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Long delays have lessened for shipping grain by rail in Red River Valley

GRAND FORKS, N.D. - Rail line improvements and increased grain storage are helping relieve congested train tracks in the Red River Valley, farmers and an agriculture expert say.

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Gary Hjelmstad sweeps up corn during a delivery at Reynolds United Co-op in Reynolds, N.D., on Wednesday, Oct. 21, 2015. Eric Hylden / Forum News Service

GRAND FORKS, N.D. – Rail line improvements and increased grain storage are helping relieve congested train tracks in the Red River Valley, farmers and an agriculture expert say.

Elevators here had faced weeks-long delays waiting for railcars they ordered, which some said made them less competitive with other regions. Pent-up demand for grain shipments, increased oil train traffic and a harsh winter helped create last year's waits, said Frayne Olson, a crop economist and marketing specialist at North Dakota State University.

"The service we're getting this fall now, from every indication I've heard ... has been good," he said.

BNSF Railway, which operates the most miles of track in North Dakota, reported last week its outstanding grain car orders were three days late on average. That's compared to a two-week delay at roughly the same time last year and a 32-day wait in June 2014.

Canadian Pacific Railway, the other major railroad in North Dakota, is now "current on all orders," spokesman Andy Cummings said.

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"It seems like, particularly over the past six months, service has gotten a lot more regular," said Dylan Karley, general manager of Johnstown (N.D.) Bean Co. "It got to be where they were a month, two months delayed. But now it's kind of back within the new normal, which would be within a week to 10 days of the day that you set to want them."


'One-lane road'

 

Several factors contributed to railcar delays starting in early 2014, Olson said, including increased crude oil shipments coming from western North Dakota. Trains carrying oil and ones with grain typically flow in opposite directions, with oil heading to refineries on the East Coast and grain going west.

"What happens when you have a one-lane road and two people meet? You've got to have a place for them to pull off," Olson said.

BNSF largely credited its capital spending that added engines, double tracks and sidings--places for a train to pull off to make way for another--for the alleviated wait times. Between 2013 and the end of this year, the company will have spent about $1 billion on railroad maintenance and expansion projects in North Dakota, according to spokeswoman Amy McBeth.

"What the customer is feeling today is the result of all those resources coming to bear," said John Miller, group vice president for agricultural commodities at BNSF.

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The amount of oil moving on trains increased dramatically since the onset of the Bakken oil boom as pipelines failed to keep up with the skyrocketing production. But Miller said they had seen growth in demand "across the rail system from all core business units."

"We are hauling a little bit less oil ... but that would really belie the true reason why we're better off today, and that's because of our capital program," he said.

With production flattening, the amount of oil shipped by rail from North Dakota has dropped this year from as high as 847,000 barrels per day in December to as low as 598,000 barrels a day in August, according to estimates from the North Dakota Pipeline Authority.

U.S. Rep. Kevin Cramer, R-N.D., whose office has sent weekly media reports on the grain car backlog, said railroads "clearly weren't prepared" for the growth in demand for their services but admitted "it's hard to imagine that they could have been."

"The railroads continue to invest in their infrastructure so they are better prepared for what they hope is a growing business," he said.


2015 sees a '180'

 

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Meanwhile, more farmers may be waiting until commodity prices rise again before shipping some of their products, Olson said. That's helping to alleviate the "peak-load pressure" on the rail system.

"The railroads have made big investments in their track, their infrastructure," said Stu Letcher, executive vice president of the North Dakota Grain Dealers Association. "And there's probably more grain being stored on the farm. There hasn't been as much moved."

But that may cause problems in the future. Cummings, a CP spokesman, called on "all participants in the supply chain" to work together to reduce bottlenecks.

"With producers storing much of the 2015 crop, CP is sidelining grain cars and locomotives, and we are in an excess capacity situation," he wrote in an email. "We are concerned that shippers will decline to use this slack today, then ship their stockpiled crops all at once, which risks creating order backlogs."

Whatever the reasons for the reduced congestion, farmers seem to be welcoming the new pace of business. Karley said the previous railcar delays caused trouble meeting customer deadlines, putting them at a competitive disadvantage to other regions of the country.

"If you could get a truck to Houston to load a transport ship out of Nebraska for the same price and increased reliability as a railcar out of North Dakota, they would go with the Nebraska product," Karley said.

Letcher called today's service a "180 from last year."

"Right now if people need railcars they're getting them," he said. "Service has improved quite a bit."

Related Topics: NORTH DAKOTA
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