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No Room at the Bin for U.S. Grain Amid BNSF Rail Jam

August 14, 2014
Railroad
  

With the start of the spring-wheat harvest in Arnegard, North Dakota, a week away, the bins on Bob Wisness’s 11,000-acre farm are half full with last year’s crops that have been stranded by a train traffic jam.

"With the railroad situation the way it is, it almost looks hopeless as far as catching up" for storage capacity normally at least 90 percent empty at this time, said Wisness, the president of the North Dakota Grain Growers Association.

BNSF Railway, owned by Warren Buffett’s Berkshire Hathaway Inc., and Canadian Pacific Railway Ltd. struggled with "greater-than-normal" demand from shippers of coal, oil and Midwest crops, the U.S. Department of Agriculture said last week in a report. Record-high grain and soybean harvests anticipated this year may exacerbate the squeeze in silo space.

Railroads in 2013 transported 75 percent of the wheat crop and more than half of the corn and soybeans from elevators in the Dakotas, Minnesota and Nebraska, according to a report by the Upper Great Plains Transportation Institute. This year has been an "exceptional" one for shipping hurdles, said Kurt Lensing, an assistant vice president and industry specialist at AgStar Financial Services in Waite Park, Minnesota.

As of yesterday, about 2,700 railcar orders were running an average of less than 17 days late in the U.S. compared with a peak in early April of about 16,500, John Miller, the group vice president for agricultural products at Fort Worth, Texas-based BNSF, said in a telephone interview.

 

‘Tremendous Improvement’

 

"We’ll be down to less than 2,000 past due by the middle of September," he said. "We’ll have covered virtually all of the old crop over the next several weeks and then the work flow becomes simply new cars. We think that’s a tremendous improvement."

At Berkshire’s annual shareholder meeting in May, Buffett acknowledged the jams on BNSF’s network triggered by a boom in shipments and harsh winter weather. The railroad has been working on improving service to meet demand, Matt Rose, BNSF’s executive chairman, said at the gathering.

As of July 31, Canadian Pacific, based in Calgary, reported 22,457 requests for grain cars in North Dakota that average 11.7 weeks late and 7,193 orders at 12.4 weeks behind in Minnesota, the USDA said in an Aug. 7 report.

The company said yesterday in an e-mail that it "is focused on ongoing improvement in the velocity of our trains and effective utilization of our railcar fleet in order to deliver more cars each week."

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