Posts Tagged ‘China’

U.S. Grain Exports to China Picked up Last Year

February 5, 2021

U.S. exports of grain, particularly grain bound for China, during 2020 exceeded expectations, which is good news for railroads.

Grain exports began rising during last year’s harvest season and by mid November had risen by 34 percent compared with September 2019.

China has been the third-largest customer for U.S. wheat and during October 2020 it accounted for 73 percent of U.S. soybean exports.

The sale value of those soybean exports of $3.5 billion nearly broke the monthly record of $3.51 billion set in November 2013.

The U.S. Department of Agriculture expects soybean exports this year to be nearly 61 million tons.

It noted that China received more than 1 million tons of U.S. soybeans during the first week of January 2021.

Railroad executives have talked about increasing grain traffic during earnings calls with investors to discuss fourth quarter 2020 financial results.

A Union Pacific executive said volume for grain and grain products was up 20 percent largely due to export grain.

A BNSF spokeswoman told Trains magazine that although grain and grain product traffic was down in early 2020 due to trade policies and smaller crop harvests, grain volume picked up in the latter months of the year.

During the fourth quarter BNSF set a quarterly record for grain and grain products volume.

Analysts say one factor behind the recent rise in U.S. grain exports to China may be trade and diplomatic disputes between China and Australia, and limited supplies of soybeans from South America.

China uses most of its soybean exports as livestock feed, mostly for pigs and of late the hog heard in China has been growing.

Another factor in the rising export of U.S. grain to China has been implementation of a trade pact reached between the U.S. and China during the Trump administration.

That deal, signed in January 2020, called for China to “reduce and eliminate structural, non-tariff barriers to U.S. agriculture in China’s market.”

Industry Observers Speculate on How a Biden Administration Will Affect Freight Railroads

November 11, 2020

Railroad industry observers are already speculating as to how the Biden administration is expected to affect freight railroads and they see a few changes coming.

Joseph Biden, a former vice president and U.S. Senator from Delaware, is seen by many as likely to abandon the broad use of tariffs that had been favored by the Trump administration.

Those tariffs had drawn sharp criticism from many businesses and business trade organizations who said they caused economic disruptions because China responded with tariffs of its own that hindered exports of some U.S. goods and commodities.

In particular, U.S. agriculture exports were hurt by the tariffs. The railroad industry had opposed those tariffs because trade is related to 40 percent of rail shipments.

Statements issued by the Association of American Railroads have called for opening more markets to international trade and ending obstacles to sustained growth.

Biden during his campaign expressed support for two-person freight crews.

That will likely put him at odds with Class 1 railroads that are pushing to eliminate two-person crews on some trains in favor of a roving conductor who would handle multiple trains as needed.

Class 1 railroads also want to explore autonomous train operations.

During the Trump years, the Federal Railroad Administration said there was no data showing that two-person crews are inherently safer than one-person crews and therefore there was no need for a federal minimum crew size regulation.

It remains to be seen how a Biden appointed FRA administrator will respond to the crew size issue.

Another potential point of tension will be the two-person crew laws approved in some states at the behest of railroad labor union.

Courts have ruled that federal law in regards to crew size preempts state laws on the matter.

Ultimately, though, the crew size issue will be resolved in collective bargaining between the Class 1 railroads and labor unions, a process that may continue to drag on for a few more years.

Railroads will be keeping an eye on the Biden administration’s environmental policies.

Biden has said one of his first actions as president will be to have the United States rejoin the Paris climate accord.

He has called for ambitious targets to reduce the nation’s emissions of greenhouse gases that contribute to climate change.

In doing this, the Biden administration may favor policies that would have the effect of reducing the market for such energy-related commodities as utility coal and fracking sand used in oil and gas production.

However, if the Biden administration imposes policies that hinder pipeline construction that could boost the shipment of crude oil by rail.

A Biden administration might also seek repeal of regulations allowing the shipment of liquefied natural gas by rail.

The rail industry might be able to take advantage of a focus on the environment by claiming that it is a more environmentally friendly way to ship freight than trucks.

Coronavirus Depressing Intermodal Traffic

March 13, 2020

The effects of coronavirus pandemic is manifesting itself in depressed intermodal traffic.

The National Retail Federation said this week that the pandemic will have a longer and larger effect on imports at major U.S. retail container ports than was previously believed.

NRT said factory closings and travel restrictions in China have hindered production.

“There are still a lot of unknowns to fully determine the impact of the coronavirus on the supply chain,” said NRF Vice President for Supply Chain and Customs Policy Jonathan Gold in a news release.

Gold said Chinese factories have begun returning to production, but other issues are affecting cargo movement.

These have included the lack of availability of truck drivers to move cargo to Chinese ports.

Hackett Associates said its projections are that some sort of normalcy will return to trade by late March or early April.

The firm produces a monthly Global Port Tracker report for the NRF.

Forty percent of respondents to a recent NRF survey said they’re seeing disruptions to their supply chains while another 26 percent expect to see disruptions as the virus continues to spread.

U.S. ports covered by the Global Port Tracker handled 1.82 million 20-foot equivalent units in January, a 5.7 percent increase from December but down 3.8 percent from unusually high numbers a year ago related to U.S. tariffs on goods from China.

February was estimated at 1.42 million TEUs, slightly above the 1.41 million TEUs expected a month ago but down 12.6 percent from last year and significantly lower than the 1.54 million TEUs forecast before the coronavirus began to have an effect on imports, NRF officials said.

