Market Matters Blog

Weekly Rail Updates Disappoint Shippers

Mary Kennedy
By  Mary Kennedy , DTN Basis Analyst
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The Canadian Pacific Railway has about 14,000 miles of track in Canada and the U.S. and is headquartered in Calgary, Alberta. While potash, grain and oil shipments have kept tracks busy in Calgary, such as this downtown scene earlier in October, other areas in Canada and the U.S. are still waiting for cars. (DTN photo by Elaine Shein)

OMAHA (DTN) -- The latest reports railroads submitted to the Surface Transportation Board appear to bolster claims by elevators that railroads are giving priority to oil shipments over grains, according to a Minnesota Grain and Feed Association official.

"The recent (Oct. 22) STB reports received from the railroads, seems to confirm reports we have received from our elevator members of continued delays in service to the grain sector, while oil appears to be unaffected by the unprecedented congestion on the upper Midwest rail network," Bob Zelenka, executive director of Minnesota Grain and Feed Association, told DTN in an email.

Zelenka had told the STB in September that whether perceived or real, it appeared oil traffic was receiving priority from both the CP and BNSF. "While grain elevators waited weeks and even months to receive service, with the severe winter being blamed by the rail carriers as the main culprit, oil trains seem to have been moving steadily throughout the winter and spring, unabated by weather or other constraints, such as, a shortage of crews and/or locomotives," Zelenka said.

It appears from the recent BNSF status update that his concerns were more real than perceived. The BNSF showed that during the week of Oct. 12, 747 loaded grain cars sat idle for more than five days with just six oil cars showing the same delay.

However, the BNSF noted in their update to the STB that "If a car has been held at a point on the BNSF network for more than 48 hours or even 120 hours, it does not necessarily mean that the car will not be delivered in a timely manner or even within the initial service plan. Many cars are held in terminals and other locations on our network as part of the service design for the movement or for the convenience of a shipper or receiver. Potentially significant numbers of delays that are not linked to BNSF's own service performance will be captured as BNSF delays in the data reported as required by the STB." Here is the link to the entire Oct. 22 BNSF letter and service update to the STB: http://goo.gl/…

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The Canadian Pacific also wrote a letter to the STB stating their concern over the new reporting system. They wrote, "We believe that to understand the facts of rail transportation, the STB should endeavor to understand the entire supply chain from the fields to the factory and from the factory to the port. We genuinely urge the board to step back and consult with all the stakeholders before implementing these new reporting requirements. This would result in a more meaningful process in our opinion and hopefully would minimize the burden on the carriers, avoid unintended consequences and result in more helpful and complete information." Here is the link to the entire letter by the CP to the STB: http://goo.gl/…

The CP reported that the weekly total number of loaded and empty grain cars in revenue service that have not moved in "greater than 48 but less than or equal to 120 hours" equaled 234 loaded and 139 empties. In comparison, there were 38 loaded crude oil cars and 106 empties. For the week of Oct. 13-19, there are 2,031 grain cars owed to North Dakota that are 2.82 weeks late; 358 cars owed to Minnesota and 100 cars owed to Montana. Here is the link to the Oct. 22 CP service update to the STB: http://goo.gl/…

RAIL BACKLOGS GROWING

As the large grain harvest continues to progress, rail backlogs seem to get a little bigger each week. While it is normal for backlogs to occur during harvest time, shippers are concerned that if the weather becomes a factor soon or other unforseen events occur to further slow cars, they will be faced with another long winter of waiting for cars.

Tim Luken, manager of Oahe Grain, a 5.7-million-bushel capacity elevator in Onida, S.D., which relies on the CP told DTN, "Oahe Grain will normally turn our facility three times a year, but being limited to 50 cars at best a week, we will be lucky to turn it twice and the bottom line will not look so good."

Luken said, "From the time our fall harvest is complete, there is only 31 weeks until the 1st of July when we start harvest again. We only have 31 weeks for farmers to get grain bins emptied along with grain elevators to empty out to get ready for next year to start all over again. If we only get 50 cars a week, this relates to about 170,000 bushel per week that is only 5.2 million bushels to ship out of here during this time period. I can see the scenario that elevators will still be full going into next year's harvest unless something changes."

Bob Zelenka told DTN, "We continue to be frustrated by both the BNSF and CP seemingly kicking the can down the road, when it comes to their 'often revised' pledge to be caught-up by harvest, which obviously has not occurred. We appreciate the action taken by the STB in requiring greater transparency and added service metrics, such as, average dwell times at origin and monitoring traffic going through the Chicago 'choke point.' Transparency and better communication between railroad and rail user will go a long way in improving the efficiency for both."

To see all of the Class 1 railroad filings to the STB on Oct. 22, open the following link and go to Oct. 22 status updates: http://goo.gl/…

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

Follow Mary Kennedy on Twitter @MaryCKenn

(AG/CZ)

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Bonnie Dukowitz
10/27/2014 | 7:56 PM CDT
Has anyone questioned how much, if any, interest in oil, Warren Buffet has? If I recall correctly, the Northern Pacific R.R.( one part of B.N.S.F.) had huge mineral rights. I am curious if he is shipping his own product to himself. Just a thought.