The powerful hurricane that barreled into south-eastern Louisiana last weekend highlights risks and opportunities for bulker operators, with one of the world’s largest dry bulk trades set for disruption due to infrastructure damage. Hurricane Ida, which strengthened to a category four at its peak, wreaked havoc on several grain terminals in the US Gulf and Mississippi River delta region, which are critical to the US’ cargo import and export capabilities.

Vulnerable supply chain infrastructure in the area, such as barge and rail facilities, have reportedly been forced to close until damage assessments have been completed. These effects may impact the flow of goods such as petcoke and coal, at a time when the latter is in extremely short supply on the seaborne market, according to Braemar ACM. But perhaps most importantly for the dry market, several grain terminals have been taken offline by the hurricane, either due to direct damage or power outages.

A Cargill spokeswoman confirmed to Lloyd’s List that the company’s agriculture supply chain and its Reserve, LA, terminal — one of two the company operates along the Mississippi River near the Gulf of Mexico — and Westwego, LA facility have sustained damage. “This area in southeast Louisiana is still facing significant personal safety concerns and power outages, so we are just able to start assessing the storm’s impact on our operations and the river system.” She said that they do not have a time frame for resuming operations currently.

The US Gulf typically makes up about two thirds of total US grain shipments, which in turn accounts for 22% of the world’s total export market, Braemar dry bulk analyst Nick Ristic estimates. Barge operations along the Mississippi River, which are crucial to the flow of grain to the export market, have also been disrupted by debris and obstacles in the channel. Moreover, deep draft vessels operating in the river are restricted to daylight transits only in Louisiana Ports Authority. As such, the fallout from Ida could have a meaningful impact on the short-term dry market fundamentals, Mr Ristic conceded.

However, the shock has come at a critical time when US soybean shipments are just beginning to ramp up for the final quarter peak export season. “Many ships have repositioned to take advantage of the typical ramp up, and so if power outages do indeed last for several weeks, we could see congestion start to swell,” he said. For now, queues of bulk carriers in the Gulf are yet to build up, and remain at average seasonal levels of about 708k dwt. “An alternative to US supply could be that from South America,” he said adding that for soyabeans specifically, ”we are currently in the seasonal low-point for shipments from this hemisphere.” However, additional tonnes could come from stockpiles in the country, but buyers of animal feed may need to look to other commodities, such as wheat and corn, to fill the gap.

He agrees that if alternate cargoes can be found, greater voyage lengths to customers in China would likely translate into a slight increase in vessel demand. Meanwhile, some US grain exporters are redirecting cargoes to their facilities in the Pacific Northwest. It is unclear how much rail capacity there is to move these volumes towards this coastline, but the shift could leave some bulkers better off than others, Mr Ristic added. “Even if total exported volumes are unchanged this season, more shipments from the PNW would likely benefit the panamax market.” Panamaxes and kamsarmaxes typically account for about 62% of grain shipments from this region, as opposed to 36% from the US Gulf.