March is forecast at 1.32 million TEUs, down 18.3 percent from last year and less than the 1.46 million TEUs expected last month or the 1.7 million TEUs forecast before the virus.

April, which had not previously been expected to be affected, is now forecast at 1.68 million TEUs, down 3.5 percent from last year and lower than the 1.82 million TEUs forecast last month.

The Association of American Railroads said that for the week ending March 7 intermodal traffic was down 14.1 percent for the week compared to the same period of 2019.

U.S. weekly rail traffic was 462,303 carloads and intermodal units, down 9.1 percent compared. Total carloads for the week were 229,742 carloads, down 3.5 percent compared while intermodal volume was 232,561 containers and trailers.

“Comparing rail traffic from one week to another must be done with caution because many different factors can come into play, especially in the winter when the weather can play a big role,” said AAR Senior Vice President John T. Gray.

“That said, rail intermodal loadings last week were down noticeably more than the norm over the past year. With the number of ships arriving at West Coast ports from Asia down sharply due to the coronavirus, it stands to reason that railroads are beginning to feel an impact too, at least in terms of intermodal. It’s impossible to quantify that impact with precision.”

For the first 10 weeks of 2020, U.S. railroads reported cumulative volume of 2,323,120 carloads, down 6.2 percent from the same point last year; and 2,475,466 intermodal units, down 7.7 percent from last year.

Total combined U.S. traffic for the first 10 weeks of 2020 was 4,798,586 carloads and intermodal units, a decrease of 7 percent compared with last year.

“We’ve not seen the impact yet from the extended Chinese New Year volumes. But we expect to see this show up in our intermodal volumes over the coming weeks,” CSX CEO James Foote said at an investor conference in New York this week.

Foote said steamship companies serving China are optimistic that they will be able to return to normal operations once the coronavirus threat subsides.

Many sailings were cancelled due to the virus. Foot said CSX is ready to handle an expected surge in intermodal traffic once it comes.

Canadian Pacific Chief Financial Officer Nadeem Velani said at the same conference that international container volume will continue to falter into the second half of March and early April before recovering.

Velani expected as “quick recovery” as retailers and manufacturers restock their inventories, which have been depleted amid extended manufacturing shutdowns in China.

“We don’t see this as lost volumes,” Velani says.

Amendment Bans Importing Buses, Transit Vehicles From China

August 7, 2018

The U.S. Senate approved an amendment last week to impose a one-year ban on new procurements of mass transit rail cars or buses from China if the procurements use federal funding.

The amendment was attached to H.R. 6147, the second “minibus” package of appropriations bills for fiscal year 2019.

It prohibits new rail-car and bus procurements from companies owned or subsidized by China if the procurements use any Federal Transit Administration formula or bus funding.

The House has adopted similar language although the Senate language has been reported to be more precise by preventing the expansion of existing contracts executed prior to the date of the legislation’s enactment to include any more rolling stock vehicles or rail cars than were already in the contract.

The differences will need to be worked out in a conference committee.

AAR Warns Tariffs Would Harm Railroads

April 17, 2018

The Association of American Railroads is warning that tariffs on foreign goods could adversely affect U.S. grain exports, which in turn would be bad for Class 1 railroads.

 “For the industry whose job is to connect businesses, the integration of the global supply chain changed the game not just for our customers but also for how we run a railroad,” AAR said in a statement in response to the Trump administration recently announcing billions of dollars worth of punitive tariffs on Chinese-made products.

The administration has described the tariffs as a way to address what it terms unfair trade practices by China.

The tariffs on Chinese goods have not yet gone into effect and the threat of a trade war has sent stock prices plunging in recent weeks.

AAR released an analysis that showed international trade directly accounts for 42 percent of rail carloads and intermodal units, 35 percent of annual rail revenue, and 50,000 rail jobs worth more than $5.5 billion in annual wages and benefits.

“With ongoing trade posturing, much of the discussion of potential impacts has been narrowly focused on targeted commodities or whether the states where those goods are grown or produced went red or blue in 2016,” the AAR said. “Even when looking at a single commodity, the potential effect in a global market goes much deeper.”

Speaking of grain exports, AAR said farmers are accustomed to dealing with uncertainty due to weather or fluctuating prices and demand,  but “[t]hrowing questions about what foreign markets will resemble come harvest makes already challenging planting decisions even more fraught.”

AAR said that its members are caught in the middle in trying to plan for asset allocation “when they don’t know if their services will be needed.”

The AAR said rail revenue from grain totals more than $5 billion annually.

Mexico is the second-largest importer of corn whereas China purchases 62 percent of soy exports and 22 percent of sorghum exports.

Most agricultural products exported to China begin their journey in a rail car.

China Steam Focus of End of Year Dinner Program

October 4, 2015

Steam railroading operations in China will be for the focus of the Akron Railroad Club’s end of year dinner on Dec. 5.

Club member Peter Bowler will present China highlights, the Twilight of Work-a-day Steam in the World, which will feature images taken during his trip to China to record the last of steam operations.

The show will also highlight some of the cultural highlights aspects of Chinese society. “One cannot travel to China and ignore the vast differences compared to the west and USA,” Bowler said. “It is essential to understand culture to have insight into China.”

The end of year dinner will be held at the Beef ‘O’ Brady’s restaurant in Stow, the site of the previous end of year dinners.

Future details about the event will be provided at a later date.