Insights - Winter Update 2014 - (Page 1)

insights Winter Agricultural Publication of Sosland Publishing Co. Transportation Update Sponsored by INTL FCStone Inc. "We're one weather event away from disaster" K 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." USDA 1 FCStone_Ezine.indd_3.indd 1 5/28/2015 9:13:04 AM

Table of Contents for the Digital Edition of Insights - Winter Update 2014

Insights - Winter Update 2014