Market Matters Blog

OMAHA (DTN) -- Rail backlogs for grain transport are improving, albeit slowly.

BNSF Vice President John Miller said the railroad was making "gradual improvements" in service and there were "positive trends" -- one being an 8% reduction in system-wide trains holding.

"While we continue to see some gradual improvements through parts of our agricultural business, we remain mindful of the work we still have to do," he added during an April 17 podcast.

Some non-shuttle elevators that are served by the BNSF in North Dakota said they are still behind cars and one elevator manager said, "I don't see any improvement. At least it's not worse."

As of April 17, BNSF system-wide shuttle turns per month (TPM) were at 2.3 with the PNW actually lower than the prior week at 1.9 TPM and the Gulf better at 3.7 TPM. South Dakota saw the biggest improvement in cars owed at 671 versus the prior week of 1,020. Minnesota saw cars owed increase at 1,496 versus 1,313 from one week prior. North Dakota showed a slight improvement with 7,175 cars owed versus 7,216 the week prior and Montana was owed 3,217 versus 3,300 the prior week. System-wide, 14,618 cars were owed versus 15,099 the prior week and average days late dropped to 25.4 versus 26.7 the week prior, according to BNSF.

Complying with a Surface Transportation Board order to provide weekly status updates on the delivery of fertilizer, BNSF said they have "improved the seven-day average velocity of our fertilizer unit trains by 17%." Both CP and BNSF were to start fertilizer status reports beginning April 25 and continue for the next six weeks. The reports are to include fertilizer delivery data, by state, number of cars shipped or received which are billed to agricultural destinations, and number of cars placed.

See the full STB order here: http://goo.gl/…

CANADIAN RALROADS STEP UP SERVICE

Transport Canada is suggesting the two Canadian railroads are meeting their shipping targets as stated in the Order in Council. "Concerns still exist within the industry that the railroads are at liberty to move grain from the most convenient locations and in the most convenient directions in order to meet their weekly targets, leaving some of the small shippers facing a lack of service," said DTN Canada Grain Analyst Cliff Jamieson. "Overall results are murky at best, with Brian Cross of the Western Producer reporting that while the Order in Council requires ongoing reporting of such things as railcar demand and actual movement by shipping corridor, this information is treated as confidential as it is covered by the Canada Transportation Act."

CN's Order Book Report suggests 5,543 cars were planned for last week, or week 37, while in the current week, the plan involves 5,407 cars, of which 4,145 cars are destined for West Coast terminals, 480 cars for Thunder Bay and 782 cars for North American export shipping. CN's outstanding orders at the end of the current shipping week are reported at 29,252 cars.

"The federal government is expected to resume debate on the Fair Rail for Grain Farmers Act on April 28, when Parliament resumes," Jamieson said. "Hunter Harrison of CP Rail suggested to the Calgary Herald that the government could 'compromise' on the bill, with one major concern of the railways being the increased interswitching limits, which allows shippers to move product by alternative rail companies within 160 km (100 miles) of an interchange, which the railroads suggest will reduce efficiencies as opposed to the increased competition that the government is looking to achieve.

"Meanwhile, grain producers may be surprised to see this week's quarterly earnings reports from both railroads," said Jamieson. "CP achieved a first quarter net income of $254 million, which is 16% above last year and a record for the quarter. CN profits increased 12.2% to $623 million, while reaching an all-time high stock price of $63.81 on April 24."

LAKE SUPERIOR GRAIN SHIPPING SEASON ON ICE

Lake Superior's ice cover was at 59.9% as of Wednesday, April 23, in contrast to 2.7% at the same time last year.

While Lakers are moving through the Great Lakes with assistance, there have been no salties appear in Duluth yet. Salties are ocean-going ships that come into port to load grain bound for international markets. Last year, the first saltie entered the Port of Duluth on March 30.

According to Adele Yorde, public relations manager for the Duluth Seaway Port Authority, "All salties we know about are on convoy lists fairly far down the transit schedule (convoys #12 through #16). For reference, Laker convoy #4 made its way across Lake Superior and upbound Laker convoy #5 (and perhaps #6) are in position to start moving west across Lake Superior on Saturday. Saltie movement across the lake is not expected until next week. Significant ice deterioration but still-tough conditions between Keweenaw Peninsula and Whitefish Bay, plus easterly winds, are creating additional challenges today and tomorrow. All transits across that section of Lake Superior are still happening under Coast Guard escort as they keep tracks established (transit times are improving as ice deteriorates, but still no travel at night with fields of ice breaking free and moving with the wind)."

Great Lakes Environmental Research Laboratory researcher George Leshkevich reported that "ice cover this spring is significantly above normal. For comparison, Lake Superior had 3.6% ice cover on April 20, 2013; in 2012, ice was completely gone by April 12. In the last winter that ice cover grew so thick on Lake Superior (2009), it reached 93.7% on March 2 but was down to 6.7% by April 21."

For the complete story about the ice on Lake Superior, click this link: http://goo.gl/…

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

Follow Mary Kennedy on Twitter at @MaryCKenn