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Rising rail rates and bottlenecks challenging grain movement

Recent analysis of freight rail rates by American Farm Bureau dissects how ag producers have been impacted by rising prices.

The report studies increases in shipping grain the past five years on the nation’s seven Class I railroads and regional and short line railroads.

For Citzens LLC. owner Bob Mansfield, he tells Brownfield container freight and railroad issues have been their greatest bottleneck throughout the pandemic.

“The shipments of containers and coordination of boats, rail, and truck is really difficult at this point in time and it continues to be a problem around the world,” he explains.

The mid-Michigan grain shipper sends containers to Detroit on trucks, then uses rail to move products to the east or west coast to export to Asia.

“We choose to go off the west coast because that’s our best choice but strikes at the export facilities, fires in the Canadian Pacific that have shut down the rail lines have all been challenges,” he says. As a result, Mansfield says his customers only have about six days of supplies for their products.

The Farm Bureau report confirms rail rates for corn, soybeans, and wheat have increased from seven to 13 percent depending on commodity and 18 percent for ethanol.

Class I railroads move about 80 percent of grain and since 2016 their rates have increased from five to 20 percent.

Ohio was found to have the largest rate increase for corn, soybeans, and wheat, up 26 percent over the past five years.

Analysts say increasing rail rates put additional pressure on producers’ bottom lines, especially in locations with less competition for moving freight, high product supply, and increased fuel prices.