Milling & Baking News - October 20, 2020 - 23

Transportation and Distribution

Rail freight rises with fall demand
Rail freight rates for grain and oilseeds
have reflected strong demand from the
fall harvest. The USDA noted that bids for
grain cars in the secondary market had
"increased significantly" in early September, when cars for October were bid
at $1,000 over tariff, up from $200 over in
May and early June and compared with
about $800 as the prior three-year average. Average October bids and offers in
the secondary rail car market for shuttle
trains were $981 per car above tariff in
the week ended Oct. 1, down $548 from a
week earlier but up $919 from a year ago.
In mid-October, some rail car auctions
were going without bids for NovemberDecember and January-March, according
to traders in the Southwest region.
Although down 1.7% year to date, US
grain rail traffic was one of the best performing of the 10 major sectors (excluding
intermodal) reported by the Association
of American Railroads. A total of 849,081
carloads of grain had been moved for the
year as of Oct. 3, which was the secondbest sector (tied with farm products and
food, excluding grain). In contrast, shipments of coal were down 27%, motor vehicles and parts were down 25%, and total carloads were down 15%. Intermodal
traffic was down 6% for the year. Grain
carloads during the week ended Oct. 3
were 26,534, up 35% from the same week
a year ago, by far the best performing sector for the week.
For the month of September total rail
carloads were 1,119,546, down 10% from
September 2019, while intermodal loads
were 1,423,883, up 7% year-over-year.
Grain carloads in September were up
28% from a year earlier, with grain mill
products up 4.7%.
"September 2020 was the fourth best
intermodal month in history for US railroads as retailers and others restocked
their inventories and prepared for the
holiday season," said John T. Gray, senior
vice president at the AAR. "Meanwhile,
rail carloads remained down in September compared with last year but showed
marked improvement compared with a
few months ago, especially if you exclude
coal (down 24%)."
Activity at BNSF Railway exemplified
the strong demand for grain freight.
"Operating teams are focused on aligning resources as effectively as possible
with higher freight shipment demand,"
BNSF said in a weekly update for agricultural products. "For the week ending Oct.
3, total volume on the network exceeded
200,000 units for the first time in 2020.
bakingbusiness.com / world-grain.com

Our local service compliance measure, reflecting efficiency in handling of carload
freight, continues to exceed 91%."
While railroads serving the Gulf region
experienced some negative effects from
hurricanes Laura and Delta, including
embargos, traffic mostly was restored
quickly.
In the grain regions, trade sources have
reported some but generally minimal delays so far this year in rail performance.
In Canada, meanwhile, railroads have
been moving record amounts of grain.
The Canadian National Railroad shipped
7.76 million tonnes of grain in the third
quarter, with September marking the
seventh consecutive month of record

are not seeing the surge in freight like
the consumer side of the economy. Fleets
hauling for retailers are generally seeing
strong freight volume. Carriers hauling
heavier industrial products generally
saw softer volumes in August."
The ATA index in April plunged 10%
from March at the start of the pandemic,
then slipped another 1% in May. The index then bounced back sharply in June,
rising 9% from May (the best month since
January 2013) as many states began to lift
coronavirus-related restrictions. But the
index again turned lower in July as manufacturing and international trade continued to lag retail volume and because
many fleets didn't have the capacity

year-over-year grain movement. The Canadian Pacific Railroad shipped 7.72 million tonnes of grain in the third quarter,
surpassing the previous record of 6.97
million tonnes set for the quarter in 2014.
As in the United States, harvest conditions in Canada have been favorable for
rapid progress, and consequently bulk
freight demand has been strong.

to take advantage of the stronger retail
freight demand."
Mr. Costello noted for-hire truck fleets
were operating 3% fewer trucks over the
summer compared with a year earlier.
The ATA forecasts total 2020 freight
volume to tumble about 11% from 2019,
with truck freight volume declining modestly less at down 9%. Truck volumes
were forecast to increase 5% in 2021.
In a Sept. 11 webinar, Credit Suisse analysts Robert Moskow, Allison Landry and
Kaumil Gajrawala noted that spot freight
prices were up 30% from a year earlier.
They cited a spike in truckload demand
in June and July, with a rising dry van
load-to-truck ratio signaling that demand
was outpacing supply.
"This is not a problem today for consumer staples companies, but it may
eventually lead to higher freight contract
costs in the coming months if conditions
remain tight," Mr. Moskow said.
Current freight demand was strong,
and capacity was tight, they said, adding

©ALEXEY SLYUSARENKO - STOCK.ADOBE.COM

©KAT7213 - STOCK.ADOBE.COM

without seeing adequate new demand to
utilize the additional capacity.

Truck freight sees high volatility
Truck freight demand and prices have
seen especially wide fluctuations this
year largely due to COVID-19.
The American Trucking Associations'
seasonally adjusted for-hire truck tonnage index in August fell about 6% from
July and 9% from August 2019 after declining 1.4% in July. The index year to
date was down 3.4% from a year ago.
"The August softness suggests that
freight is very uneven in the trucking industry," said Bob Costello, chief economist at the ATA. "The trucking sectors that
haul for industrial and energy industries

Milling & Baking News

October 20, 2020 / 23

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

Milling & Baking News - October 20, 2020

Table of Contents for the Digital Edition of Milling & Baking News - October 20, 2020

Milling & Baking News - October 20, 2020 - 1
Milling & Baking News - October 20, 2020 - 1
Milling & Baking News - October 20, 2020 - 2
Milling & Baking News - October 20, 2020 - 3
Milling & Baking News - October 20, 2020 - 4
Milling & Baking News - October 20, 2020 - 5
Milling & Baking News - October 20, 2020 - 6
Milling & Baking News - October 20, 2020 - 7
Milling & Baking News - October 20, 2020 - 8
Milling & Baking News - October 20, 2020 - 9
Milling & Baking News - October 20, 2020 - 10
Milling & Baking News - October 20, 2020 - 11
Milling & Baking News - October 20, 2020 - 12
Milling & Baking News - October 20, 2020 - 13
Milling & Baking News - October 20, 2020 - 14
Milling & Baking News - October 20, 2020 - 15
Milling & Baking News - October 20, 2020 - 16
Milling & Baking News - October 20, 2020 - 17
Milling & Baking News - October 20, 2020 - 18
Milling & Baking News - October 20, 2020 - 19
Milling & Baking News - October 20, 2020 - 20
Milling & Baking News - October 20, 2020 - 21
Milling & Baking News - October 20, 2020 - 22
Milling & Baking News - October 20, 2020 - 23
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Milling & Baking News - October 20, 2020 - 48
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