bare minimum just to

keep the river operating and keep barges flowing. We are also because the water is so low, it restricts how much you can put in a barge, and so we're seeing very low drafts on bar barges, which then has that next implication that you need more than the usual amount of barges to move that size parcel of cargo. So you know, if you're previously you would have moved your parcel in ten barges, maybe now you need fourteen

because of how you have to load them. So it's really there's constraints on the system coming from every direction. You know, we can't get the barges moving fast enough to get them to a point where we need them to load. Plus we need that many more to load now, yeah, add on you know that need for more barges per per per ton effectively on top of a busy grain season. And you think people used Percy spoke to on the

grain market and probably get more insight on this. But we've seen a more active export grain market this year, with which seems to be of course servers alt to what's happening with Russia and Ukraine and European markets buying more American grain. And we're not grain people, so we'll leave it to the great experts to comment on that. But yeah, this situation on the on the river system is coming at a time within when there's a ready constraint on the barge market and we're seeing as a result,

we're seeing spot barge rates skyrocket. We've seen on an important lane that we're moving on ray materials setting northbound. We've seen spot rates for October in the range of nine to ten times what the annual contract rate was for that particular move, and we were lucky to be able to find that. Tracy, I just found we have U S D A U S river barge grain spot rage on the terminal. So we do we actually st Louismasouri, Yeah, we do so. In fact, it's very clear what Anton

just said. So you know, going back to August, we were at fifteen I'm not exactly sure what the fifteen dollars per short time, So we're at fifteen and it got as high as a hundred and six in the in early October, so really an extraordinary rise in a spot barge prices. All this chaos on the Mississippi, and you know, a lot of this is sort of reminiscent of the shipping chaos that we were talking about in one. But what exactly can be done to alleviate this? If anything?

I know there's some dredging activity going on. Can you try to you know, expand capacity on the river rush to expand capacity at river ports? Is any of that possible or does it help the fix right now is a good old rainstorm. They just need water. You know, there is no significant rainfall in the forecast. Everyone's you know, watching carefully in the bards lines of all. And then

the next concern is when that rainfall comes. The surrounding area is so dry as well that it's going to take a bit before we get to a point where there's actually runoff feeding the rivers. That's the corrective action that we need. We just need water in the rivers, you know, dredging. Dredging is always a difficult thing to stay ahead of to keep channels open, and you're talking about, you know, a massive amount of navigable rivers that that the Army Corps of Engineers needs to maintain to keep

us moving freight on the rivers of the US. So increasing capacity right now is purely just by keeping channels operating, keeping navigable waterways operating, and that's where we're suffering. We just don't have the water to be able to navigate

up and down these rivers right now. At some points we look at large capacity being the issue, and it's usually this time of year that's a big issue because the barges are all tied up in the grain sector, and those that are looking to move northbound cargo are constrained because the barge lines feed all their equipment up river. But that's not even the issue anymore. The issue is

just it purely can't move. There's no water, it can't move, and everyone is just desperate to get the river the empty barges back and get them reposition to the next point for a load and keep right moving. I have

a short question and then a slightly longer question. So the first short question is what are the non grain the dominant non grain goods that gets shipped along the river coal, steel, metals, chemicals and tank barges, petroleum products, things like that, iron ore, find row material sparrow alloys, things like this that go into into steel and making a coal. Coal is a huge commodity that moves on

the on the river system. Our business tends to fold mostly towards the metals and steel markets and the row materials that go around those, and they're they're keeping us pretty busy, Joe. Then this gets to my second question, which is, Okay, yes, we see I'm looking at the start and the spot rate shot up. But if there's an issue of Okay, you just can't move it, which is sort of like a lot of our themes. That's like, there are certain things that you can't buy it any price.

When there's a constraint on how many barges there are or the depth of the river, what are your clients doing as alternatives or how are you helping your clients find alternate mean divid shipment that's a yeah, that's a difficult one to work around, but it does depend on the commodity. When we're looking at a lot of the bulk products, which are you know, in terms of being raw materials into production, there's often not necessarily the easy ability to offload it at a terminal and find another

conveyance to move it. When you're talking about a ship that has fifty thou tons of material on or even thirty tons of material on it, that's a huge, huge,

huge amount of trucks. If you could move it in trucks to wait for rail cars would be not feasible, you know, And a lot of the instances waiting out the delays on the river system is still going to be the likely the best use of your time, the most time efficient to get to the end destination because simply finding a place to offload that much tonnage to ground and reload it out and finding enough conveyance to

get it to that next point is too hard. Now, once you move into break bulk materials, where you know steels and metals and you know that fall into our sector, right now, we're seeing a good portion of that landing too dock when it wouldn't have before. And it's simply because there is no spot market for barges. If you didn't have it booked and you don't have a contract

for it, nobody's moving it, nobody's touching it. And we're talking about like the ships coming into New Orleans discharging to the like the city docks in New World, just to leave it outside for later reload too barges instead of going direct from ship into barge, which is the cheapest, most effective, cost effective right And we're finding two that we're running a lot of rail rates on lanes that were not expected to be rail because there is capacity

to offload break bulk materials onto the dock steven doors when it just needs a basic outside storage. It's easier to easier to navigate that and figure that one out. So it's landing to outside storage and then we will bring in rail cars and move it out that way is the best option. Best option for some other cargo may end up seeing what happens with the river system. If it's not urgently needed upriver or at a at a consumption point, it may just stay on the dock.

