Rail car shortage a ‘perfect storm’ for ag users

North Dakota Farmers Union (NDFU) President Mark Watne met with North Dakota’s congressional delegation and BNSF officials Tuesday in Washington, D.C., to discuss the lack of railcars at grain elevators.

Posted 2/12/14

North Dakota Farmers Union (NDFU) President Mark Watne met with North Dakota’s congressional delegation and BNSF officials Tuesday in Washington, D.C., to discuss the lack of railcars at grain elevators.

“Based on our research, availability of railcars has significantly delayed shipping by as much as 40 days,” said Watne. “These delays have triggered penalties by end users of 5 to 10 cents a bushel per day, costs that elevators are directly passing on to farmers.”

NDFU believes railcar delivery problems are linked to the railroad industry’s prioritization of cars for oil, coal, and container shipments over agricultural products.

The state’s extremely cold weather pattern has also impacted rail movement by requiring more horsepower and shorter train lengths to prevent airline freeze up.

“Even though BNSF told us they are making attempts to harmonize ag and oil shipments, it appears that ag has fallen down on the list of priorities,” Watne.

“Railroads need to provide quality, reliable service to their customers,” said Sen. John Hoeven said. “Our state and our economy are growing, which means our railroads need to devote more resources to move our people and goods safely and reliably.”

With an estimated 85 percent of the 2013 corn crop either in on-farm or warehouse

storage, there is a valid concern that it won’t be moved in time for the new crop to be stored, Watne said. “This could create huge problems down the road. Add in oil trains and track construction and you’ve got the makings of a perfect storm.”

NDFU also expressed concern to BNSF that the prioritization of agriculture exports and lack of horsepower has unfairly impacted the secondary market for railcars.

Watne said that the rail industry sells the right to elevators to receive cars on a given date in the primary market. If an elevator does not need cars, it can sell them in the secondary market. When supply of cars is tight, cars are sold at a premium.

“We’ve heard up to $4,000 recently,” he said, “when it usually is around $300 a car.”

“We need pressure on the rail industry to service agriculture,” he emphasized, in acknowledging Sen. Hoeven’s efforts to coordinate the meeting with BNSF officials. “Rail is our primary way to move ag products out of this state.”

 


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