WASHINGTON, Sept. 16, 2015 - After a string of inconsistent and often tardy service from rail companies in recent years, uttering the name of a rail service provider in the Midwest was usually a good way to ruin a grain elevator operator’s day. But after billions of dollars in infrastructure improvements and more consistent arrivals, rail companies appear to have made major gains on the massive grain backlog – and image problem -- that plagued them between the 2013 and 2014 grain harvests.
“You’re hearing a lot less frustration,” said Mike Steenhoek, executive director of the Soy Transportation Coalition, who teamed up with the University of Minnesota to survey 42 grain-handling facilities in Nebraska, Minnesota, and the Dakotas every two weeks on the rail companies’ response to the backlog. For a while, Steenhoek said, grain handlers weren’t exactly the most positive demographic to rate the nation’s rail carriers.
“These were guys that if they had any reason to criticize the railroads, they would warmly embrace that opportunity,” he said in an interview with Agri-Pulse. However, he said more recent feedback has typically included the phrase ‘I can’t believe I’m saying this, but ….’ followed by a complimentary remark about their rail provider, offered almost in shock.
No one would blame elevator operators if they held ill feelings toward their rail company after the substantial delays in moving grain from the 2013 harvest. High demand from oil, gas and other sectors, a bountiful harvest and a bitter winter combined to slow the delivery of rail cars meant for moving grain and fertilizer. As the problem peaked in late March 2014, BNSF Railway – the largest transporter of agricultural goods – had 16,470 past due orders across the country, meaning a shipment by rail car was more than four days late to its scheduled destination.
By comparison, John Miller, BNSF Railway’s group vice president for agricultural products, told Agri-Pulse that as of this past Friday , the company had 125 cars past due, which he called “a very small universe compared to how many cars we move.”
Miller said there were several reasons for the change, including improved velocity, less demand due to lower commodity prices, and investment in rail infrastructure. He touted BNSF’s record investment in its system, on pace for $6 billion in infrastructure spending in 2015. Steenhoek noted that the seven largest rail companies are expected to spend a combined $29 billion on their networks this year, which is only about $6 billion less than the $35 billion expected from the Highway Trust Fund for the entire federal highway system.
As the wheat harvest wraps up and corn and soybean harvests get under way, Miller described the current state of the rail market as in equilibrium: BNSF is offering cars that grain elevators are not buying, signaling “the market is buying everything they want from us.” That situation might change, but Miller and Steenhoek both said much of this year’s harvest might not hit the rails right away as farmers store crops in anticipation of higher commodity prices. Even so, Miller said between grain shipments from harvest and fertilizer shipments for planting season, reliable transportation is critical for the time ahead.
“It’s the next six months where we’ve got to make sure we’re on our game to be ready to move as much volume as possible,” Miller said. “(We have) plenty of cars, plenty of locomotives, plenty of people, and we are ready for harvest.”
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