Evaluating the Financial Risk of Low Mississippi River Water Levels in Grain Transportation

The Mississippi River is a critical shipping route for U.S. agricultural commodities, moving hundreds of millions of tons annually. During recent low-water harvest seasons (2012, 2022–2024), reduced river depth constrained barge traffic and sharply increased freight rates during peak demand. When barge rates spike high enough, rail freight becomes a more economical alternative but must be secured before river conditions and barge rates are fully realized.This thesis develops a decision tool to help grain shippers choose between barge and rail transport to Gulf export ports. Using weekly data (2015–2024) on river conditions, harvest volumes, and futures prices, the model predicts fall barge rates between St. Louis and New Orleans. A novel minimum navigable depth metric improves upon traditional stage-based measures. Results indicate that improved river forecasts could have reduced shipping costs by up to $1.50 per bushel in 2022, highlighting the economic value of better flow information.