(The following story by Art Hovey appeared on the Lincoln Journal Star website on September 28, 2009.)
LINCOLN, Neb. — Twenty years ago, the hopper car shortage had gotten so severe in Nebraska at harvest that railroads were accusing grain elevator managers of placing “phantom orders” for two or three times the cars they needed.
There’s no better evidence of the 2009 contrast than the chipper recorded voice of a Burlington Northern Santa Fe executive.
“Just place your order today,” Kevin Kaufman, group vice president for agricultural products, says in a BNSF podcast, “and we can be there right away.”
The reasons for such a transformation in responsiveness include the efficiency of shipping virtually all grain from a much shorter list of departure points and unit trains of 80 to 100 cars.
The proliferation of ethanol plants near grain origination outlets also has cut down on railroad’s long-haul business.
But the biggest reason, as farmers begin work on what’s expected to be a bin-buster harvest, may be that the rail-freight business is faltering badly in just about every other category.
“That is pure market-driven and that’s the economy and that’s all sectors,” Mark Davis said Monday from Union Pacific’s Omaha headquarters. “For us, the agricultural side of the market has not lost as much as the others.”
For example, the latest figures from the Association of American Railroads show shipments of lumber and wood products are off 37 percent so far this year.
The previously bustling category of “piggy-backed” trailers riding on rail cars is off 35.2 percent. And motor vehicles and related equipment are down 43.9 percent.
While this is not good news for railroads, the relatively ample supply of rail cars is one less thing for grain elevator managers to worry about.
“All I know is that we’re getting trains more timely,” said Randy Robeson of the Frontier Co-Op in Brainard.
That allows for prompt dispatch of grain shipments from the six Frontier locations with sidings big enough to accommodate 100-car trains.
Pat Ptacek of the Nebraska Grain and Feed Association said railroads used their rate structures as an incentive for elevators to invest millions in their loading infrastructure. One result, he said, is “a very small concentration now of unit and shuttle loaders throughout the state.”
How much grain business railroads will get in the early weeks of the 2009 harvest remains to be seen.
One factor is that the annual grain-gathering ritual is off to a slow start. Only 7 percent of soybeans had been harvested as of Sunday. Normal is 14 percent.
Three percent of corn was out of the field, compared to the normal 9 percent.
Prices are also at the comparatively low levels that often cause grain to stay in storage.
That could mean a storage pinch that has nothing to do with shipping headaches.
Tim Mehl, a federal grain warehouse official based in Kansas City, said requests for emergency storage permits there, the usual route to outdoor grain piles, “are up at this time and this goes across several states.”
Between them, Nebraska and Kansas account for more than 50 million of the approximately 99 million bushels requested so far across the United States.
The Kansas tally, as of Monday, is up from 12.5 million bushels last year to 29.2 million.
John Fecht, Mehl’s counterpart with the Nebraska Public Service Commission, said the pace is slower there in late September.
But “it’s going to be a big year,” Fecht said. “Guys are just not getting their requests in yet.”