Shipping record U.S. corn crop burdens railroads, barge lines
Harvesting the largest U.S. corn crop on record and transporting it on railroads and rivers to markets here and abroad is driving up costs for rail cars, barges and trucks in the world's top crop producer and exporter.
After three years of crop shortfalls that left grain supply pipelines all but empty by late summer, the U.S. grain handling system is now tasked with quickly absorbing a huge corn crop - projected at a record 13.8 billion bushels, around half of which is already harvested.
"You have a record North American grain mass, and you went from zero to 100 miles an hour in two weeks," said Charlie Sernatinger, an analyst with ED&F Man Capital in Chicago.
With the bulk of the estimated 3.15-billion-bushel soybean harvest complete, farmers are turning their attention to the much larger corn crop, and yields so far are surprisingly big.
"People were projecting a sizable corn harvest, but yield results coming in from the field are better than expected. That's going to tax the system even more," said Mike Steenhoek, executive director of the Soy Transportation Coalition.
Already, costs for rail freight have surged this month, due in part to strong export demand for U.S. soybeans and hard red winter wheat. Also, grain traders say freight trains have been running slowly, especially in the western half of the country.
"Normally they get 2.5 or 2.8 turns a month, sometimes 3. They're getting maybe 1.6 or 1.8 right now," said a grain trader who asked not to be named, referring to the number of trips rail cars were making each month.
Service on the BNSF Railway, a major hauler of grain from Midwest to Pacific Northwest export terminals, has slowed after recent infrastructure upgrade projects fell behind due to adverse weather, he said.
BNSF said it was working with its customers to "address the challenging service issues the grain supply chain is experiencing during this record compressed harvest season."
Industry sources said a growing number of ships were waiting for rail-delivered grain to load at Pacific Northwest export terminals.
"There are lots of vessels waiting in the Pacific Northwest that are waiting to be loaded and railroads are having trouble keeping up," said Steenhoek of the Soy Transportation Coalition.
Rail cars are commonly traded in a secondary market by brokers who trade space on 100-car "shuttle trains," expecting the trains to make a certain number of trips. When the trains run more slowly, these brokers are forced to pay up for more freight to cover their commitments.
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