RFA Seeks Rail Delay Answers

STREATOR, Ill. (DTN) -- The Renewable Fuels Association, an ethanol lobby group, wrote a letter Thursday to the American Association of Railroads seeking an explanation for recent delayed rail shipments which have impacted the ethanol industry.

The AAR responded this afternoon that there was a confluence of events, including one of the worst winters on record and increased shipments of several commodities, with the rail industry responding with increasing shipments to record volumes.

In a report issued by the Energy Information Administration on Wednesday (4/2), spot ethanol prices have exceeded the prices of RBOB by more than $1 in late March, reflecting mostly rail transportation delays in dwell times, EIA said.

Dwell times are the time loaded railcars spend in a terminal awaiting movement. EIA cited the example of Burlington Northern Santa Fe Corp.'s Galesburg, Ill., terminal dwell time, which doubled in early 2014 to 60 hours in February, at the peak of one of the harshest winters on record.

Bob Dinneen, RFA president and CEO, said the rail industry should have been prepared for winter weather.

"The railroads have attributed this lackluster performance and inefficiency to winter weather," Dinneen wrote to the AAR. "But they seem to have forgotten that winter comes every year."

Dinneen suggested a more plausible explanation for the delays is the growth in railcar shipments of Bakken and Canadian crude oil.

In Dinneen's questions, he asks what role has the growth in crude oil and hydraulic fractionation sand shipments played in current rail inefficiencies; what steps are being taken in the short term by the rail industry to alleviate the current logjam on the rail system; and when the AAR expects service on each of the Class I railroads to return to more normal operating conditions.

Dinneen also asked AAR how it can assure the ethanol industry and other rail-reliant industries that crude oil shipments "are not being prioritized over shipments of other goods and commodities?"

The RFA asked if average train speeds would recover to historically normal levels, or does the ARA expect slower speeds to be the "new normal" due to the increase in crude oil shipments?

Dinneen also asked what the ethanol industry can do to assist in the rail industry's efforts to ensure similar situations are avoided in the future.

Responding to Dinneen's letter Thursday in an emailed statement to DTN, Edward R. Hamberger, AAR president and CEO said railroads are "working around the clock" to mitigate the recent challenges faced by the industry in certain parts of the country.

"Those challenges result from a confluence of events that were concentrated in particular regions," Hamberger said. "These events include a winter that, contrary to the RFA's claim, was far worse than usual and forced railroads to dramatically shorten train lengths and crew exposure to the elements; a record grain harvest and unexpected surge in grain exports; and higher coal volumes as utilities sought to replenish stockpiles they consumed when they generated additional electricity to keep all of America warm this winter."

He said the railroad industry continues to move "vast volumes of goods safely and efficiently."

In March 2014, U.S. railroads originated nearly 39,000 more carloads and nearly 93,000 more containers and trailers than in March 2013, he said.

They transported higher average weekly intermodal volume in March than during any other March in rail history, with the volume the fourth highest of any month in history.

Average weekly U.S. rail carloads of coal in March were the highest in six months; carloads of chemicals (the category that includes ethanol) were the highest in 23 months; motor vehicles were the highest in 12 months; lumber was the highest in 67 months; and nonmetallic minerals were the highest in six months.

"Our goal is to restore service to the high levels our customer[s] expect and we deliver," he added.

Myke Feinman can be reached at myke.feinman@telventdtn.com

(BM/CZ)

(BM/CZ)

Copyright 2014 DTN/The Progressive Farmer. All rights reserved.