For the week ending September 4 , total inspections of grain (corn, wheat, soybeans) from all major export regions reached 1.91 (mmt), up 12 percent from the past week, up 60 percent from last year, and 37 percent above the 3-year average.
Grain inspections were also the highest since May 8, 2014. This marks the first week of the new marketing year for corn and soybeans and their respective inspections jumped 39 and 334 percent from the previous week. Increased corn inspections, shipped primarily to Asia and South America, helped Pacific Northwest and Mississippi Gulf grain inspections rebound from the past week.
During the last four weeks, ending August 28, outstanding sales for corn and soybeans remained well above the same time last year.
Senate Commerce Hearing on Rail Service Issues
On September 10, the Senate Committee on Commerce, Science and Transportation held a hearing titled “Freight Rail Service — Improving the Performance of America’s Rail System.”
The focus of the hearing was on rail service issues, including congestion and delays of grain shipments, as well as locomotive and railcar shortages. During the hearing, stakeholders discussed the impacts the rail service issues have had on various industries and the economy. USDA provided comments at the hearing on how the past year’s rail service problems have affected agricultural producers through inadequate service and lost revenues.
USDA also expressed concern over rail service problems continuing into the 2014 harvest.
STB Finds Five Class I Railroads Revenue-Adequate in 2013
The Surface Transportation Board (STB) determined that five Class I railroads — BNSF Railway, Canadian National (Grand Trunk Corporation), Norfolk Southern, Canadian Pacific (Soo Line Corporation ), and Union Pacific Railroad — were revenue-adequate in 2013, meaning they achieved a rate of return equal to or greater than the STB’s calculation of the average cost of capital to the freight rail industry.
This represents a significant milestone for the rail industry; since 1996, no more than three Class I railroads have ever been found revenue-adequate in any given year. In 2012, the STB found only three railroads were revenue-adequate — BNSF, Norfolk Southern, and Union Pacific. The STB is currently holding a proceeding (STB Ex Parte 722) to explore the methodology for determining railroad revenue adequacy, calculating the railroad industry’s cost of equity capital, and the use of revenue adequacy in rate reasonableness cases.
National Grain Car Council Looking at 2014 Harvest
On September 11, STB is held its annual National Grain Car Council (NGCC) meeting in Minneapolis, MN, to discuss railroad preparedness to transport the 2014 grain harvest.
The NGCC was established by the former Interstate Commerce Commission in 1994 as a working group to facilitate private-sector solutions and recommendations to the ICC — which was re-established as the STB in 1996 — on matters affecting rail grain car availability and transportation. The NGCC’s more than 40 members include representatives from Class I railroads, regional railroads, short lines, rail-car lessors and manufacturers, and grain shippers and receivers.
Snapshots by Sector
- Rail U.S. railroads originated 19,474 carloads of grain during the week ending August 30, up 4 percent from last week, 13 percent from last year, and 8 percent from the 3-year average. During the week ending September 4 , average September non-shuttle secondary railcar bids/offers per car were $1,033 above tariff, up $433 from last week and $958 higher than last year. Average shuttle secondary railcar bids/offers per car were $1,143 above tariff, up $25 from last week and $943 higher than last year.
- Barge During the week ending September 6, barge grain movements totaled 283,854 tons — 60.3 percent lower than the previous week but 13.5 percent higher than the same period last year. During the week ending September 6, 179 grain barges moved down river, down 60.8 percent from last week; 576 grain barges were unloaded in New Orleans, up 21.5 percent from the previous week.
- Ocean During the week ending September 4, 30 ocean-going grain vessels were loaded in the Gulf, 3 percent less than the same period last year. Forty-nine vessels are expected to be loaded within the next 10 days, 14 percent less than the same period last year. During the week ending September 5, the ocean freight rate for shipping bulk grain from the Gulf to Japan was $46.50 per mt, up 1 percent from the previous week. The cost of shipping from the PNW to Japan was $26 per mt, unchanged from the previous week.
- Fuel During the week ending September 8, U.S. average diesel fuel prices were unchanged from the previous week at $3.81 per gallon — down 17 cents from the same week last year.
