🚗 🚙 Turn your trusty old car into trustworthy journalism Learn more

Low water levels in the Mississippi River are disrupting the supply chain

Kai Ryssdal and Anais Amin Oct 24, 2022
Heard on:
A tug pushes a barge down the Mississippi River through St. Paul, Minnesota. Karen Bleier/AFP via Getty Images

Low water levels in the Mississippi River are disrupting the supply chain

Kai Ryssdal and Anais Amin Oct 24, 2022
Heard on:
A tug pushes a barge down the Mississippi River through St. Paul, Minnesota. Karen Bleier/AFP via Getty Images

The Mississippi River’s water level is at historic lows, and sections of the river are near levels that have not been seen in more than 30 years. This is hurting businesses that rely on the river and disrupting the supply chain for petroleum and agricultural exports, like soy and grain

“Marketplace” host Kai Ryssdal checked in with Austin Golding, CEO of Golding Barge Line in Vicksburg, Mississippi, to see how the Golding family business is managing. The following is an edited transcript of their conversation. 

Kai Ryssdal: All right, so look, the first thing I need to get from you is an understanding of what low water levels on the Mississippi mean. Because to a layperson, it’s like, OK, it’s a little low. To you, a guy who makes his living on the river, what does it actually mean?

Austin Golding: Well, it really means tow sizes have been reduced dramatically, the amount of tonnage that we move per barge has been reduced significantly. And all that will be passed down in really higher costs to move bulk goods, especially export goods in the center of our country this year.

Ryssdal: So it’s costing you money.

Golding: It’s costing us money. It’s lowering the amount of productivity that we see. Normally the agricultural sector and the aggregate sector, especially, and the energy sector, those three, you’re probably going to see less efficient transportation within the core of their supply chain this year.

Ryssdal: Did this comes as news to you? I mean, I read this piece, I guess it was probably a week or two ago now, and I was like, holy cow. Where did this come from? And I know we’ve been having a drought, but this is a tangible thing.

Golding: I mean, it’s certainly something we saw coming. I mean, that’s kind of the strange thing about floods and droughts in my industry is we get about a month’s notice before a lot of these things happen. So we were able to plan, and, you know, in ‘11, when we first started talking, Kai, during the unbelievable flood we had then, we were able to operate. In this all-time low water, we’re able to operate.

Ryssdal: Was it really 2011 when you and I started talking?

Golding: 2011, the flood of ‘11, the water was probably here in Vicksburg close to 45 feet to 50 feet difference than what I’m looking at today. 

Ryssdal: Oh, man. So let’s talk about a couple other things. First of all, as listeners know, you transport mostly petroleum products. The president’s all about releasing reserves from the Strategic Petroleum Reserve. Does that affect you at all moving stuff up and down the river?

Golding: Well, it’ll certainly affect some of the crude that moves by barge. I mean, some of those supply runs will change as that supply is are released. But really, on my side, on the refinery side, it doesn’t matter really how much crude is sitting around waiting to be refined. They’re only going to refine so much. And the demand for that, especially on the global side, is not really impacted by our strategic reserves. Now, our strategic posturing and the strategic investment, and I would say supply appreciation does change here. And that comes down the pipe into price change. But globally, the refining end is going to operate at a maximum capacity that they can charge whatever they want for.

Ryssdal: Yeah, let me actually get you to the supply chain for a second, and it kind of goes like this, right, and step out of the petroleum products for me for a minute. You’re a guy who follows this more closely than most. On a macro level, what is your sense of the global supply chain right now? Is it easing? Are we still jammed up? What do you think?

Golding: I think it’s starting to ease. We’re starting to see some real, I would say, streamlining when it comes to some of the parts we need that are sourced internationally. And when it comes to bulk steel, we’re starting to see some relief there. But it’s still very, very tight. I think in a lot of ways, I think people became accustomed to some of the new supply patterns that we have now and especially enjoying some of the new supply pricing. I haven’t had many people come to me and say, “Oh, things are getting easier. Our prices are going down to where you remember them.” I’ve really been getting more of the message that we’re not going up anymore, or we’re not going up as fast.

Ryssdal: Well, but flat is the new down, right? I mean, that’s a win.

Golding: Look, we’ll take it. It’s certainly been an acceleration that we have not been able to keep up with in our shipping rates. So any recovery, any slowdown, and that would certainly help us catch our breath.

Ryssdal: Right. Two words for you, three, I guess, technically: labor market and inflation. What’s your gut telling you?

Golding: Labor market, we’re seeing some real relief. Labor market, we’re seeing more people apply. We’re seeing people that had left come back. And, look, we’ve increased our wages in response to this, which is what you’re supposed to do as a good employer. So we’re seeing more traffic as a result.

Ryssdal: Inflation. Go. 

Golding: Inflation is something that we’ve gotten our hands around. We’re starting to see some relief also, but we’re not accustomed to keeping up with 5% to 10% price increases on an annual basis. I can absorb 2% to 3%, but anything over 5% is still extreme, and we’re still there.

Ryssdal: Next six-ish months, your business looking pretty good?

Golding: I think so. I mean, unfortunately, we’ve seen a lot of carnage in our industry commercially. We’ve seen a lot of people sell out. We’ve seen a lot of consolidation because of how tough it’s been the last two or three years. So we have a chip and a chair. 

Ryssdal: Wait, what does that mean, “chip and a chair?”

Golding: Well, that’s an old poker term, Kai. You know, if you’re in the tournament, you got a chip and you got a chair, you got a shot. There’s a lot of people that have gone all in and gone bust. But we’re still sitting here, so we’re hoping to keep on playing.

Ryssdal: I’m a terrible gambler. That’s what people need to know about me.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.