Market Matters Blog

Rail Delays Continue

Mary Kennedy
By  Mary Kennedy , DTN Basis Analyst
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A BNSF locomotive moving through northwest Minnesota along the Northern Corridor. (DTN photo by Mary Kennedy)

OMAHA (DTN) -- Officials with the BNSF railroad acknowledged in their weekly report to the Surface Transportation Board that more grain cars are late for delivery than oil cars, but said that was not unexpected considering the railroad owns considerably more grain cars than oil cars.

The BNSF reported of the loaded cars in revenue service that have not moved in greater than 120 hours, 615 were for grain, 60 for ethanol and 141 for crude oil. The weekly total number of unloaded cars in revenue service that had not moved in more than 120 hours was 696 for grain, 76 for ethanol and 188 for crude oil.

"There have been several comments regarding the difference in the number of cars identified as holding for more than 48 hours and more than 120 hours in the crude category and grain category," the railroad reported. "The BNSF grain fleet is much larger than the crude fleet, but more importantly, BNSF grain fleet has around 1/2 of the cars deployed in shuttles or unit trains. By comparison, the vast majority of crude oil cars move in unit trains, which are built for speed and efficiency. The manifest service will always have more holding time as cars move across the network into multiple yards along the route to be switched in and out of trains and ultimately delivered by a local train.

"Given the large number of single cars made available for grain deliveries, there will always be a higher number of overall grain cars for holding when compared to commodities that travel almost exclusively in trains."

The BNSF reminded the STB that the data includes trains that hit the report at any point in our network, rather than trains held "short of destination or interchange only."

"It is still important to keep in mind that just because a train has been held at a point on the BNSF network for more than the period contained in the request does not mean that the shipment will not be delivered in a timely manner," said the BNSF.

Past due cars overall were at 6,043 and were 12.2 days late with North Dakota owed 3,252 cars, 14.5 days late and Montana owed 698 cars, 12.4 days late.

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Here is the link to the entire BNSF status update to the STB: http://goo.gl/…

There has been an increase of trains staged into the PNW, according to BNSF ag vice president John Miller in his weekly podcast. Staging refers to trains holding at a point on line for release to move into a terminal. "We will continue to push pipelines across the Northern Corridor to help reduce staging in the PNW. Our shuttle trips per month (TPM) rebounded to 2.3 overall and we remain committed to achieve a consistent 2.5 TPM for shuttles to meet the expectations of our customers during the harvest push."

Oahe Grain in Onida, S.D., is served by the RCP&E railroad, but has an agreement to load BNSF shuttles that come through the Wolsey, S.D., interchange, according to manager Tim Luken. This is where the RCP&E short line picks up the train with attached BNSF power and delivers it to Onida.

Luken said the BNSF shuttles have been a big help this harvest. "A week ago Monday we had a gift BNSF shuttle train that I traded FOB, which helped free up some well-needed corn room. We filled up on corn this past Tuesday, but I did trade another shuttle FOB for this coming week and am hoping to move more corn in the middle of this coming week. Shuttle freight has come down, which has helped."

The Onida elevator also received 75 cars from the Canadian Pacific (CP) last week, Luken said, which was the biggest car placement from them in months. The CP reported to the STB that out of 200 cars requested by the RCP&E from Oct. 20 to Oct. 26, 174 were filled. Luken was grateful to get the cars because he was able to load out enough grain to free up a 100,000 bushel bin for sunflowers. With harvest still going on, he said that bin filled up in two days and he is back to "one truck in, one truck out."

The CP reported the weekly average terminal dwell time, excluding cars on run-through trains, was 18.3 mph. CP reported 31,787 cars on the line for the week, which included 16,664 covered hoppers and 9,313 tank cars. The weekly total number of loaded cars in revenue service that have not moved in more than 120 hours was seven for crude oil, zero for ethanol and 85 for grain. The weekly number of empty cars in revenue service that have not moved in more than 120 hours was 14 for crude oil, zero for ethanol and 74 for grain. Outstanding car orders in North Dakota were at 2,529, 304 in Minnesota and 104 in Montana. Here is the link to all the Class 1 railroad filings on Oct. 29: http://goo.gl/…

CANADA MAY DISMISS MINIMUM VOLUME MANDATE FOR RAILROADS

Early indications suggest the Canadian federal government may let the rules expire on Nov. 30, which have set the weekly minimum volumes of grain to be hauled by each of the two railways at 536,250 metric tons.

"Federal Agriculture minister Gerry Ritz has reported to Reuters that 'a complete failure by the railways to move grain" would be needed before the minimum volumes would be extended, said DTN Canada Grains Analyst Cliff Jamieson. "The minimum volume targets have stirred significant opposition. Of course the railways have been opposed to the mandates. Joining them has been opposition from U.S. lawmakers, who feel that increased traffic on the Prairies has added to service failures in the U.S. Opposition has also been seen from competing commodities relying on rail service, such as lumber, fertilizer and mining, who feel that the government's actions have 'played favorites,' which is viewed as detrimental to other commodity sectors."

At the same time, some groups feel the government's work is not done. "Short-line railways in western Canada and small shippers continue to be penalized as the railways concentrate their efforts on the most efficient mainline routes in order to meet weekly targets and avoid fines associated with non-performance," said Jamieson. "Many continue to wait for cars which are months over-due. Gordon Harrison, president of the Canadian National Millers Association, told the Western Producer that 'rail service continues to be inadequate, uneven and unpredictable,' highlighting the ongoing concerns faced by domestic processors both in Canada and the U.S. as railways focus on high volume shipments to export terminals, which allow for quick turn-around of empty cars."

Prairie farm groups, producers and shippers will be sorry to see the minimum weekly volumes end for fear of what could follow. Jamieson reported that CN's data for September suggests a weekly average of 5,659 cars were requested for shipment while a weekly average of 5,267 were spotted, which is 26% above the five-year average of 4,181 cars per week. Spotting refers to cars placed at a railroad siding for either loading or unloading.

"Unloads at major export terminals on the west coast, Churchill and Thunder Bay, total 9.228 million metric tons for the week ending Oct. 26 versus last year's volume of 7.1135 mmt and is 37% above the three-year average. While the 2014 crop was significantly lower than the record production seen in 2013, the total production of Canada's principal grains is suggested to be 3% above the five-year average and ample supplies remain to be shipped," Jamieson said.

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

Follow Mary Kennedy on Twitter @MaryCKenn

(CZ/SK)

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