Market Matters Blog
Mary Kennedy DTN Basis Analyst

Friday 06/27/14

Heavy Rains in the Upper Midwest Hampering Rail and Barge Traffic

OMAHA (DTN) -- The Angela K moved 12 barges through Lake Pepin on Wednesday, April 16, officially opening the 2014 Upper Mississippi River shipping season and marking the latest start to a shipping season on record.

Barges slowly make their way south toward the confluence of the St Croix and Mississippi near Hastings, Minn., on June 24. (Photo by Katharine Sawyer)

The late start was attributed to the unprecedented amount of ice covering the lake over the winter. Two months after the ice cleared, shipping was stalled as flood waters, due to a record amount of rainfall in Minnesota, closed Lock and Dam No. 1 located just north of the confluence of the Mississippi with the Minnesota River at Mississippi River mile 847.9, in Minneapolis.

To reduce the flood risk upstream of the lock, the U.S. Army Corps of Engineers (USACE) opened the Tainter gate at Upper St. Anthony Falls lock, in downtown Minneapolis on June 20. The Tainter gate is a type of radial arm floodgate used in dams and canal locks to control water flow.

"This is the sixth time the St. Paul District has passed water through the chamber," USACE stated in a news release. "The previous years that this has been done include 1965, 1969, 1997, 2001 and 2009."

The Corps added, "Due to the high flows, the St. Paul District anticipates having to pull Tainter and roller gates at each of its dams from Lock and Dam 2, in Hastings, Minn., to Lock and Dam 10, in Guttenberg, Iowa, no later than June 23. The gates are pulled when they are no longer required to maintain the 9-foot navigation channel. When the gates are out of the water, the river is flowing naturally, as if the locks and dams weren't there."

While barges are still able to move, they face high water restrictions, which include slow speeds to avoid causing any wakes. The danger of moving through flood waters is debris underneath the water, which creates obstacles for moving barges. Barges also find difficulty loading and unloading in high water.

As of midweek, Minnesota received a record 10.85 inches of rain in June with more rain expected in the next week. The current level of the Mississippi River Twin Cities District is at 19.94 feet about flood stage after reaching its crest of 20.5 feet on June 26. The river is expected to remain above flood stage at least through July 3; minor flood stage is 14 feet above zero gauge and major flood stage is 17 feet. However, with more rain in the forecast, the Mississippi River at St. Paul, at its highest reading since 2001, could remain at flood stage longer. Barge lines reported late in the week that logistics continue to worsen on the Illinois River and mid-Mississippi River as well.

Here is the USACE St. Louis District RIVER & RESERVOIR DAILY REPORT: http://mvs-wc.mvs.usace.army.mil/…

RAIN AFFECTING RAILROADS, TOO

"Recent heavy rainfall and high water levels disrupted CN operations in southwestern Iowa," The Canadian National railroad reported on June 25. "In particular, our yard facility in Council Bluffs, Iowa, was evacuated and suspended its activities over the weekend. Water levels crested on Monday, June 23, as expected, and the main line returned to normal service as of 1415 hours CDT on Monday. Speed restrictions remain in effect along the Sprague and Fort Frances subdivisions. As a result, trains running between Winnipeg, Manitoba, and our Ranier, Minn., border crossing are operating with some delays."

The BNSF is also dealing with washouts. In his weekly podcast, BNSF Ag Group Vice President John Miller reported, "While periodic weather events will undoubtedly challenge our maintenance and expansion efforts, our team continues to do a tremendous job of remaining focused on completing projects. Most recently, sections of track on two subdivisions were washed out due to flooding, and fortification with sandbags is occurring on another subdivision to prevent any additional washouts."

Miller reported key outages in the Twin Cities division along the north-south routes. The line from Wilmar, Minn., to Sioux City, Iowa, and another through the Sioux Falls, S.D., to Mitchell, S.D., closed for three days due to flooding through mid-last week.

In his past-due car update, Miller said, "Twenty-seven previously committed grain shuttle sets became available and were redeployed as added capacity to allow BNSF to work down the number of past-due cars. For the week ended June 20, past-due ag cars were reduced by more than 1,200 cars and at the lowest level owed since February. In fact, last week past-due cars related to our agriculture business were at their lowest level since February and were reduced by more than 1,200 cars from the prior week. The only state which actually saw an increase in cars owed was South Dakota, which was in part due to washed-out tracks." Past due cars were at 316 in South Dakota vs. 217 owed the prior week; North Dakota was owed 5,133 cars vs. 6,137 cars the prior week; Minnesota was owed 845 cars vs. 1,208 the prior week and Montana was owed 1,798 cars vs. 2,129.

STB DIRECTS RAILROADS TO FILE WEEKLY REPORTS

On June 20, 2014, the STB "directed Canadian Pacific Railway Company and BNSF Railway Company to report their plans to timely resolve their backlogs of grain car orders, as well as respective weekly status reports pertaining to grain car service." These reports are to include a state-by-state count of any past-due car orders still outstanding. While the BNSF already offers this information to the public on its website via a weekly podcast (they are currently on the 19th week of podcasts), the CP does not publish a weekly report on car backlogs and some shippers in the U.S say they are still waiting for unfilled orders from as far back as February. Here is the link to the STB decision: http://goo.gl/…

CANADA CRACKS DOWN ON RAILROADS

The Canadian government announced this week that it will speed up plans to conduct a review of Canada's transportation system. "Challenges facing the movement of grain this winter along with issues such as the rapidly increasing movement of oil by rail have shed light on issues which can hamper Canada's ability to serve export customers, while remaining competitive and nimble enough to meet the needs of the market," said DTN Canadian Grains Analyst Cliff Jamieson.

"We need the right conditions for a system that has capacity and flexibility to respond to global and domestic demands," Canada's Transport Minister Lisa Raitt said in a statement."

"While the grain industry waits for the final rules that will govern the Fair Rail for Grain Farmers Act, or Bill C-30," said Jamieson, "the success of the current initiatives taken depends largely on who you talk to. The government is suggesting that railways are meeting their weekly targets of 5,500 cars each, totaling 1 million metric tons of movement. CN has responded by saying that it would have achieved current volumes regardless of government intervention. Farmers would respond by questioning where was the needed capacity all winter when the railroads fell some 70,000 cars behind in meeting the needs of the industry while totally eliminating movement in some shipping corridors and leaving grain shippers and customers without service?"

While numbers would suggest movement has improved, small shippers, shippers on branch lines and farmers counting on producer car shipments continue to struggle. North-south movement continues to suffer along with movement of smaller specialty crop volumes. The equitable and reliable distribution of freight services remains an issue that needs to be addressed in Ottawa in the final push to make Bill C-30 law, Jamieson said.

Mary Kennedy can be reached at mary.kennedy@dtn.com

Follow Mary Kennedy on Twitter @MaryCKenn

(CZ/SK)

Posted at 1:55PM CDT 06/27/14 by Mary Kennedy
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