The transportation of grain from country grain elevators to food processing centers
should be easier this year than in past years.
In recent years, farmers found it difficult to move their grain due to a shortage of trains, specifically a shortage of locomotive engines.
However, that is not the case this year. According to Mike Steenhoek, the Executive Director with
the Iowa Soy Transportation Coalition, says the reason why is that rail cars and trains are more readily available.
“Well, fortunately from an Ag transportation perspective, rail capacity is well positioned to handle the 2015 harvest, even with the significant volumes that farmers are reporting as coming out of their fields,” says Steenhoek. “The fact of the matter is, that railroads have responded to the uptick in demand that we witnessed a couple of years ago, by investing in new capacity.
He says there is new locomotive power, new personnel, new tracks that is in service today and available for usage that did not exist a couple of years ago.
Steenhoek says grain elevator managers are reporting no delays this year with rail service, and that was not the case during the first six months of last year, when there was frustration among rail customers for the lack of rail service.
He believes the reason for that frustration was the imbalance of rail supply versus rail demand.
In addition to the additional locomotives that rail companies have added on line, Steenhoek says the lower oil prices have slowed down the activity from the Bakken oil fields of North Dakota, allowing for more train engines to be available to transport grain.
“One of the contributing factors of that was the expo increase in crude oil production, and the crude oil transportation,” says Steenhoek. “Now that has abated a bit, over the last year, and it’s one thing when crude oil is over $100 a barrel, there’s obviously a market incentive to produce a lot more crude oil, and as a result to transport a lot of crude oil. But when crude oil gets below $45 a
barrel, yes you are still producing some, but it is not as vigorous as it was in the past.”
So does this having any effect on the availability and supply of trains?
Steenhouck says the third reason for the smooth transportation of grain this year is because farmers are holding on to their grain, in hopes to see higher prices at a later time.
The results means the marketplace is not being flooded, therefore an adequate supply of locomotive engines and rail cars are now available to transport any grain that is being marketed, and not creating short-term rail shortages.