In New Orleans, we're also seeing some interest in alternate ports, like let's go to mobile where maybe we can barge north out of Mobile and avoid the lower Mississippi River just to not get caught up in those bottlenecks. Uh, Margot, you briefly touched on this at the beginning up. Can you maybe describe what would you expect the second order effects of all of this to be. Is it going to be you know, we mentioned the higher spot rates

and will that feed into prices. Is it going to be you know, shortages because manufacturers can't get the core components or resources that they need, things like steel or coal to stoke various furnaces. What exactly is going to be the result of all of this. Well, right now it seems like everything is moving slowly, but things are recovering. And the biggest fear that you have in pushing things

up river predominantly. You know, in talking about a US economy and a US workforce, we become concerned with feedstock, raw materials, making it into production facilities to keep them running right. We don't want to see anyone shut down. We don't want to see a labor force for a load or cut because a facility has to stop working. So that's definitely an ancillary effect and an outcome that

you have to worry about. But the river, thankfully, you know, they're working hard to keep it moving in a modified capacity right now. And what we're seeing from the barge lines is that they are currently able to cover what their commitments are, just they can't go above there already booked commitments. So if we can keep it, keep it moving, and keep the river alive until rainfall comes, that will help a lot and help lessen much of you know, some of the impact, I guess, but they're still going

to be impact. And I think you know what we're anticipating is barge contracts run most commonly, if you're on a contract, it's a following a calendar. So we're coming into that time where we should be negotiating for contracts. But nobody's talking about it yet. The spot market being eight nine, ten times what the contracts market is is not a good time to be talking about, Hey, what do you think you want to price me for three?

It's a really loaded question to be asking right now, and nobody's having the conversation we have where everyone is agreeing to defer that topic right now. Can I just ask a quick question about that? You know, I know when we've when we've done episodes on trucking, you know, contract is in trucking seems to be like sort of a nebulous thing, and uh and are ripping up their contracts all the time, and they're not particularly legally binding.

Particularly spot and contract deviate far when you talk about contract with barge operators. Are these more binding or they also sort of like loosened subject to reprice? So, Joe, the barge lines are are honorable. These are binding contracts they are performing. So these these annual contracts that as Margo mentioned, right, it's typically a calendar year for for these types of contracts that handle the medals and steels and some of the row materials that we that we manage.

So the barge lines are they they stand behind the contracts. They stand behind the pricing on the annual basis, annual rates that they agree to, and as Margot mentioned right that, what they're not doing is going over and above in a good year, well a good year for for shivers, right for cargo interest, there's some extra capacity and there's a possibility to get a barger two extra under the

contract rates when when needed. Not now. As Margot mentioned right there, the barge lines are not giving a single barge beyond what they're committed to in their in their contracts. But but they are, they are performing and there's no back trading, as a phrase that we like to use right now, no back trading and Joe as you men should right with the trucker is a whole different world of what a contract means. But but in the barge world, a contract is a contract and the barge lines are

are sticking sticking to that. Can I just have one more question and you know whether it is what it is and the rain you know there will be another rain or maybe a flood and that might help, but how much you know long term do you think about your clients, think about climate change and whether the river capacity may be impaired on a meaningful basis for some time to come, Probably not as much as they should be thinking about it, because I know a lot of

people are going to say there's no such thing as climate change, but I don't know. I sort of have to beg to differ on that. So you've you've seen like sitting aside, what what what you can? Can we attribute this drought to climate change or not versus random things that happened in the weather. Your perspective from your whole career is that things have been worse, Yes, yeah, but but I do think that is supported by weather data.

I think that is supported by looking when you look year on year the storms that hit, and you know, talk to the people that live in New Orleans and tell me what they think about the increase of hurricanes, right, I mean except this year, this year, we're not they're not getting them. And you know, dare we say we need a good hurricane to roll through there, but we don't.

But the river needs it. But yeah, So that that was something I had actually read at one point, talking about the climate change and talking about you know, how much of the US is under a drought condition right now and this time last year they were trying, you know, talk speaking specifically to the river system and the barge market. Our barging market was desperately trying to recover from a huge hurricane that came through that reeks complete havoc with

the system. And here we are a year later, we're talking about we have no rain and we have havoc in the river system. So I think, I think it's

really something they do have to talk about. And there was one article I had read and it talked about even just global trade and the key choke points that are exposed both on political situations and um piracy and you know, acts of man that are in control of someone, and then the weather events that are in control of no one, you know, and talking about straits and Panama Canal and Suez Canal and places like that in the Black Sea, and everyone being subject to the impacts of weather.

