RFA Slams Railroad Delays

STREATOR, Ill. (DTN) -- The Renewable Fuels Association on Wednesday criticized increasing shipments of Bakken crude as the culprit for continued delays in ethanol rail deliveries.

Bob Dinneen, president and CEO of the RFA, submitted written testimony to the U.S. Senate Committee on Commerce, Science, and Transportation, which held a hearing to examine rail congestion and the harmful effect it has had on agriculture and other commodities.

The letter suggests alleviating rail congestion would need greater transparency "to help regulators oversee and monitor how logistics and contracting decisions are being made by rail operators."

Dinneen also said "it is critical that regulators have the ability to oversee what new shipping contracts are being negotiated while the rail operators continue to try to catch up with current customers."

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Dinneen singled out Bakken crude rail shipments that he says have played a role in increasing dwell times and decreasing train speeds and pointed toward the negative effect these delays are having on ethanol producers, adding increased shipments of Bakken oil by rail are growing "at the expense" of other goods and commodities.

"The recent crisis of congestion that has seemingly overtaken the rail industry has become a huge and costly problem," Dinneen testified. "This crisis is one that is causing significant harm to the economic health and well-being of our nation's economy, as well as driving up costs for a wide array of commodities that rely on the rail for transportation."

The rail system is a vital asset to the ethanol industry as "trains have historically served as an economical and efficient virtual pipeline for ethanol, safely moving our product from plants concentrated in the Midwest to population centers on both coasts."

Dinneen said last winter's Polar Vortex-driven extreme cold hampered the ability of the railroads to efficiently and effectively deliver their cargo on time.

"But dwell times and train speeds still have not reached pre-vortex levels, even after the summer months," he added.

Dinneen testified that the continued rail congestion "leads one to believe that it has more to do with rail capacity, rail operations and ongoing rail demand, than simply a tough winter."

Grain shipments are expected to increase this fall as the United States is on course to harvest a record corn crop, Dinneen said.

With the increase in grain shipments this fall and the current rail congestion, Dinneen said "rail operators must respond in a way that treats the vast array of other goods and commodities competing with crude oil on the rails fairly and equitably."

(BM/AG)

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