Testimony before the Surface Transportation Board (STB) last week from several association and company officials suggested that the rail industry is doing a horrible job of providing necessary transportation for grain, fertilizer and fuel.

What didn’t seem to be stressed as much as it could possibly be is the high transportation costs charged by the railroads when rail cars are in short supply and high demand occurs. Grain officials and farmers asked for service to be upgraded to levels that was common a few years ago.

There is concern that grain isn’t going to market smoothly as backhaul from delivery of fertilizer and there could be shortages of fertilizer this spring because of poor rail service. Service to the Dakotas are a major area being shortchanged, according to various persons testifying.

The Minneapolis Star Tribune reporter Tom Meersman quoted Dennis Jones, a farmer near Aberdeen S.D. and co-founder of the South Dakota Corn Growers, as testifying that rail equipment has been “hijacked by big oil.” He also said, “We need to get ag products back on the track and get fertilizer here, and move the mountains of grain that should have been shipped by now.”

Burlington Northern Sante Fe spokeswoman Amy McBeth said that the railroad has not favored petroleum companies at the expense of other shippers. She said the cold winter and an increase in demand for the grain, oil and coal industries all contributed to the recent problems. The railroad tried to assure the STB that it is adding engines, crews and building up service.

But the Renewable Fuels Association (RFA) represented by Ed Hubbard, general counsel of the RFA, contended that increasing crude oil shipments are causing a redistribution of currently available railcars, leading to a shortfall of railcars for other commodities such as ethanol. These commodities shippers cannot be expected to wait on the railroads. 

Hubbard recognized that the railroads had big challenges because of the winter weather across the nation, but he blamed the railroads’ failure to adequately prepare for increased rail shipment needs and the harsh winter.

Hubbard said, “What the data tells us that is different about this year, as opposed to the countless other winter seasons, is the recent dramatic and explosive growth in railcar shipments of Bakken and Canadian crude oil.

“The growth in crude oil shipments has reshuffled the existing fleet of railcars and locomotives, pressured lease rates, changed normal rail traffic patterns, and generally exerted significant stress on the rail system. And with this congestion crisis, it is becoming more and more apparent that surging crude oil shipments are coming at the expense of other goods and commodities, like ethanol.”