I mean, any weather extremity causes a problem in shipping. And actually this article I read it was so interesting that it went as far as to point now excessive heat warping about ten years ago getting so hot in parts of the US it affected the railroad tracks because all the railroad tracks expanded and it caused tremendous derailments. So you know, it's not just water, it's not just our barges and our ships, it's you know, it definitely

affects our our network across across all conveyances. Yeah. I think that's a really important point and one that we all seem to be um learning in real time unfortunately. But Anton and Margot, that was fantastic. Thank you so much. Really appreciate you coming back on all thoughts to talk about barges just like we promised. Finally. Thank you so much. Absolutely thanks for having us high so Joe, I'm so

happy we finally did the barge episode. I should say I've been reading a really good book on barges lately that a listener actually recommended. Yeah, it's called Brown Water Boating by Dean Gabbert. Anyway, if you want to learn more about barges, you should definitely check that out. But I mean, you know what was interesting in that very last bit of the conversation with Margo and Anton the

talk about climate change. I mean, this is a climate change episode, right, and this is sort of what I mentioned this already, but this is what we're all learning now, is that a lot of our economy depends on the weather acting in a certain way. There are being enough water for us to transport goods by river, there being you know, not too much heat so that the railway lines still work. And we're kind of discovering all these

vulnerabilities in our transport and infrastructure as um as climate change. Yeah, you know, I'm thinking also back to that episode we did earlier in the year with Elex Turnbull, and we were just talking about energy and you know the issue of nuclear plans even that need a certain amount of cool water to uh, you know, to cool down, and if the rivers are too warm then that doesn't work, etcetera.

And so yeah, we really see that, like certain things we take for granted, like the smooth operation of the Mississippi River or just the idea that there's gonna be cool water for nuclear facilities is not something that we can just take for granted. But it's interesting, and you know, it really does seem like the inland waterway is the Mississippi River. It kind of feels like old timy, you know, right, like if you like, what does the Mississippi River contropp

like some sort of like old verboats riverboats. So who's you know, one of those authors who like wrote books about that time. You don't think of it as being like all that vital like these days, but obviously it really is. Yeah, Twain, I was going to say Mark Twain, like, come on, Mark Twain, uh, you know and going down the Mississippi. Okay, but seriously, if you like that topic,

you should read that barge book I just mentioned. Um, the other thing that struck me is it's not even like we need more water, it's that we need water in a specific pattern. So, as Ben was mentioning, you know, you either need a downpour sort of upriver that then flows downstream, or you need a prolonged rain that softens the ground like further south and then flows into the river.

And then the other thing that struck me was that even if you get a disruption like this and it's relatively short lived, to Anton and Margot's point about the contracts, like the way those work, basically means that this disruption can have this lagged effect for many many months to come, even if it only like is extreme for two or three months. Right, the chart is really extreme. It's come

down a little bit. The spot prices but you know, as they as they pointed out, like nobody, nobody wants to enter like contract renegotiation season now with the levels here,

because where the where where do you price things? Also like what did the Antons say something about how on the barge business they take their contract seriously, unlike unlike those truckers where they just rip them up in the in the In the barge business, a contract is a contract words to live by, live like a barge operator, you know, just the just the other thing, you know, to Ben's point about how look, you know, price is

one thing and capacity is another thing. And if you don't have the capacity, then you have all these issues. You have various terminals that aren't equipped to move things at different spots. You have more storage at the ports because you're just waiting longer for the barge to come

and move them. I mean, it's a real mess. And again, you know, like it's so interesting in the broad sweep of things that we cover, because there are clearly things that are sort of macro, right, like inflation generally probably is a macro story. But this really does seem like one where it's just it's a lot of bad luck. Yeah, on top up of the Ukrainian grain situation as well, which we've already spoken about, and the booming demand for

U S domestic grain. So it is connected. And to Margot and Anton's point, the booming demand for grains globally also means that there's less capacity for non grain goods like the various industrial commodities or coal or iron that they were talking about. So it really is a it's kind of a perfect storm. You're going to say that it does seem like it does seem like a perfect storm. All right, Well, on that note, before we utter any more cliches, I think we should leave it there. Let's

leave it there. Okay, this has been another episode of the All Thoughts Podcast. I'm Tracy Alloway. You can follow me on Twitter at Tracy Alloway. And I'm Joe Wisnal. You can follow me on Twitter at the Stalwart. Follow our guests on Twitter. Ben Schole he's at Auto Shoal and Tom Posner He's at Anton Posner and I don't think uh. Margot Brock, the president of the Mercury Group, is on Twitter. But follow our producer Carmen Rodriguez at Carmen armand and if you enjoy it today's episode and

enjoy odd Lots. Check out Bloomberg dot com slash odd lots. Tracy and I write a blog, We post transcripts there, and we have a weekly newsletter where we talk about some of the themes of the episode. Find it all at Bloomberg dot com slash odd lots, and check out all of our podcasts on Twitter under the handle at podcasts. Thanks for listening.