A U.S. Farm report viewer sent in a question about the nation’s rail system.
Kevin Boerson from Kalamazoo, Mich., had this question for Customer Support:
“My question concerns the rail system in United States, as it pertains to delivering corn and grain, to shipping ports, from all places around the country. I was wondering if we are improving the rail system as in updating sidetracks and loading facilities, so we can move more grain at a faster pace, and not get behind during shipping season. Are we upgrading the rail system or are we using the same tracks and system we have been using for the last 50 years?”
For a developed country as large as the US, we are almost unique in our lack of robust rail capabilities. It’s most apparent for passenger travel, of course, but that dwindling demand affects our rail freight system as well. The key driver is the American emphasis on roads over rails. For instance, when we talk about upgrading our infrastructure, we invariably use the phrase “roads and bridges” – not railroads.
Trucks carry 40% to rail’s 28% of US Freight. About half of all rail shipments are commodities. Of that 52 percent here is a somewhat outdated division of commodity shipments from 2014. Farm products are only 8% of that half. From a railroad management point of view, the enormous cost of laying new track or even upgrading existing track that serves ag commodities doesn’t look like a money maker.
Overall rail freight is flat or slowly declining as well. The other problem for railroads is the seasonality of grain shipments due to harvest timing, unlike the steady flow of coal, for example. Location also plays a role. We have acceptable freight service in my area, as our corn is largely shipped to southeastern livestock buyers, in large quantities year-round.
As more corn in grown in former wheat country, shipping will become more problematic. Unlike other countries, US railroads are regulated but privately owned and receive much less government support.
I’ve met few farmers who think their elevators have enough rail service, especially at harvest. On the whole, the system is managing but has little spare capacity to handle extreme shipping volatility like droughts or perversely surprisingly large harvests.
With coal freight likely to decline, the probability of more and better rail will decline with it.
You can also read more of John’s U.S. Farm Report commentaries.
