Major rail carriers have significantly improved service over the past couple of years, but the fluidity of their lines will be tested in the next few months as they try to move thousands of carloads of freshly harvested corn, soybeans, wheat and other crops.
Agricultural shippers and regulators are eying railroads’ harvest season plans’ warily with the short-lived Canadian rail lockouts that halted service last week north of the U.S. border still fresh in their minds. Their attention is now fixed on ongoing service delays hampering grain transport along capacity-stretched rail lines in Mexico.
“We just cannot have a harvest where we’re falling down from the rail perspective, so we’re going to work hard to ensure that doesn’t happen,” Surface Transportation Board Chair Robert Primus said Tuesday at a National Grain Car Council meeting in Kansas City, Mo.
The six largest U.S. railroads — BNSF, CSX, Canadian National, Canadian Pacific Kansas City, Norfolk Southern and Union Pacific — have successfully reduced much of the congestion that plagued their networks in 2022 and early 2023 by bringing on more staff.
It took an unweighted average of 23.2 hours as of Aug. 14 for railroads to begin moving loaded or empty trains towards their destination since being first released by customers, down from 42.3 hours on April 27, 2022, the day of an STB hearing that examined the service challenges hampering product deliveries at the time.
Additionally, 1,219 loaded grain cars sat idle for 48 hours or more on Aug. 14 this year, according to STB data. That’s a significant improvement from April 27, 2022, when 2,380 loaded grain cars had not moved over a 48-hour period.
Low demand for grain transport over the summer months often helps to shrink backlogs ahead of the tumultuous fall harvest, when carriers will attempt to speedily move extra cars of corn, soybeans and wheat while also transporting their normal shipments. It’s a time of year known to challenge carriers, who risk seeing their lines clog up if deliveries get delayed.
It’s a challenge even to predict what this year’s harvest will bring. It’s a “highly dynamic” time of year, BNSF President and CEO Katie Farmer noted in a letter to STB Chair Primus last month. Freight movements are shaped by weather, the commodities grown, market conditions and farmers' locations — a highly variable mix of factors that will require railroads to be flexible with their plans.
Last year’s harvest presented BNSF with 2,550 additional carloads of grain — the equivalent of 23 loaded shuttle trains — each week, an “immense increase in operational tempo” that requires intense planning and careful coordination, Farmer said. Much of this grain, loaded at more than 150 different locations, was carried to eight ports in the Pacific Northwest.
Amid the surge in demand, the company saw disruptions in getting goods shipped. Primus, in a letter to Farmer last month, noted that BNSF trains at one point last year reached an “alarming” low of 1.7 turns per month. Grain shippers were also “forced to discharge partially loaded vessels from their terminals,” Primus said after expressing “grave concerns” about the company’s ability to meet the surge in demand of this year’s harvest.
Some of last year’s disruptions were outside of the company’s control, Farmer said. For instance, heavy rains at the end of the 2023 harvest stalled shippers’ unloading of trains at terminals, leaving grain-filled cars idle until they could be emptied.
“While BNSF has invested billions of dollars into our network to build resilience in the face of weather-related challenges, externalities outside of our control and our customers’ control can and do affect the ability to load and operate trains,” she wrote. “The cascading effects of these disruptions are an example of the unavoidable variability in any freight transportation service but should not be equated to service failure.”
The company is preparing to see similar freight demand this fall as it did in the fall of 2023, despite shippers so far in 2024 selling 91% less soybeans and 90% less corn to Asian export markets than the average for the same time period over the last three years, Farmer said. It hired 259 conductor trainees and 70 locomotive engineers and, if needed, plans to transfer employees from other parts of its network to handle expected surges in demand caused by grain shippers.
"We're ready for harvest," Zac Roskilly, BNSF's director of bulk operations for agricultural commodities said at the National Grain Car Council meeting. "We feel like we're in the beginning stages of it already."
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Still, agricultural stakeholders worry about the company’s ability to handle the influx of demand this fall, Primus told Farmer. The U.S. has seen a “steady erosion of international market share” for corn and soybeans over time and slowdowns, he warned, would only hinder the nation’s ability to compete with Brazil.
“Many agriculture shippers in the Upper Midwest believe that BNSF’s inconsistent service, coupled with steady rate increases and now a higher-than-tariff value for shuttle trains, will further weaken their cost basis and make their grain less competitive on the export market,” Primus said.
Congestion on Mexican lines belonging to Ferromex, a company that operates within the same rail network as BNSF, are adding to these concerns. Twenty-six agricultural groups last month urged Primus, Agriculture Secretary Tom Vilsack and U.S. Trade Representative Katherine Tai to press Mexico to invest in infrastructure amid increased demand for rail service that has led to “embargoes, congestion and slowed servicing.”
Mexico was the second largest importer of U.S. agricultural products last year, purchasing 18.62 million metric tons of corn, 4.77 million metric tons of soybeans, 3.1 million metric tons of wheat, 1.6 million metric tons of soybean meal and 1.1 million metric tons of pork products, according to USDA.
“We’re very concerned about having sufficient service down in Mexico, particularly as our harvest season comes online,” Soy Transportation Coalition executive director Mike Steenhoek told Agri-Pulse. “We’re going to need to be able to move a substantial amount of soybeans, a substantial amount of grain. This is clearly the time when we’d want our supply chain to be operating at full throttle. It clearly is not right now.”
Primus said that he has been speaking with officials from the White House and other agencies to try to find a solution.
“The problem is in Mexico and it’s a capacity issue, from my perspective,” Primus said. “How we’re going to deal with that, I’m not quite sure.”
Farmer herself acknowledged that issues on Mexican lines have had an impact. Access to Mexico, she said, was closed to BNSF on three different occasions over a period of nine months due to challenges at the border. Interchange windows are limited at border crossings at Eagle Pass and El Paso for all traffic and missing any of these can hinder the flow of goods like grain. Extended disruptions like border closures can “reverberate for weeks before traffic flows are able to normalize,” she added.
“Given that we do not operate across the border, BNSF is limited in our ability to address service disruptions in Mexico and our contingency efforts are principally aimed at limiting the impact of those disruptions," she added.
Last week, BNSF announced it would be halting permits to shuttles bearing a number of agricultural products to the country for 30 days, which could impede the flow of U.S. exports to Mexico and vice versa. Roskilly said the decision is intended to clear up lines by mid-September, which is a peak time for harvesting soybeans.
Other rail carriers face their own challenges. Canadian National and Canadian Pacific Kansas City must catch up after temporarily halting trains amid an employee lockout stemming from a contract dispute. Union Pacific, the second largest hauler of grain behind BNSF, currently has five trains stuck at the Mexican border, Primus said.
Still, representatives of these railroads, along with CSX and NS, indicated at the meeting that they were prepared for harvest. "We're ready to go," said David Przednowek, Canadian National's assistance vice president for grain.
