Early this week there were reports that bids for shuttle cars in the secondary freight market were $3,000 per car and offers were at $4,000 per car as rail service has been a mess for shippers and end users. According to the weekly USDA Grain Transportation Report, the BNSF did improve service during the first few weeks of November by placing additional locomotives and cars on line and also adding more crews. However, service began to slow in December as scheduled track maintenance and poor weather across the Northern Plains reduced train velocity and sent the secondary freight market back to historic levels. USDA said during the week ended December 5, the average bid/offer for shuttle cars in the secondary market were $1,562.50 above tariff. This is $900.00 higher than last week and $1,731.50 higher than this same time last year. USDA stated, "The shuttle average reflects the highest bid on record of $2,825 per car for service on BNSF Railway. This follows the previous record high of $2,517 for BNSF shuttle service just five weeks ago, during the week ending October 31."
Other rail lines have also seen similar delays, not only in the U.S. but in Canada as well, where shippers have reported delays of up to 30 days or more for grain movement on the Canadian Pacific Railway. USDA reported bids for rail moving on the UP have also risen due to the high demand for cars. Besides the higher usage of cars during harvest, additional traffic has occurred due to shippers unable to move grain on the BNSF line. The USDA GTR showed weekly grain car loadings on the Kansas City Southern, CSX, and Norfolk Southern are also witnessing higher than normal grain traffic because of the service issues on the BNSF. The delay in service on the U.S. and Canadian rail lines has pushed spring wheat spot basis up $1.00 per bushel this week and hard red winter wheat spot basis up as high as 40 cents.
Moving grain in barges has not been an easy task of late either, although availability appears to be sufficient for the increased demand, according to USDA. But with the low water levels becoming troublesome for barges, less grain can be moved as barges need to lower drafts in the areas where dangerous levels exist. As of December 12, the river level at St. Louis was -2.1 feet below zero gauge and it is expected to drop another foot in the next few weeks without significant precipitation. The severe winter weather and cold has caused icing problems on the Upper Mississippi and Illinois River and the seasonal reduction of water flow from the Missouri River has exacerbated the low water conditions. According to sources, water levels on the Ohio River and lower Mississippi are low but remain stable. The Corps of Engineers has begun phase 2 of the rock removal near Thebes and the Coast Guard has placed restrictions on tows passing through the area at 15 barges per tow. The work is expected to be completed in early January and until it ends, movement to the Gulf will be slowed.
The low water has already affected barge movement in the Upper Mississippi River and USDA reported for the week ended December 7 barges moving down river totaled 488, 13.3% lower than last week. Barge movement through Mississippi River Lock 27 at Granite City, Ill., was down 18.1% from last year and 20.5% lower than the three-year average. Barges unloading in New Orleans for the same week totaled 916, up 9.2% from the prior week. During last week, there were 45 ocean going vessels loaded at the Gulf and 69 vessels are expected to be loaded in the next 10 days, up 44% from the same time last year. USDA stated, "Weekly ocean-going grain vessels loaded in the Gulf have averaged 47 during the past 9 weeks, higher than in the past two years, but below the average in 2010 at 49 and in 2007 at 53. However, ongoing demand at the ports is as strong as it has been in years. The nine-week average of grain vessels expected to be loaded within the next 10 days is 73, the second highest in nine years, surpassed only by the level of 75 vessels waiting in 2007."
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