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With harvest approaching, more pressure on freight rail carriers

 

 

By TIM ALEXANDER

Illinois Correspondent

 

WASHINGTON, D.C. — A June 20 federal Surface Transportation Board (STB) order requires Burlington Northern Santa Fe (BNSF) and Canadian Pacific (CP) railroads to provide ongoing information about what the Class 1 freight carriers are doing to address substandard rail service for grain orders.

While BNSF has been forthcoming in providing regular updates in accordance with the STB decree, CP has been lagging on addressing the needs of farmers, according to U.S. Sen. Heidi Heitkamp (D- N.D.). With harvest rapidly approaching, she called on CP to release more information on the extent of agricultural delays in her state.

"North Dakota farmers are rightfully concerned that railroad delays will hamper their ability this harvest season to store their crops and get them to market," stated Heitkamp, in a news release from her office last week. "The time to act is now, which is why I want Canadian Pacific to provide our farmers with an update on the status of agriculture shipments and recommit to getting issues with poor service resolved before this year’s crop is loaded into bins.

"Our farmers work too hard to produce high-quality foods to have their livelihoods threatened by inadequate transportation service."

Heitkamp noted while CP has released broad details about agriculture shipments, it hasn’t directly addressed the extent of delays in North Dakota. She is seeking answers from CP as to exactly what it is doing to resolve shipping delays that cost her state’s farmers an estimated $66 million from January-April, according to a recent North Dakota State University study.

Heitkamp sent a letter to CP President and CEO E. Hunter Harrison July 22 about the railroad’s performance regarding agricultural deliveries. "I am greatly concerned about the ability of the grain storage and delivery system to withstand further difficulty in accessing needed rail service to move grain to market," she wrote.

"If farmers and grain elevators are unable to move current inventories of agricultural commodities being stored at the elevators or in bins on the farm, there is a great possibility that insufficient storage space will be available to accommodate the coming harvest."

BNSF, along with the Red River Valley and Western Railroad Co. (RRVW), announced in July they had reached an agreement to provide unit train service to a proposed grain shuttle facility in Verona, N.D. The announcement was championed by Sen. John Hoeven (R-N.D.).

He said construction is expected to begin in October on the facility, which will be able to load 110- to 120-car unit trains and store approximately 1.2 billion bushels of grain in bins. It won’t be completed until next year’s harvest, however. "The agreement between BNSF and RRVW ... is an important step in our ongoing efforts to improve rail service in North Dakota, especially for our state’s farmers who rely heavily on trains," Hoeven said. "We continue pressing the railroad to eliminate backlogs and get our agriculture shipments moving for our producers."

South Dakota officials are also urging railroads to improve ag products service, according to ProgressiveRailroading.com. The rail industry organization reported Gov. Dennis Daugaard recently sent a delegation of state officials to meet with the STB to discuss ways to address rail service issues impacting grain deliveries.

"Our farmers and ranchers have the potential for record crops this year, but without rail shippers to deliver those commodities to the market, our producers won’t realize that success and our economy will be negatively impacted," he said.

Grain movements are not the only aspect of rail delivery of agricultural products to come under fire this year. The STB’s June 20 directive to BNSF and CP failed to address substandard rail service for ethanol deliveries, according to Growth Energy, which represents ethanol producers.

"Earlier this year, we saw ethanol supply dwindle and prices skyrocket solely because of the inability to get rail cars to ship product – even to the point of having many plants reduce production," said Growth Energy CEO Tom Buis, in a letter to the STB dated July 7.

"Ultimately, these service failures hurt the American consumer, as these costs are borne in the form of higher gasoline prices, which impact every segment of the American economy. We feel as though it is necessary for the board to immediately act to ensure that the railroads improve their service."

A recent ProgressiveRailroading.com member poll found about half its respondents stated they believe the reason behind the delay of agricultural shipments lies with the railroads’ failure to allocate enough resources to handle the volume of U.S. ag shipments.

7/30/2014