Insights - Winter Update 2014 - (Page 1)
Publication of Sosland Publishing Co.
Sponsored by INTL FCStone Inc.
"We're one weather event away from disaster"
KANSAS CITY - After 2013-14 delivered one of the worst winters
in decades - both weather-wise and transportation-wise - U.S.
and Canadian agricultural markets are approaching the 2014-15
winter with trepidation. Railroads' ability to transport recordlarge fall harvests, the availability of trucks to help pick up the
slack when the railroads fall short, the impact of weather on timely
shipment of grains, fertilizers, sugar, dairy and other products, and
high transportation costs in general are major concerns ultimately
facing everyone in the agricultural marketplace.
While the agriculture sector depends on trucks, railroads,
barges and ocean freight to move raw commodities, fertilizers
and milled and processed products, railroads continue to be the
focus because that is where the bottlenecks typically occur and
certainly have been most critical in the past year, despite massive
efforts by the railroads and increasing government intervention
to improve service. Trucks are most efficient and move the vast
majority of grain within 250 miles of origin with railroads the
major carrier and more efficient for longer distances. Barges
move the majority of grain to ports for export via river systems,
with railroads also a significant carrier of export grain to ports.
Export grain is shipped by bulk or container via ocean routes
to primary markets in Asia, Europe, Africa and South America.
It was early in the fall of 2013 that rail service issues began to
surface, coming on the heels of lower crop production in 2012
that limited grain transport issues. Key causes arguably included
heavier volume of coal, crude oil and intermodal rail shipments,
with surging crude oil shipments from the Bakken shale oil
region in North Dakota often singled out as the major culprit.
Demand for grain transportation also ballooned as the 2013
Canadian wheat and U.S corn harvests came in record high. The
final blow was severe winter weather that slowed rail transport
and resulted in abysmal performance in which railcars were
weeks and even months behind schedule, mills and processing
plants had to shut down on occasion due to the lack of coal to
power facilities, the lack of raw materials to process or the lack of
empty railcars to ship products out. Delays persisted into spring,
creating problems getting fertilizer to farmers ahead of planting
season. And the delays continue.
The rail delays cost the agricultural industry millions of
dollars, from lower prices received by farmers for their grain
Typical unexpected shifts in demand
and supply have lasted less than 20
weeks before they were resolved, the current
rail service problems have extended over twice
as long-about 58 weeks-with no
end in sight."
5/28/2015 9:13:04 AM
Table of Contents for the Digital Edition of Insights - Winter Update 2014
Insights - Winter Update 2014