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Summary and Comments

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Category: 

Shipping_and_Transportation

Date: 

1997-11-13 14:18:55

Subject: 

USDA Reports on Grain Shipment Problem

Comment: 

The 1997 crisis of Union Pacific Railroad is now a factor in US grain shipments. Here is a recent United States Department of Agriculture report. It says that part of the problem has to do with incompatible computers.

* * * * * * * * *

Rail Problems Disrupt Marketing Flows by Jerry Norton, Agricultural Marketing Service/USDA; (202) 720-4211

Rail shippers in many parts of the Nation have been experiencing serious shipment delays and service disruptions since late summer. The impact of the current problems varies substantially from region to region and market to market. Grain shippers in the lower Plains and western Corn Belt have been especially hard hit by these problems. Western livestock and poultry feeders that depend on rail shipments of feed grains from these areas have also had to struggle to secure sufficient feed supplies to maintain their herds and flocks. As the fall harvest enters its last weeks, additional grain moving in from the fields could mean that any significant improvement in the current situation is still weeks away.

The service problems now plaguing many grain shippers in the western United States began in July on the Union Pacific (UP) in and around the Houston market. The initial problems appear to have stemmed from stronger than anticipated intermodal and petrochemical demand combined with UP's efforts to consolidate its operations with those of the Southern Pacific Railroad (SP). These problems were further exacerbated by the unexpected large winter wheat harvest in the southern Plains. The 1997 U.S. winter wheat crop was up 27 percent from last year.

Among the factors contributing to the UP-SP consolidation problems were incompatibility of computer systems between the railroads, unsettled labor agreements that restricted crewing flexibility, and lack of adequate locomotive power to move trains. To some extent the shortages of locomotive power reflect long-term operating problems inherited from the cash-strapped SP which UP acquired last year. With the fall harvest and increased demand for grain transportation, the UP's troubles have quickly spread to other areas and other railroads, especially the Burlington Northern Santa Fe (BNSF).

The current rail service problems are substantially different in nature than the types of equipment shortages and service delays that shippers have routinely experienced following many recent harvests. Since early September, grain car loadings on the major railroads have averaged 23,250 cars per week (3,200-3,400 bushels per car). This is down nearly 20 percent from the average weekly loadings during the same period in 1995 when many shippers in the western Corn Belt and upper Plains experienced serious equipment shortages and service disruptions.

Grain traffic on the three major western U.S. railroads--the Burlington Northern Santa Fe, Kansas City Southern (KCS), and UP--is also down this fall as compared with 1995 traffic. Since September, only the KCS has had average weekly grain loadings higher than their 1995 level. Increased grain traffic on the KCS, part of which is the result of rerouting from the UP, has done little to increase the overall level of loadings on the western railroads. Weekly loadings on these carriers are averaging 16,300 cars per week, down 17 percent or nearly 3,500 car loads per week from the same weeks in 1995.


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