Rail Companies Hear from Farmers, Legislators on Transportation Backlogs

Rail Companies Hear from Farmers, Legislators on Transportation Backlogs

Stakeholders testify on grain shipping issues at Surface Transportation Board hearing in Fargo, N.D.

Members of the Surface Transportation Board met in Fargo, N.D., Thursday along with state agriculture officials and lawmakers to discuss ongoing rail transportation issues facing Northern Plains and Upper Midwest farmers.

Fertilizer deliveries and grain exports have been plagued with sluggish rail service for several months; both the Burlington Northern Santa Fe Railroad and the Canadian Pacific Railway Company have been under a directive from the STB since July to provide weekly updates on the status of grain shipments due to the service disruptions.

Related: Exclusive Farm Futures Report: Will Train Troubles Derail Harvest?

BIG CROPS and nowhere to go? Rail availability concerns Upper Midwest farmers.

Pressure on rail to deliver is further exacerbated by expectations of record crops and large supplies of oil moving out of the Bakken region.

"The bottom line is that we need greater rail capacity to meet the growing needs of North Dakota's expanding economy and dynamic businesses and farms," Sen. John Hoeven, R-N.D., said in a statement. "To make that happen, railroads must commit to investing in more rail infrastructure, including more locomotives, more railcars and more crews."

BNSF has already made commitments to increase infrastructure and personnel, Hoeven said, but CP has not provided similar commitments. Hoeven said CP should implement a "more transparent way" of reserving cars and tracking orders for shippers.

"The investments and changes we are calling for are not only in the interest of North Dakota, but also in the interest of the railroads themselves," he said.

Related: Rail Car Shortage Impacts All Levels of Ag

American Soybean Association Director Lance Peterson said inadequate rail service costs are passed directly to the farmer. He expects his own lost income to total more than $100,000.

Storage trouble? >>

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A major concern, Peterson said, is that the sluggish service has been ongoing since spring, when farmers first feared that fertilizer shipments would not arrive on time. Now, with large crops on the way and limited storage, farmers are doing some troubling math.

"In many cases shippers have spent millions of dollars in premiums on initial rail car auctions to access rail cars for the coming year," Peterson said during his testimony. "Based on expected car movement, this amounts to an approximate $700/car premium just to access the cars."

Related: Rail Backlogs Fuel Grain Shipping, Storage Concerns Ahead of Harvest

Though the STB's reporting directive for the rail companies is helpful, Peterson also said more information is needed. He requested fuller reporting on past dues, average days late and turnaround times for agricultural customers vs. crude oil customers and other customers.

Storage situation a concern
According to its August 29 report to the Surface Transportation Board, BNSF had 2,029 grain cars past due an average of 10.6 days, down 22% from the 2,609 it reported the prior week, USDA's Sept. 4 Grain Transportation Report said.

Canadian Pacific, the report said, had 9,010 open requests of as of August 29. Grain car requests in North Dakota were reported to be 13.14 weeks late, while those in Minnesota were 18.76 weeks late.

The USDA report also addressed the concern of storage shortage, noting that grain production and grain stocks this harvest are expected to exceed permanent grain storage capacity by about 694 million bushels – the equivalent of 173,500 jumbo covered-hopper rail cars, 13,219 barges, 881 15-barge tows, or 762,600 truckloads.

For more rail and basis coverage, check out this month's Farm Futures NOW! and Bryce Knorr's Weekly Transportation Review.

TAGS: USDA
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