Wednesday, March 12, 2014

'Perfect storm' leading to delays in shipping U.S. wheat by railway

"U.S. wheat farmers are finding it increasingly difficult to find rail transport for their crop, a squeeze brought on by increased competition from oil and coal shipments, a bumper grain crop, an improved economy that is jacking up the amount of consumer goods being shipped and a freakish run of extended cold weather conditions not seen in years," reports Agri-Pulse, a Washington newsletter. The average shipping delay for Burlington Northern Santa Fe Corp., a principal rail carrier of wheat in the Midwest and Northwest, has been 15.4 days. (Heavy snow has been one factor in delays)

Bing Van Bergen, immediate past president of the National Association of Wheat Growers and a Montana grower, told Agri-Pulse, "It’s been a perfect storm. These delays are a real concern for wheat growers.” Van Bergen said the explosion in recent years of oil from the North Dakota Bakken "has produced quantities of oil unthinkable only a few years ago. Concerns over greenhouse gas emissions, as well as a meteoric rise in the use of natural gas, has dropped the sale of coal in the U.S., prompting mining companies like the U.S.-based Peabody Energy, the world’s largest coal contributed to the delays, which have been compounded by cold weather conditions that reduce the length and speed of transport trains."

That's been coupled by problems from our neighbors to the north, who harvested a crop 50 percent bigger than last year, but a severe winter in Canada has forced them to transport the product to the U.S. instead of across Canada, Agri-Pulse writes. "The country’s transport and agriculture ministers last Friday gave Canadian railroads four weeks to meet minimum weekly volumes of grain they must transport or face fines of up to $100,000 per day."

The solution is to expand, said John Miller, vice president for agricultural operations at BSNF. He also said the company has a plan that "includes $1.6 billion for new locomotives, cars and equipment, and $900 million for the company’s largest expansion ever, including double tracks and new sidings that will be built mostly in the U.S. Northern Corridor, including heavy agriculture areas in wheat-rich North Dakota," Agri-Pulse writes. Miller told Agri-Pulse, “Our service has not been up to our customer’s expectations or our own. We know that. We understand that. We’re working very hard to get back to the level of service all of our customers expect from us.” Agri-Pulse is subscription only, but a free trial is available by clicking here.

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