Milling & Baking News - October 9, 2018 - 25

Transportation and Distribution

locomotives over a three-year period,
hiring and training 1,250 new conductors prior to the winter of 2018-19, and
spending $3.5 billion on capital expenditures such as line upgrades and double tracking to improve rail capacity.
BNSF, the largest U.S. rail mover
of grain, has taken 1,150 locomotives
out of storage and is expanding tracks
on two major routes and hiring 4,500
crew members, Sam Sexhus, group
vice-president of agricultural products
at BNSF, said earlier this year.
In his weekly podcast update on
Sept. 28, Mr. Sexhus said the railroad
continued to move robust freight
volumes on the network, with most
metrics for the week ended Sept. 27
improved from a week earlier but still
trailing year-ago levels. Total trains
held for the week dropped by 15%
from a week earlier but were up 63%
from a year ago, car velocity (miles per
day) was up 3% for the week but down
7% from last year, train velocity (miles
per hour) was up 6% for the week but
down 6.5% for the year, trains on the
system were down 1% for the week
but up 12% for the year, and terminal
dwell was up 2% for the week and up
6% for the year.
Union Pacific, while adding cars and
making adjustments similar to other
railroads, in September announced its
new operating plan called Unified Plan
2020 for phased-in implementation as
of Oct. 1. The plan seeks to apply "precision scheduled railroading" (P.S.R.)
principles, a highly controversial plan
implemented early in 2017 by CSX that
was the brainchild of the late Hunter
Harrison, who also implemented P.S.R.
principles while heading Canadian National and Canadian Pacific railways.
While P.S.R. was credited with cutting
costs and vastly improving railroad efficiency and financial results, the program often was despised by shippers,
at least in early stages.
When CSX implemented the plan
last year, it drew sharp ire from grain
and other industries because of major
service deterioration, among other issues, ultimately resulting in the U.S.
Department of Transportation's Surface Transportation Board stepping in
to monitor the process. Under the plan,
Union Pacific hopes to shift focus from
moving trains to moving cars, minimizing car dwell and improving crew
and rail asset utilization. Union Pacific
said it would have weekly calls to update the S.T.B. on operating changes
and customer impact.
Overall, freight rates for unit and
shuttle trains in September mostly
bakingbusiness.com / world-grain.com

were higher from a year ago, according to the U.S.D.A. Unit train tariff
plus fuel surcharges for wheat ranged
from $1.11 to $1.94 per bu, up 2% to
6% from last year, for corn 58c to $1.60
per bu, up 1% to 11%, and for soybeans $1.18 to $1.75 per bu, up 5% to
19%, all depending on origin and destination. Shuttle train freight and fuel
rates for wheat were $1.10 to $1.70 per
bu, up 2% to 6%, for corn were 93c to
$1.26 per bu, flat to up 11%, and for
soybeans were $1.18 to $1.65 per bu,
up 3% to 9%.
Grain freight demand remains strong
China typically buys mainly from
Brazil during the summer months
(when U.S. soybean supplies are lowest) and returns to the U.S. market in
the fall and winter months as the new
U.S. crop becomes available, although
U.S. shipments of corn and soybeans
(to all destinations) set monthly records over the summer, while wheat
shipments struggled against lower-priced Black Sea region supply.
However, total soybean export sales
commitments to China as of Sept. 13
totaled 1,454,000 tonnes, down 83%
from the same period last year. China
has been forced to seek supply from
other origins, with Brazil also setting
export records in recent months.
For 2018-19, the U.S.D.A. projects the
combined production of corn, wheat
and soybeans at 21,397 million bus,
up 3.2% from 2017-18, with soybeans
record high at a time when the largest U.S. export market for the crop is
in major limbo. Combined exports at
5,485 million bus are projected up 1.4%
from last year based on higher wheat
shipments more than offsetting slightly
lower corn and soybean exports.
Old-crop soybean stocks on Sept. 1
totaled 438,105,000 bus, up 45% from
a year earlier and above trade expectations. Sept. 1 corn stocks were up
7%, and all wheat stocks were up 5%,
the U.S.D.A. said in its Sept. 28 Grain
Stocks report. The soybean harvest in
the 18 major states was 23% completed
as of Sept. 30, ahead of 20% both last
year and as the 2013-17 average for the
date. And November soybean futures
in Chicago were $8.66 a bu as of Oct. 2,
up 7% from contract lows set Sept. 18
but down 18% from the recent high of
$10.60½ a bu on May 29.
"U.S. transportation demand for
grain could be affected (during harvest) if soybean prices continue to
fall and farmers decide to store more
grain," the U.S.D.A. said. MBN

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- Ron Sterk
Milling & Baking News

October 9, 2018 / 25

http://www.ADM.com/milling http://www.bakingbusiness.com http://www.world-grain.com

Milling & Baking News - October 9, 2018

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