In the year following the disastrous winter of 2013/2014, U.S. railroads have trains back to moving grain and other goods in a timely manner.
The railroad industry is undergoing a renaissance in which a crowded highway system, a shortage of truck drivers, and increased demand to move freight will put more cargo on railcars going forward, said John Miller, group vice president for agricultural products at BNSF Railway.
A year ago, U.S. railroads were harshly criticized by the grain industry for late shipments, mainly in the northern tier of the country. Since then most of those problems have disappeared as the railroads have spent billions of dollars on track, equipment, and crews.
“It is important that what happened last year with us, we don’t want to ever happen again,” Miller said during his address last week at USDA’s annual Agriculture Outlook Forum.
BNSF will spend $6 billion in 2015 to improve infrastructure, enhance train operations, and add new equipment.
Other railroads also are spending money. Using data supplied by the Association of American Railroads, Miller said the industry in 2015 will spend about $29 billion on capital improvements and maintenance, up $2 billion from 2014 and up nearly $14 billion from 2005.
Just completed improvements have already shown results. The cost of rail cars in an important secondary market has tumbled, a sign that shippers are confident that cars will arrive when they are needed, said Miller.
Some of the improvements have been attributed to a milder winter and farmers storing more grain, both of which lessened stress on railroads. However, even with more grain going into storage, Miller said 11% more grain was shipped in 2014’s fourth quarter than a year earlier and BNSF’s fertilizer shipments in the 2014/2015 crop year are up 5% from the previous year.
“When velocity (train speeds) is restored we are moving more stuff and in many cases with fewer cars,” he said.
There are still delays in delivering cars to customers, but when measured in days, the delays are about half of what they were a year ago.
“Our goal is take that down to zero in the next couple of months,” he said of the past-due cars.
Looking ahead, Miller said the nation’s highway system is projected to become more congested and that will force more freight to railroads. In addition, freight hauling by all sources is projected to reach 28.5 billion tons by 2040 from 19.7 billion in 2012.
The National Grain and Feed Association, a trade group for the nation’s grain elevators, said that while rail shipments are greatly improved from a year ago there are still some trouble spots.
“The Union Pacific and BNSF have performed very well,” Randy Gordon, NGFA president, told Farm Futures. “Our biggest concern has been with the eastern carriers, those in Indiana and Ohio.”
Also, because farmers have stored much of the 2014 harvest, some shipping problems could develop when that grain comes to market, added Max Fisher, a NGFA director.