(The following article by Stacie Hamel was posted on the Omaha World-Herald website on August 24.)
OMAHA, Neb. — Slowed service is worrying grain producers and processors who use rail transportation for their products.
That concern and others were raised during a two-day visit by Surface Transportation Board Chairman Roger Nober. He spent Monday and Tuesday touring grain-processing facilities in the Omaha-Council Bluffs area and talking with producers and railroad officials.
“The message was they want to be partners, not antagonists of the railroad, but they also need to be able to plan long term,” Nober said of producers and processors. “They realize they have to work together. That’s a message I’m going to take back to the carriers.”
Nober said the grain producers and processors requested that he visit to hear their concerns.
Five grain and feed associations, including Nebraska’s, criticized Nober in a July letter for what they called gratuitous compliments of railroads’ handling of grain shipments last year.
The associations sent a letter to Nober on July 6 that listed grain transport problems last year, including 40- to 50-day backlogs on railcars, incomplete railcar orders and delayed containers of agricultural shipments.
Officials from grain and feed associations in Illinois, Minnesota, North Dakota and Texas also signed the letter.
The associations were reacting to an earlier letter by Nober to the nation’s largest railroads requesting their plans for this year’s peak shipping season. In his letter, Nober stated that railroads handled unprecedented demand during last year’s peak season “without any significant degradation of system fluidity and performance.”
Nober said at the time that the statement was not a compliment but simply a statement of fact.
“The carriers handled the fall peak volume better than expected. That doesn’t mean there weren’t problems. There were. My letter acknowledged that.”
Fall harvest coincides with peak shipping season for holiday products, making it traditionally the busiest and most congested time of the year for railroads.
“Agriculture is feeling the general congestion of the carriers,” Nober said, but he added that he doesn’t expect major problems during peak season.
So far in 2005, Union Pacific Railroad’s grain car loadings were down 8 percent as of the week ending Aug. 13, compared with the same period in 2004. For just the week ended Aug. 13, grain car loadings were up 2 percent compared with the same week last year.
Grain car loadings for BNSF Railway were up 1.96 percent for the year so far and 7.47 percent for the week ended Aug. 13.
Nober said one concern he heard this week was the amount of time railroads are taking to return empty grain cars so they can be refilled and shipped out again.
“Many agriculture producers own a lot of cars, and they’re feeling a deterioration in turn times,” he said.
The tour was a good reminder, he said, of the importance of rail capacity and efficiency to agriculture’s ability to be profitable.
Capacity remains a concern as shipping demand continues to increase.
“Carriers are investing more in capacity but not enough to keep up with demand,” he said.
With capacity tight and demand high, railroads have raised rates, intentionally forcing some rail customers to seek other transportation.
“The question isn’t whether they can find alternatives. The question is at what price,” Nober said.
Rising transportation rates could force some out of business.
“No one wants to see that,” he said.
Rate increases can be especially difficult for agriculture producers who base their business on the futures market.
“They lock in prices a long time in advance, and (shipping) price increases make it difficult to plan,” he said.