Market Matters Blog
Mary Kennedy DTN Basis Analyst

Friday 03/21/14

Rail Service Slow to Recover

OMAHA (DTN) -- Despite weather easing as we move into spring and some small reductions in the number of late rail cars in a few states, the number of days that cars were late increased in the past week and shuttle turns are taking longer than usual. In addition, those needing rail cars to fill are paying more.

Empty railroad tracks are a sign of the times in Canada where available railroad cars are in high demand. (DTN file photo by Elaine Shein)

The spike in average March non-shuttle secondary railcar bids/offers per car "added $0.45 per bushel to the cost of shipping grain in jumbo hoppers" for the week ended March 13, according to USDA's weekly Grain Transportation Report. Record high shuttle freight costs "added $1.47 to the cost of shipping grain in jumbo hoppers, USDA reported. "These costs are in addition to what shippers must pay directly through tariffs and fuel surcharges (that change monthly), which currently total between $4,000 and $6,000 per car on key BNSF grain routes." Mileage based fuel surcharges for all railroads can be found at:…

Two key states in the western Northern Plains -- North Dakota and Montana -- are still seeing the number of late rail cars increase, according to a BNSF podcast on March 14.

"Late cars in North Dakota were at 7,305, up 9% from the March 6 report. The average days late were 22.4, up from 18.6 days two weeks ago," said John Miller, BNSF vice president. "Montana showed 3,176 late cars, up 9% from March 6. Average days late were 23.2, up from 18.8 days two weeks ago."

Other states named by Miller showed decreases in the number of late cars, but the cars that were late were later than they were last week. Minnesota had 1,309 late cars, down 5% from a week ago and those cars averaged 23 days late, compared to 20.5 days the prior week. South Dakota reported 1,284 late cars, down 8% from March 6, and those cars averaged 21.8 days late compared to 19 days the prior week.

The entire podcast can be heard at…


In eastern North Dakota, Finley Farmers Grain & Elevator Co. manager Dave Fiebiger said, "Getting cars isn't the problem for me, it's the cost of getting them. ... If you want March cars, the conversation starts at $7,000" per car for shuttles. As for getting shuttles placed, he said he had shuttles placed on March 9 and March 15. "The cars billed March 10 were pulled March 14 and the cars billed March 16 were pulled on March 17." These turn-around times, from cars arriving at the elevator, getting filled and the railroad actually pulling the full cars away from the elevator, are longer than usual.

Shuttle turn times for the whole BNSF system averaged 2.1 turns per month versus the normal average of three turns per month.

Farther west in Beach, N.D., Beach Cooperative Grain Company manager Paul Lautenschlager is not very optimistic. Earlier this week he said his 27-car COT train ordered for Feb. 1 was finally spotted at his siding, but was missing 23 cars. As for service and freight costs in his neck of the woods he said, "Beach Co-op Grain is seven weeks behind in railroad service. I bought a 24-car COT for mid-April shipment last week. It cost me $2,800 per car. I called the railroad to place it and they told me without a smile I would not see that train until June."

Lautenschlager added, "Today I am seriously looking at buying a May train for $3,000.00. This situation is not good nor is it going away any time soon. Maybe years if you ask me. Obviously the railroad will eventually get caught up. They have not offered any cars for sale in the COT auction for over two months now. Secondary freight is running out and that is why it is so expensive. I am out of cars."

This must frustrate Lautenschlager's patrons as well. A notice on the company website pretty much sums up his current inability to get rail cars and ship grain: "We are only taking contract wheat. No cash or price later."


Canada's two major railways unloaded 569,800 metric tons of western grain in the week ending March 16, DTN Canada Grains Analyst Cliff Jamieson reported. This volume was almost entirely made up of West Coast unloads at the Port of Vancouver and Prince Rupert. This is 25.6% higher than the combined volume unloaded in the previous week at the Pacific ports as well as Thunder Bay and Churchill, although remains well below the one million metric ton weekly target as mandated by the federal government, which is to start in April.

"Frustrations remain high," Jamieson said. "Prairie oats are not moving south as a result of the focus on western movement. Some terminals have expressed their doubts that the government target can be reached, while the Provinces of Alberta and Saskatchewan have suggested that the weekly target as well as the daily fine for not hitting the target are not set high enough, setting their sights on a 13,000-car-per-week target for the two railroads combined rather than the 11,000-car target in the order, while preferring to see a daily fine of $250,000 rather than the $100,000 per day as announced by the government."

On moving Canada's 2013/24 crop, CN CEO Claude Mongeau said, "It will take more than the summer, continue into the fall, into next year." This is not welcome news for producers who have contracts that are months overdue, or are waiting for supplies to tighten on the Prairies, which will in turn improve basis levels on new sales.


As water levels increased on the Mississippi River near St. Louis and ice began to break up and melt on the Illinois and Ohio rivers, more barges were able to get downriver to the Gulf for export.

Barge freight has moved lower, most noticeably on the Illinois River, where freight costs dropped 60% to 65% this past week for March barges. "During the week ending March 15, barge grain movements totaled 757,024 tons -- 45% higher than the previous week and 71% higher than the same period last year," reported USDA. "During the week ending March 15, 479 grain barges moved down river, up 41.3% from last week; 726 grain barges were unloaded in New Orleans, up 5% from the previous week."

With better water conditions, more empties were able to make the trek upriver for loading, which added to a lower cost in barge freight as well. "For the week ending March 15, 665 total barges, were able to transit Mississippi River Locks 27, Arkansas River Lock and Dam 1, and Ohio River Locks and Dam 52, up 371 barges from the previous week," USDA reported.

The only area of the river still not 100% open for business is the UMR, St. Paul Distinct. The USACE has been measuring the ice depth in Lake Pepin and it is thicker than in years past. The next measurement should be taken March 26 and shippers in that area are hoping to be able to start loading barges by mid-April.

NOAA released its spring flood outlook on March 20, showing minor to moderate risk in the Midwest. "Recent snowmelt has increased the near-surface soil moisture and elevated the potential for rapid runoff from rain events," NOAA reported. "In addition, significant river ice increases the risk of flooding related to ice jams and ice jam breakups." The concern over ice jams is that they could affect the operation of the locks and dams along the river, many of which are currently under repair due to damage sustained over the winter.

DTN Senior Ag meteorologist Bryce Anderson said the NOAA outlook is reasonable and there may be some planting delays in some areas of the Corn Belt.

"The NOAA spring flood outlook has a category of "moderate" for much of the Mississippi and Red river valleys, along with the upper Missouri basin as well as the Great Lakes, with a rating of "minor" in the Ohio Valley. This is a reasonable outlook considering the moderate snow cover in the Upper Midwest and the northern Rockies. Combine this with a below-normal temperature outlook for the rest of March through April, and I think we will see some issues with flooding-related field-work delays in portions of the Corn Belt this spring. The flood outlook also may complicate river transport at times during the next couple months."

The complete outlook can be found on the NOAA website:…

Mary Kennedy can be reached at


Posted at 3:44PM CDT 03/21/14 by Mary Kennedy
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