Milling & Baking News - October 18, 2022 - 21

chains, including railroads.
A President's Emergency Board (PEB) laid
out a plan for wage increases and set a Sept.
15 deadline. As it drew near without agreement,
some unions were set to strike and
members of other unions were expected to
take part in a work stoppage of solidarity,
halting the flow of materials into a broad
range of industries and creating a bottleneck
of imported products at ports. At the
eleventh hour, union officials gave their tentative
approval to a handshake deal similar
to the one suggested by the PEB, including
an approximate 24% in wage increases over
five years retroactive to 2019.
US railroads quickly undid pre-strike
preparations within a week. For shippers
loading hard red winter wheat in the
central and southern Plains, placement
of cars at elevators quickly caught back
up and resumed a late summer trend of
improved overall performance. Union
Pacific refurbished and returned to
service 200 rail cars, a wheat trader told
Milling & Baking News in late September.
So improved were rail car placements at
origins, another broker caught up on contractual
obligations for the first time in
eight months and was able to sell unused
rail cars in the secondary market when
millers, flush with supplies and cognizant
of potential demurrage charges, were
not amenable to accepting October wheat
early. Wheat shipments by rail remained
timely into the early fall even as corn and
other row crop harvests expanded.
Meanwhile, traders and analysts in the
northern Plains/Upper Midwest spring
wheat area said train movement was
merely adequate.
" We're not hearing complaints about
not getting cars, " a veteran analyst said.
" A shipper said this morning (Oct. 11)
BNSF performance was at a 7 on a 1-to-10
scale. What we are hearing is complaints
about spiking freight costs. "
Rail prices in the fourth quarter have
varied widely. Plains shippers in the first
week of October found single cars offered
around $200 a car over tariff drew no bids,
but below-tariff offers did. In the case of
shuttle trains, the situation was reversed.
Shippers hoped to take advantage of the
110-plus-car trains to help transport grain
while barges in the low-water Mississippi
River faced loading limitations necessary
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to avoid grounding. But BNSF and Union
Pacific shuttle trains were being bid up to
$2,000 per car over tariff with no offers or
were offered as high as $2,300 per car with
no bids for last-half November.
" At those prices, sellers out in the country
aren't buying any freight they don't
have to, " the analyst said.
Prices could shoot higher in the event
a strike were delayed rather than forestalled.
By Oct. 10, four labor organizations
had ratified agreements to resolve
the national bargaining round and seven
other labor organizations had tentative
agreements subject to ratification, the
National Railway Labor Conference
(NRLC) said. The third-largest union
representing rail workers, the Brotherhood
of Maintenance of Way Employees
Division, rejected the tentative deal with
only 43% of the 12,000 members who voted
approving it. But for now, that union and
railroads have agreed to maintain the
status quo, so the failed ratification " does
not present risk of an immediate service
disruption, " the NRLC said.
US rail traffic in 2022 through Oct.
1 totaled 19,278,856 carloads and intermodal
units, down 2.7% from the same
period in 2021, including 10,259,554
intermodal units, down 5.1%, and 9,019,302
carloads, up 0.1%, according to the AAR.
Of the carload total, grain accounted for
851,497 cars, down 4.6%. In comparison,
grain carloads on Canadian railroads
totaled 276,976 units year to date, down
19%, and Mexican grain carloads were
65,661 units, also down 19%.
BARGE RATES SOAR
Barge freight rates on the Mississippi
River soared to record highs in late September.
" The
barge industry has had to balance
a tight supply with increased demand
throughout the year, " the US Department
of Agriculture said. " During the winter,
severe storms and icy conditions limited
barge traffic on the Upper Mississippi
River. In the spring, rising coal exports
to replace reduced Russian coal and gas
from the war in Ukraine - along with high
water levels - reduced barge capacity and
increased demand for the use of barges. In
the summer, hot temperatures throughout
the Midwest and low river levels in the
MILLING & BAKING NEWS 21
lower Mississippi River led to draft and
tow reductions. At the same time, the barge
industry, like the rail industry, has struggled
to hire and retain workers. "
Barge freight rates have increased since
early August. As of Sept. 27, the barge rate
for export grain at St. Louis was a record
high 1,250% of tariff at $49.88 per ton, up
58% from a year earlier and 95% above the
five-year average, according to the USDA.
The surge comes as the Midwest corn and
soybean harvests were gaining momentum,
and grain movement to terminals for
shipping down river typically increases.
More than half of US corn and soybean
exports move down the Mississippi River.
Year-to-date (through Sept. 24) downbound
grain volume on the Mississippi
River was 23.9 million tons, down 10%
from a year earlier and 4% below the fiveyear
average, according to USDA data.
The number of barges unloaded in New
Orleans since the first of September was
down 39% from the five-year average.
There were mixed signals for barge
freight during the fall harvest and into 2023.
" The tight barge supply is problematic
for grain shippers heading into harvest, "
the USDA said. " Unless barge supply
improves, the increased demand for
barges from grain shippers during harvest
will likely put even more upward
pressure on barge rates. "
At the same time, the USDA noted 2022
corn and soybean production forecasts
were lowered by the USDA in September,
and 2022-23 export forecasts are down 8%
for corn and 3% for soybeans from 2021-22.
" Lower production and reduced exports
will both translate into lower grain
demand for rail and barge, which should
make harvest transportation demand
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Milling & Baking News - October 18, 2022

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