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Rail Car Shortage Impacts All Levels of Ag

Rail Car Shortage Impacts All Levels of Ag

STB and grain processors keep close eye on how railway companies handle rail service delays.

Kevin Thompson, assistant vice president and transportation lead for the Grain and Oilseed Businesses of Cargill, says grain processors and export elevators have idled or significantly reduced operating capacity because of an inability to predictably source sufficient quantities of grains and oilseeds.

Still other grain processing and animal feeding operations, particularly in the Eastern United States, are shifting to comparatively inefficient and much more costly long-haul truck movements in an attempt to obtain sufficient quantities of grains and oilseeds.

Those points and others were made during a Surface Transportation Board hearing earlier this year.

Rail cars at the Mendota, Ill., ADM rail load out facility. Photo courtesy ADM

Grain sales are made and freight is locked in with the understanding that shuttle trains will be operating with a turnaround time of roughly three trips per month. Recent shuttle turnaround times have been much worse, and now a great deal of uncertainty exists in regards to future service, testified Minnesota farmer Lance Peterson.

Thompson says that in the West, the Canadian Pacific has been 60 days late or later in providing 100-car unit trains, and up to four months late on non-shuttles. Meanwhile, the BNSF only now is starting to provide certificate of transportation – or COT – trains that shippers had paid to have delivered in late January and early February.

What's next?

Those testifying recognized that there has been an increase in demand and severe winter weather, which contributed to service disruptions. However, companies and the STB need to ensure that the service provided to agricultural commodities is in balance with that provided to other sectors.

National Farmers Union president Roger Johnson called on the STB to hold railroads responsible for the losses due to delayed delivery of rail cars and ensure there is increased future investment to compensate for the increased demand.

Johnson also called on BNSF and CP to guarantee that a certain portion of shipments will be dedicated to agricultural products.

NGFA actually advised against the directed-service approach, which the Canadian government has implemented. “We fear such measures could exacerbate and further slow the recovery and restoration of predictable, reliable freight rail service,” NGFA said in its final written comments. Instead, NGFA asked the Board to “exercise very vigilant oversight during this period of disruption.”

NGFA did call on STB to require Class 1 rail carriers to report and make public service-related metrics including:

- real-time information on train velocity and cycle times

- realistic projections in restoring service

- weekly car loadings by product and state

- weekly average dwell times for trains hailing grain and grain products, coal and crude oil from January 2012 onward

- level of capacity utilization by rail corridors and breakouts of capital spending by Class 1 carriers. 

At the beginning of July CP and BNSF publicly filed their first weekly status updates on the backlog in grain shipments as required by a decision by the STB. The figures from BNSF show a total of 4,942 past due rail cars in North Dakota averaging 32 days late. The CP report does not include a specific number of past due rail cars or average lateness, but estimates a backlog demand of 10,000 to 12,000 cars.

The two companies were ordered by the STB June 20 to report their plans for resolving the backlog of grain car orders, and begin issuing weekly status reports until the problem is resolved.

The BNSF report can be viewed here, and the CP report can be viewed here.

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