What caused major change in rail shipments for grain?
What happens to your corn or soybeans when it leaves your possession? If you are delivering to a feed lot or a processor, it is quite evident what will happen to it.
But if it flows through an elevator and into a covered hopper car, the destination could be a long ways away and there may be a lot of other grain hauled with it.
Increases in corn and soybean production, the development of ethanol plants, and China’s hunger for soybeans have all become significant dynamics in the changes the rail industry has made to transport U.S. grain.
In the railroad ledger books:
- Grain comprises 7.9 percent by tons of all commodities hauled by rail.
- Grain represents 94 percent by tons of all farm commodities.
- Grain transportation earned 8.4 percent of total rail revenue in 2009.
- Railroads hauled 33 percent of all grain transported in the United States in 2007.
But those statics are changing over time according to USDA economists who say since 1994 railroads have moved from hauling single carloads to grain to shuttle-sized shipments which are 75 or more railcars. That is the primary option for movement of corn, soybeans, and sorghum.
However, the use of shuttle trains has not been the primary mode of transportation for wheat.
Additionally, the distance traveled by rail cars full of grain has increased for corn and soybeans, the US Surface Transportation Board reported, “In 1994, lengths of haul for corn and soybeans were principally between 20 and 500 miles. In 2009, however, the predominant length of haul for these two crops had become greater than 1,500 miles.”
In terms of a percentage increase from 1994 to 2009, the length of haul for corn increased 71%, for soybeans the length of haul increased 123%, but only 33% for wheat.
However, in the case of wheat the Surface Transportation Board reports, “In 1994, the average length of haul for wheat and sorghum was between 501 and 1,000 miles, representing 40 percent and 34 percent of total movements, respectively.
By 2009, hauls of this length had increased to 51 percent and 54 percent of total movements.”
The length of haul for grain and the size of shipments are functions of the changing production of corn, primarily, along with the relatively new development of ethanol plants, and the global demand for various types of grain produced in the US.
The USDA economists report, “As prices have changed to reflect new supply and demand equilibriums, the size and distance of grain shipments has been affected as well.”
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