Rogelio V. Solis/AP Photo
A towboat navigates the Mississippi River at Vicksburg, Mississippi, on October 11, 2022. Unusually low water levels have caused some barges to get stuck in the muddy river bottom.
Last month, rail barons turned to Washington to avert a rail strike that could have brought the economy to a halt. Out on the Mississippi River though, depleted rail service has fueled a separate economic catastrophe.
A historic drought on the river has shuttered the critical node of barge transportation, leaving farmers and other shippers searching for alternative options to get their goods to port before winter. From the waterhead in Minnesota down to the port in New Orleans, barges deliver over 60 percent of corn and soybean exports and around $100 billion worth of cargo every year, including fuel, grain, industrial chemicals, and building materials.
The railroads don’t have adequate capacity to serve these shippers, in large part because of recent downsizing measures, including worker layoffs, to boost short-term profits for shareholders. As a result, shipping prices have jumped and capacity has cratered. The collapse of markets served by the Mississippi is creating exactly the situation that politicians warned against for the country at large when a strike loomed on the horizon: a potential crisis for the smooth flow of commerce. This one can’t be blamed on rail workers, however: It falls squarely on the companies themselves.
The emergency on the Mississippi has escalated for several months. Little to no rainfall has led to the lowest water levels on record, leaving stretches of the riverbed so dry that wreckages from old ships are emerging from as far back as Mark Twain’s days on the river.
The shallow waters limit the number of barges that can travel down the river at a time. Even along the narrow strips of open waterways, several barges have gotten stuck on the river floor and caused further traffic jams. Just over a month ago, almost 2,500 barges waited in long queues to voyage down the remaining channels that the Port Authority hadn’t closed yet.
To keep the hull above water, the barge boats are only able to carry a fraction of the cargo that they typically do. For the few shippers who can still find barges to take their product, rates have skyrocketed nearly 300 percent compared with the same time last year.
Recent rainfalls in the Midwest have improved the outlook for the weeks before winter. Still, water travel won’t be at full capacity until spring. The continued bottleneck from the drought has caused slowdowns for transporting goods such as grain and fertilizer, which are already in short supply globally. These supply chain snarls have also put a steep overhead cost on farmers who need to ship their crops before the winter or risk losing their buyers. In the most drought-stricken area near Memphis, grain and soybean growers have said profits are down 15 percent compared to last year.
“Many of our farmers are between a rock and a hard place, either faced with taking losses or paying storage at elevators until the water rises back up,” said Ken Hartman, the former chairman of the National Corn Growers Association, now a farmer in Illinois.
The Mississippi River drought is yet another example of the need for rebuilding rail capacity in preparing for the climate crisis.
Naturally, many shippers are looking to railroads to fill the gap in the transportation network. Unfortunately, decades of deregulation and consolidation have made that option a nonstarter for most.
Marty Marr owns a corn and soybean farm in central Illinois that’s been in his family for four generations. After harvest, his crops travel mostly by rail and occasionally barge, depending on the fluctuating costs per season. For the past three weeks, the nearby rail stations he uses have been teeming with desperate newcomers from the western part of the state who usually rely on barge transport.
“I never see traffic like this around the stations and I can tell you the business is good for rail,” Marr said.
With high demand at the rail stations, Marr is facing massive fare hikes that eat into his pocketbook. All the major carriers in the region have increased their rates for the past several months as the drought persisted. Marr, at least, is able to get his bushels of grain onto the rail carriers because the elevator company that he uses has contracts with Kansas City Southern. Many other farmers won’t be so lucky though.
“Farmers along the river have no one to turn to because the rail lines are reporting that they’re already at capacity,” said Todd Tranausky, the vice president of Freight Transportation Research, which monitors the rail industry.
For many farmers like Marr, Kansas City Southern is the main rail service they can access in the region. The rail carrier has also filed to merge with Canadian Pacific, which, if approved, would bring the rail industry under the control of just six carriers. Consolidation in rail has provided windfalls for financiers at the expense of nationwide rail service. Under relentless pressure from Wall Street to maximize short-term profits, the railroads have turned to the management regime known by the perversely Orwellian term “precision scheduled railroading.” PSR entails cutting operating budgets and reducing service lines to charge monopoly prices on shippers.
Rail workers have been a recurrent casualty of these measures. Between 2014 and 2019, the four largest railroads laid off around 30,000 employees. With fewer workers maintaining railcars, accidents have risen as well as equipment malfunctions. In fact, understaffing on rail lines is one of the main reasons the carriers can’t take on additional cargo during the barge crisis on the Mississippi, according to an analysis by Freight Transportation Research.
The other problem is Wall Street’s mania for ripping out track. The big rail carriers have slashed the miles of track they own, from 164,822 in 1980 down to 92,282 in 2019. One of those tracks was the Illinois Central rail line, a historic rail line of much folklore which ran parallel to the Mississippi River between Chicago and New Orleans. But in the 1990s, after a corporate takeover by Canadian National (CN), investors installed a new CEO, E. Hunter Harrison, who ripped out the second track and closed key yards. With that decision, the Illinois Central lost much of its capacity to serve as a viable alternative to barge or truck traffic. But Harrison boosted profits by cutting expenses faster than revenues, making him a Wall Street darling. Today, farmers and ag producers along the Mississippi could use an extra rail line.
After years of lagging service, it’s not a surprise that some farmers along the river are opting to just hold their goods for storage rather than dealing with high fares and unpredictable rail service, which has gotten worse since the pandemic. Congress and the Surface Transportation Board, the rail industry’s main regulator, have held several hearings in recent years because of increased complaints about inadequate rail service and higher costs. In these hearings, testimonies from shippers have described a breakdown in rail function that’s even led to bankruptcy for some shippers.
“They may claim that PSR improves service, but our experience and that of many other shippers has been the opposite,” said Emily Regis, fuels resource administrator for the Arizona Electric Power Cooperative, speaking on behalf of the Freight Rail Customer Alliance in her congressional testimony.
The Mississippi River drought is yet another example of the need for rebuilding rail capacity in preparing for the climate crisis. Transportation flexibility can certainly help mitigate the economic havoc of droughts, floods, or other extreme weather conditions. Fortifying our national rail system would also help curb the overreliance on trucking, a major greenhouse gas emitter.
By some estimates, trucking is five times less fuel-efficient than rail. The Association of American Railroads estimates that railroads contribute just 2 percent of U.S. transportation-related greenhouse gas emissions even though they carry 40 percent of U.S. freight.
A fairly modest investment in electrifying freight railroads could reduce carbon emissions by 39 percent, according to a calculation from the Millennium Institute, a nonprofit focused on energy and climate modeling.
In a speech from September of last year, Surface Transportation Board chair Martin Oberman addressed this issue head-on.
“An additional 123 million tons of global warming CO2 [has been] pumped into our atmosphere since 2002,” Oberman said, “just because the railroads chose not to maintain their market share as compared to trucks.”
