Feds tell rail companies to fix rail delays for Upper Midwest farmers

By Robbie Webber

The Surface Transportation Board ordered BNSF and Canadian Pacific Railway to report their plans by April 18 to ensure delivery of fertilizer shipments this spring. The board also ordered the railroads to provide weekly status reports on fertilizer delivery for the next six weeks, beginning April 25. BNSF submitted their plan on Thursday, and Canadian Pacific assured the STB that it would be able to fulfill fertilizer contracts promptly.

Farmers and grain shippers have complained all winter that they could not get rail cars to ship grain. Farmers can’t move grain out of warehouses because the grain elevators can’t ship to markets. Some North Dakota farmers believe there is a good chance that this year’s crop will not be moved before the new crop has to go into storage.

At the same time, farmers reported to Washington that their fertilizer shipments were being delayed just as the critical spring planting season was starting. Some warned that fall harvest could be endangered if the delays were not solved quickly. The rail delays come on top of late ice on rivers, keeping barges from making deliveries as well.

Everyone agrees that increased oil shipments from North Dakota and a harsh winter have put a strain on rail lines, but suspicion abounds that rail executives are favoring the profitable oil trains over agricultural shipments. Rail executives denied this during the STB hearing, but Robert Zelenka, Executive Director of the Minnesota Grain & Feed Association, said, “This perception is reinforced when an elevator, that has been waiting months for delivery of grain cars, sees an oil train-a-day, go rolling past his facility.”

Even coal shipments to power plants are having trouble getting through. Both Xcel Energy and Minnesota Power reported problems getting rail deliveries for their plants. Although utilities like to have a 30-day supply of fuel on hand, an executive close to big utility companies reported, “The railroads tell us they aren’t serving power plants until their inventories are in single-digit days.”

The delays in moving agricultural products are rippling through the economy. Ethanol producers are feeling the pinch, since they are having trouble both getting corn to their plants and shipping fuel to the coasts. Soybean growers report that Chinese buyers are turning to other countries because of the inability of U.S. markets to deliver product. Agricultural shippers are turning to trucks to move freight. But even the trucking industry is having trouble keeping up, as they are also behind schedule after multiple winter storms kept them off the roads and salt deliveries increased.

BNSF blames the record snow falls for the delays, although they admit the oil shipments have also contributed to capacity problems. The exceptionally brutal winter delayed trains and also required shorter trains than usual across snow-swept plains states. They are also short of locomotives and staff to move cars, whether empty or full. In order to meet demand, BNSF is hiring workers, purchasing more locomotives, and laying track, even over still-icy ground. However, these upgrades will take time, and delays are expected to continue at least through spring. Significant increases in rail capacity could take years, and surging oil shipments could continue to cause problems for agricultural shippers for the foreseeable future.

Robbie Webber is a Senior Associate at SSTI.