STC analysis continues to monitor rail performance for 2014 harvest

The Soy Transportation Coalition (STC) is continuing to work with the University of Minnesota on a research project, "2014 Harvest: Attaching a Garden Hose to a Fire Hydrant." The STC on March 30th released the results from the ninth and most recent survey period of March 13-27.

"Grain shippers continue to provide favorable reports on rail service for the 2014 harvest," explains Mike Steenhoek, executive director of the Soy Transportation Coalition. "The two most recent surveys highlight that 100 percent of survey respondents are experiencing faster cycle times this year compared to last year - a very unambiguous indicator that the rail service struggles in 2014 are fortunately not being repeated in 2015."

In the most recent update, 100 percent of participating grain handling facilities report that cycle times for railroads are faster than a year ago - an increase from 67 percent in the first survey. A couple of the survey responses did indicate a modest decline in rail service over the past month. For example, 74 percent recorded no rail orders as past due - a decrease from 88 percent in the seventh survey. Similarly, 21 percent currently are reporting rail service delays and diminished storage capacity - an increase from only 10 percent in the eight survey. Despite this, the survey responses strongly verify that rail performance for the 2014 continues to meet or exceed customer expectations.

As highlighted in prior updates, the overall favorable performance of the railroads in the analyzed area of the country can be attributed to the following:

• An elongated harvest season. Given how the 2014 harvest occurred over a more elongated period of time, railroads were better able to adjust to the volumes produced by farmers. Historically, when the harvest occurs over a more condensed period of time, railroads are more challenged to accommodate demand for service.
• Railroads have responded to demand. In one of most recent survey periods, one of the participants stated, “CP (Canadian Pacific) is turning like we’ve never seen before. Loads are pulled more promptly. BN (BNSF Railway) is about the same; they have improved on pulling loaded trains quicker.” Another survey respondent said, “Actually very pleased with both Class I railroads (BNSF Railway and Canadian Pacific Railway).”
• Farmers storing grain. According to one of the survey respondents, “With the drop in grain prices over the past five weeks, farmers are disengaged in marketing any additional bushels.” This has reduced to a degree demand for rail service.
• Favorable weather. While there has been some significant snowfall and cold temperatures over the past couple months, the weather overall has been favorable for transporting soybeans and grain in the surveyed areas. The STC analysis will continue to survey grain receiving locations through March of 2015 in order to monitor how railroads continue to serve agriculture if and when severe winter weather occurs.
• More modest harvest volumes than anticipated. While the 2014 harvest will be regarded as significant and perhaps historic, a number of the surveyed areas have reported more modest volumes than earlier anticipated. Survey respondents mentioned “poorer crops” in certain areas and the harvest not “as expected.”

The full results of the bi-weekly survey can be accessed at www.soytransportation.org.

Project Description:

While transportation concerns throughout much of 2014 have been evident throughout the country, a particular region - North Dakota, South Dakota, Minnesota, and Nebraska - experienced particular hardship over the past year due to having more limited access to alternative transportation providers and modes. Most of these areas solely rely on freight rail. As a result, the supply/demand transportation imbalance had a more punitive effect on agriculture and individual farmers in these regions than other areas of the country.

Given the acute rail service challenges throughout much of 2014 and given the projected record 2014 harvest, widespread concern regarding rail performance was expressed by grain handlers and farmers in the weeks and months preceding the 2014 harvest.

The research project seeks to monitor and document rail service for the 2014 harvest in areas of North Dakota, South Dakota, Minnesota, and Nebraska. The project will identify and estimate the impact of rail service on the profitability of each state’s agricultural industry and individual farmers.

A component of the research is a bi-weekly survey of 42 grain receiving locations in these states. The surveys began in early November and will extend through March of 2015. Completed anonymously, the survey is comprised of the following questions:

1. If you load shuttle trains, what is the current number of cycles/turns per month?
2. Is your cycle time/turns faster or slower than one year ago?
3. How many days past due is your oldest open order for railcars?
4. How many railcar orders are past due (or passed order date)?
5. What percent of your permanent storage capacity remains open?
6. If your permanent storage is full, are you creating ground piles or using bunkers, bags and/or other forms of temporary storage
7. Due to a lack of storage, have you closed your truck dumps to farmers?
8. If so, how long have your dumps been closed?
9. Is there more or less pressure on storage capacity since the last survey?
10. Have you experienced rail service delays and diminishing storage capacity?
11. If experiencing rail service delays and diminishing storage capacity, estimate the impact on your local basis for each grain handled at your facility.
12. What are spot prices on rail freight that you can purchase today?