USDA rail report confirms grain shipping troubles of 2013-14

USDA rail report confirms grain shipping troubles of 2013-14

Senators hope USDA rail report will inform future rail transportation capacity and investment decisions

Poor rail performance in 2013 and 2014 left less permanent storage available to corral larger harvests and caused farmers in the upper Midwest to be more exposed to rail prices, a USDA report on rail service challenges said.

The report was requested last year by Sens. John Thune, R-S.D., and Amy Klobuchar, D-Minn., as farmers were feeling increasingly pinched by a lack of railcar availability to move crops to final destinations.

Thune said the grain car backlogs, storage issues are rail car premiums affected not only transportation costs but also grain prices, leaving a lasting impact on the region's grain farmers.

Senators hope USDA rail report will inform future rail transportation capacity and investment decisions

The report was designed to examine the causes and effects of rail congestion and inform rail network capacity and investment decisions in the future.

Related: River Transportation May Be Next Bottleneck for Grain Shipments

"This report is an important resource for understanding future vulnerabilities and the importance of maintaining strong rail service for our agricultural producers and other shippers," Thune said in a statement.

The report finds that in September of 2014 some of the major grain producing states most impacted by poor rail performance‎ had remaining grain and oilseed stocks in storage up to 40% higher than in previous years.

USDA's report says that the situation also left less permanent storage available to accommodate another record harvest, as production and stocks exceeded permanent capacity by over 900 million bushels during the 2014-2015 harvest.

Related: Rail Companies Hear from Farmers, Legislators on Transportation Backlogs

Capacity issues and service concerns caused shippers to pay record-high car premiums, 28% to 150% above the average previous levels for roughly 65 consecutive weeks, the report said.

Transportation cost increases for corn, wheat, and soybeans from the Upper Midwest to the Pacific Northwest and to the Gulf of Mexico could have depressed local crop prices on average by between $0.11 per bushel to as much as $0.18 per bushel in 2014, the USDA rail report estimates.

Related: USDA reviews 2014 in grain shipping

Despite the findings, Thune praised the rail companies for making changes to ensure appropriate capacity for another large harvest, but said improvements should continue.

"While the railroads have made important gains in rail service in recent months, we need to work to ensure that this service continues," Thune said.

Read the full USDA rail report for 2013-2014: Rail Service Challenges in the Upper Midwest: Implications for Agricultural Sectors

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