Posts Tagged ‘railroad grain traffic’

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.”

Grain Traffic Bright Spot for U.S. Railroads

September 21, 2016

The Association of American Railroads said that grain traffic by rail this year has been surpassing carload numbers from 2015, with grain carloads up by more than 26 percent to 22,599 carloads.

AARThis equates to more than 250 90-car unit grain trains per week.

AAR said the first two weeks of September have yielded higher volumes of grain shipments and that during August grain traffic averaged about 25 percent higher than during the same month last year.

Grain is one of the few commodity groups in which the AAR has been posting substantial traffic increases. Coal and energy-related commodities continue to tumble.

Overall U.S. rail traffic is down more than 5 percent in 2016 when compared to 2015.

U.S. Railroads Are Also Losing Grain Traffic

February 25, 2016

Add grain to the list of commodities that railroads aren’t hauling as much of anymore. But unlike coal the falloff in grain traffic is due to increasing levels of grain being hauled by trucks or coming from foreign lands.

Grain traffic is still a substantial market for railroads and in 2014 U.S. railroads carried 140 tons of grain.

train image2But bulk grain shipments to Gulf of Mexico and Pacific Northwest ports are falling as U.S. wheat continue to lose world market share.

The railroad share of grain hauling has declined by about 50 percent since 1980.

Last year U.S. railroads hauled 1.1 million carloads of grain, which the Association of American Railroads said is an increase of 3.4 percent over 2014. Nonetheless, grain traffic thus far in 2016 has fallen more than 4 percent.

“Our export volume is really taking a dip with the strong dollar and especially with the Argentine peso being devalued,” Randy Gordon, president of the National Grain and Feed Association, told Trains magazine. “These markets all basically trade in U.S. dollars.”

Argentina President Mauricio Macri ended export taxes on corn and wheat and let the peso float free from the official rate of fewer than 10 pesos to the U.S. dollar.

With the exchange rate of the peso now more than 15-1, Argentine products are now a better deal and buyers have taken notice.

Truckers, though, are not necessarily hauling grain to the Gulf or the Pacific Northwest for export.

Doug Story, vice president of agricultural marketing for regional rail operator Watco Companies, said the increase in the trucking of grains has been in local hauls.

The U.S. Department of Agriculture in 2013 reported trucks had captured market share away from railroads in corn grown for ethanol and soybeans hauled to biodiesel manufacturers.

USDA said that those industries usually are located close to farms with 90 percent of ethanol production situated within 50 miles of corn-producing areas.

Trains reported that although the ongoing concentration of animal feeding operations tends to favor railroads, an increasing portion of that market has gone to “dried distiller grain with solubles,” a by-product of ethanol production that can be hauled by truck.

However, Watco’s Story said there is “nothing crazy or outlandish with what’s going on here. It’s just market conditions, the value of our commodities relative to the rest of the world, and the strength of the dollar.”

When the market does turn, Story said, “the positive thing is we’re coming off a good harvest, and so we’re sitting on a tremendous supply for when the market is going to turn and allow product to move.”

Although not good news for railroad revenues, the downturn in coal and crude oil traffic has benefited the movement of grain by rail because track capacity is not as jammed as it was following the harvests of 2013 and 2014.

Add that to a brutal winter and moving grain by rail became a major challenge during those years.

“Virtually across the board they reported very few if any shipper issues,” Gordon said of last fall’s harvest and haul.

“Car availability is fine,” Story says. “If you look today at the Class 1s and how they’re moving [unit train grain] shuttles, they’re probably moving as fast as ever.”