Canadian Pacific and Kansas City Southern Propose Merger
Earlier this week, Canadian Pacific Railway (CP) and Kansas City Southern Railway (KCS) notified the Surface Transportation Board (STB) of their intent to merge.
The two railroads anticipate filing their formal application to STB on or shortly after June 28, 2021. STB has jurisdiction over railroad mergers. In a statement, STB Chair Martin Oberman said the agency will review the proposed transaction carefully, commit to move forward expeditiously, and create opportunities for public participation and stakeholder comments.
If approved, the proposal would be the first merger between two Class I railroads in over two decades.
USDA Cooperative Research Examines Preferences for Rail vs. Barge on Mississippi River System
USDA’s Agricultural Marketing Service recently published a synopsis of a study conducted in cooperation with the University of Oregon. The researchers studied the relationship between preferences for barge and rail transportation among Midwest corn shippers.
The analysis measured how a given shipper’s preference for each mode changed as the shipper’s distance to the waterway changed. Of movements originating near the Mississippi River network, nearly all barge shipments and about a quarter of rail ended in the Louisiana Gulf.
Preference for barge was found to be strongest for shippers closest to a waterway and fell to approximately zero for shippers beyond 175 miles from the waterway.
Export Sales of Corn and White Wheat Remain Strong
According to USDA’s Foreign Agricultural Service’s most recent data, net total U.S. corn export sales were close to 1 million metric tons (mmt) for the week ending March 11, the largest weekly volume since February 11.
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China purchased a total of 3.076 mmt of U.S. corn on March 16, 17, and 18. Respectively, these sales represented the second-, third-, and fourth-largest single-day U.S. corn sales volumes for marketing year (MY) 2020/21.
At 4.4 mmt, total U.S. white wheat sales for MY 2020/21 are at a 10-year high for the week ending March 11. Chinese demand for white wheat (for feed and milling use) is the most robust it has been since 2010.
Although export sales commitments are subject to cancelation, the strong volume of reported sales is unusual for this time of the year. The strong volume could point to higher transportation demand in the coming months, if the unshipped export balances materialize as deliveries.
Snapshots by Sector
Export Sales
For the week ending March 11, unshipped balances of wheat, corn, and soybeans totaled 43.1 mmt. This was 4 percent lower than last week, but still represented a significant increase in outstanding sales from the same time last year.
Net corn export sales were 0.986 mmt, up significantly from the past week. Net soybean export sales were 0.202 mmt, down 42 percent from the previous week. Net wheat export sales were 0.390 mmt, up 18 percent from the previous week.
Rail
U.S. Class I railroads originated 23,939 grain carloads during the week ending March 13. This was a 9-percent decrease from the previous week, 20 percent more than last year, and 17 percent more than the 3-year average.
Average April shuttle secondary railcar bids/offers (per car) were $217 above tariff for the week ending March 18. This was $233 more than last week and $142 more than this week last year. There were no non-shuttle bids/offers this week.
Barge
For the week ending March 20, barge grain movements totaled 722,820 tons. This was 11 percent lower than the previous week and 29 percent higher than the same period last year.
For the week ending March 20, 463 grain barges moved down river—49 barges fewer than the previous week. There were 767 grain barges unloaded in New Orleans, 10 percent fewer than the previous week.
Ocean
For the week ending March 18, 37 oceangoing grain vessels were loaded in the Gulf—54 percent more than the same period last year. Within the next 10 days (starting March 19, 2021), 56 vessels were expected to be loaded—47 percent more than the same period last year.
As of March 18, the rate for shipping a metric ton of grain from the U.S. Gulf to Japan was $60.25. This was 4 percent more than the previous week. The rate from the Pacific Northwest to Japan was $35.00 per metric ton, 8 percent more than the previous week.
Fuel
For the week ending March 22, the U.S. average diesel fuel price increased 0.3 cents from the previous week to $3.194 per gallon, 53.5 cents above the same week last year.
