This article has been reprinted from USDA's Nov. 21 Grain Transportation Report.
During second quarter 2019, increased barge, rail, and ocean rates pushed up the transportation costs of shipping grain (corn, soybeans and wheat) from the United States to Mexico by water and land routes.
Quarter-to-quarter landed costs of corn and soybeans shipped to Mexico likewise increased (see table).
However, the landed costs for wheat declined.
Quarter-to-quarter transportation costs for shipping waterborne corn, soybeans, and wheat each increased 4 percent.
Meanwhile, costs of transporting via the land route increased 4 percent for corn, 3 percent for soybeans, and 4 percent for wheat.
Higher barge and ocean rates elevated the transportation costs for waterborne corn and soybeans during the quarter.
Better navigation conditions on the river system, which raised the demand for barge services, pushed up barge rates.
In previous quarters, persistent flooding and navigation disruptions led to reduced demand for barge services as the upper section of the Mississippi River was closed for navigation.
This may have increased the supply of barges on the lower section of the river, causing barge rates there to decline (see August 15, 2019 Grain Transportation Report (GTR)).
Ocean freight rates for shipping bulk commodities, including grain, increased during the quarter because of firm trade of bulk items such as coal and iron ore (see October 31, 2019 GTR).
From the third quarter of 2018 to the third quarter of 2019 (year to year), transportation costs increased for corn, soybeans, and wheat transported via the land route.
Although year-to-year transportation costs also rose for waterborne wheat, they dropped for waterborne corn and soybeans.
This decrease for corn and soybeans stemmed from a decline in truck and barge rates that more than offset an increase in ocean rates.
Quarter-to-quarter landed costs for corn and soybeans also rose (over both water and land routes), as a result of higher transportation costs and farm values during the third quarter.
In contrast, wheat landed costs fell in response to lower farm values, which declined from the second quarter. Year-to-year landed costs increased for corn and declined for both soybeans and wheat.
The landed costs for the water route ranged from $204 to $366 per metric ton (mt) (see table and fig. 1).
For the land route, landed costs ranged from $229 to $396 per mt (see table and fig. 2).
The share of landed costs comprising transportation ranged from 13 to 31 percent for the water route and 26 to 39 percent for the land route (see table).
Both quarter to quarter and year to year, Mexico imported more soybeans and wheat from the United States (USDA’s grain inspection data).
During the third quarter, 1.3 million metric tons (mmt) of soybeans and 0.94 mmt of wheat were inspected for export to Mexico.
In comparison 1.03 mmt and 0.87 mmt of soybeans and wheat were exported during second quarter 2019.
Third quarter 2019 numbers were also up from a year ago when 1.22 mmt of soybeans and 0.73 mmt of wheat were exported.
On the other hand, both quarter to quarter and year to year, corn inspected for export declined slightly.
During the third quarter, 3.12 mmt of corn were exported compared to 3.39 mmt in the previous quarter and 3.93 mmt in the previous year.