Floods to disrupt barges for weeks, rail months

By Lisa Shumaker

CHICAGO (Reuters) - Flooding in the U.S. Midwest is taking a toll on freight carriers, costing barge lines about $1 million per day and likely disrupting railroads for months to come, said traders and industry executives on Monday.

The worst flooding in the Midwest in 15 years has closed 300 miles of the Mississippi River to commercial traffic. Several bridges and unknown miles of railroad track have been damaged or washed away.

Barge rates already have risen 15 percent and the flooding could have an even bigger impact on railroads.

"It may turn out that the biggest disruptions come from rail rather than the barge side," said Diana Klemme, vice president of Grain Services Corp, an agricultural brokerage and risk management firm. "We don't know what conditions the bridges and tracks are in. You just don't replace that overnight."

Barge traffic is expected to resume in two to three weeks as water levels drop and the U.S. Army Corps of Engineers reinstalls electrical equipment that had been moved.

The Mississippi River is the main channel for grain flowing from Midwest farms to the export terminals at the Gulf of Mexico. The river transported 68 million tonnes of farm goods in 2006, according to the U.S. Army Corps of Engineers.

The Mississippi also moved 48 million tonnes of petroleum products and 5 million tonnes of coal.

Dry weather has been forecast, which should allow water levels to recede and barge traffic to resume faster than in 1993, when constant rain and flooding shut the Mississippi River for about two months.

"In 1993, there were months of delays," said Larry Daily, president of Alter Barge Line Inc in Bettendorf, Iowa. "This time, it's going to be shut down two weeks if we don't get any more rain, longer if it rains again."

Even a delay of a few weeks, comes with a hefty price tag.

Alter has 100 barges trapped on the upper Mississippi River, which is costing the company $25,000 to $30,000 a day.

"We figure that's $750,000 to $1 million per day for the industry," Daily said.

Barge freight rates have climbed 15 percent since the flooding started. And they could go even higher once the river re-opens due to pent-up demand and continued problems with rail lines, grain traders said.

"There will be certain end-user markets that will have to pay more," Klemme said.

RAIL LINES UNDER WATER