By TIM ALEXANDER
Illinois Correspondent

ANKENY, Iowa — A recently-released study from the Soy Transportation Coalition (STC) has soybean producers and shippers upset at what the STC’s study calls “potentially excessive” rates for soybean transport via rail, being charged by the nation’s largest railroads.

The STC, along with the U.S. Senate Commerce Committee, which passed the Surface Transportation Board (STB) Reauthorization Act (S.2889) in December, seeks changes in federal law and policy that would require railroads to provide more competitive pricing and reliable service.

“There needs to be a way for railroads and the soybean industry to achieve a better balance so that one is not profiting at the expense of the other,” explained Mike Steenhoek, STC executive director, recently following the study’s release.

Nearly half of all rates for soybeans carried by the United States’ largest railroads are at levels classified as potentially excessive, according to the STC study, accounting for some $120 million in potential overcharges.

Shipping rates that are in excess of 180 percent of a railroad’s variable cost of transport can be classified as excessive and could be subject to the jurisdiction of the STB, according to Gary Wulf, of Dow Jones Newswire.

Freight rates at least that high were applied on 43 percent of all soybeans moved by Class 1 railroads in 2008, the study revealed.
Those costs are shifted to farmers through lower basis, Roy Bardole – an Iowa soybean grower and vice chair of the United Soybean Board’s marketing program – told Wulf.

Revenue among the largest railroads for transportation of soybeans and soy products has nearly tripled from 1998, according to the study, which identified Burlington Northern Santa Fe Corp. as the carrier of the largest volume of soybeans and Union Pacific Corp. (UNP) as the largest transporter of soymeal and soy oil.
A Dec. 14, 2009, news release from UNP, which links 23 states in the western two-thirds of the country, stated the company set a personal record for moving loaded agricultural unit trains in the previous month.

Of the 400 ag unit trains moved in November 2009, 338 were grain and soybean unit trains and 62 were grain product trains.
“With record crop production levels, we knew this would be a busy year,” stated Paul Hammes, UNP vice president and general manager.

“Every area, from operating to engineering to our dispatch center, was ready for the challenge and provided peak service levels for our customers.”

Tom Lange, UNP spokesman, issued the following statement to Farm World regarding the STC report on rail freight rates for soybeans and soy products: “While Union Pacific does not agree with some of the study’s assertions, we have open communications with the (STC) and really prefer to continue to work directly with the STC, rather than publicly debate the study’s results.”
A similar call for comment to CSX Transportation Corp., another of the nation’s biggest railroads, was not returned by press time.
The STC study, Railroad Movement of Soybeans and Soy Products, may be accessed at www.soytransportation.org

RR CEOs’ assertions refuted

Recent criticism leveled by the CEOs of CSX and UNP at the Senate Commerce Committee for its passage of the STB Reauthorization Act prompted Robert Szabo, executive director of CURE (Consumers United for Rail Equity, a coalition of freight rail customers), to issue a statement refuting some of the CEOs’ assertions.

“Statements by the CEOs of a couple of the major freight railroads seem to have been made with the intent to undermine the pro-consumer, bipartisan compromise legislation embodied in S. 2889,” said Szabo.

“These statements are surprising because they are being made within a month of the bill being reported from committee, without objection by the freight railroad industry, and disappointing because nothing about the legislation has changed.”

Szabo said the committee worked for 10 months to consider the concerns of all parties involved and that the final product is proposed legislation that allows railroads to maintain “pricing freedoms” while ensuring rail customer access to competing freight railroads. In addition, stock of major freight rail companies continues to be viewed favorably by investors, according to Szabo.
“The Senate should move quickly to pass this bipartisan legislation in 2010,” he concluded.

According to the STC and Steenhoek, the bill will likely be modified as it is considered by the full Senate in 2010. Modifications could include language amending the rail industry’s limited antitrust exemptions.

It is also expected that the House Transportation and Infrastructure Committee, chaired by Rep. James Oberstar (D-Minn.), will produce its own version of the rail reform bill in 2010. The House and Senate versions of the bill would ultimately need to be reconciled before a final version is voted upon.