Advertise in Print | Subscriptions
Published January 25, 2011, 01:44 PM

Oil boom is changing container economics

FARGO, N.D. — The oil boom in western North Dakota is changing the economics of railroad shipping containers, potentially benefitting agricultural shippers who want to send their products west through the Pacific Northwest port, or even to the east.

By: Mikkel Pates, Agweek

FARGO, N.D. — The oil boom in western North Dakota is changing the economics of railroad shipping containers, potentially benefitting agricultural shippers who want to send their products west through the Pacific Northwest port, or even to the east.

“I believe we now have rates that are both attractive and aggressive,” says Ashley Goldade, a regional business development manager for BNSF Logistics in Minot, N.D., who attended the recent North Dakota Grain Dealers convention in Fargo, N.D. “We’ll be quoting on a monthly basis.”

Rates for containers out of Minot have come down considerably in the past two months.

Containers are loaded by North Dakota Port Services Inc., a privately owned, intermodal service in Minot, serving customers in a 250-mile radius. The intermodal facility, opened last July, is serviced by BNSF’s Northern Tier Intermodal line and is adjacent to BNSF’s main-line switch yard with daily service and four-lane highway access. It is one of two privately owned facilities of its type in the valley.

Goldade, originally from the Rugby, N.D., area, left North Dakota to get her undergraduate degree in communications but returned to the state where she received her master’s degree in agribusiness and applied economics at North Dakota State University in December. She interned with the North Dakota Trade Office in Fargo, where she learned about global shippers located in the Red River Valley region. Most require the use of “containers” to ship identity-preserved ag products or manufactured items.

“North Dakota is a landlocked state,” Goldade says. “Shippers in the valley have to pull a container out of Minneapolis, if it’s available, or if they can’t do that, they have to get a container out of Chicago, or to send their material in bulk to the Pacific Northwest to trans-load a container for export.”

At the Trade Office, Goldade helped conduct an annual review of shipper needs. The primary impediment to business growth was logistics — access to the means of shipping. She wrote her master’s thesis on how container logistics could be improved, though shippers told her the issue had been “exhausted.” Among other things, she looked at the economics of moving containers from Chicago to Minot, which she found to be feasible, but not sustainable with high enough profits for everybody.

Meanwhile, BNSF Logistics and the BNFS Railway — sister companies under the BNSF Corp. umbrella — also were studying the same matter, but from a new angle.

Why? Since the oil boom, there has been a natural influx of containers into Minot where there weren’t before.

Fill ’em up

Goldade was hired by BNFS Logistics Nov. 1. Since Dec. 1, she’s been tasked with finding ways to fill the empty containers with agricultural and other products for export through the Pacific Northwest. Some 400 containers would like to come into Minot every week, she says. The main item so far is “frac sand” for drilling, but clay and pipe would like to come into the area.

That leaves empty containers to be distributed with agriculture or other types of products — grain, products and ag equipment.

Goldade is beating the bushes for container shippers in northwest North Dakota and elsewhere in the region. She’s working with the “ocean carriers,” who quote freight rates from “ramp Minot to port destination,” even though their direct responsibility is for the so-called “ocean piece.” So far, that’s the part of the rate that has come down, Goldade says. The economics in Minot need to beat the economics of shipping containers out of Minneapolis, or Chicago, or sending material to the Pacific Northwest for transloading.

Valley-area shippers

On the other side of the issue, Red River Valley-area shippers also are considering the equation.

Currently, they pay the roundtrip “drayage” for obtaining containers from Minneapolis — a relatively straight shot on Interstate 94 compared with the less-direct and potentially more difficult road conditions to Minot.

Looking ahead, Goldade says BNSF Logistics is studying whether it would be feasible to reposition a “pool” of shipping containers into the Red River Valley area, from Minot to eastern North Dakota, perhaps. BNSF could subsidize part of that dray and then the producers would pull containers from the pool and dray only one way to Minot.

“On paper, we’ve determined it may be a feasible option. Now it’s time to see if it’s feasible in reality,” she says.

One issue that farmers may be interested in is the transloading service, Goldade says.

“Some producers would bring in a bulk, hopper truck into the Minot facility, to transload into a container,” she says. “Peas and lentils have been the biggest commodities for export that we’ve had so far.”

Tags: