CHICAGO, Ill. (Reuters) — Rail backlogs in the United States are delaying shipment of grains as well as processed flour and corn syrup, contributing to inflation, food and grain companies said at a hearing earlier this spring.
Russia’s invasion of Ukraine has increased prices of wheat, corn and vegetable oils after the COVID-19 pandemic disrupted supply chains, and rail delays could further add to costs that are weighing on consumers.
“This is the price of bread going up. This is ethanol not getting mixed with gasoline, and the price at the pump going up,” said Martin J. Oberman, chair of the Surface Transportation Board, which oversees Class I rail carriers and held the hearing.
Read Also
Increasing farmland prices blamed on investors
a major tax and financial services firm says investors are driving up the value of farmland, preventing young farmers from entering the business. Robert Andjelic said that is bullshit.
Included in the hearing were Berkshire Hathaway Inc.’s BNSF Railway, Union Pacific Corp., Norfolk Southern Corp., CSX Corp., Canadian National Railway and Canadian Pacific Railway.
Jon Setterdahl, the product and services leader at Landus Co-operative, said in a letter to the STB that rail transit times from the farmer-owned co-operative have more than doubled.
Landus buys grain from 7,000 farmers across Iowa and described turning away loads of corn and soybeans as country grain storage elevators waited 20 days for rail carriers to pick up loaded grain cars.
“This delay in March consisted in a total five trains being delayed into April, which is a total shortage of grain shipments in that month alone of 2.25 million bushels,” said Setterdahl.
U.S. food prices rose 8.8 percent in March from a year earlier, according to the Bureau of Labor Statistics.
Rail carriers said the delays are due to recent extreme weather and a surge in shipping demand at the end of 2021.
But shippers blame cost-saving measures at the railways before the pandemic, including labour force cuts, storing locomotives to save fuel and stretching train length to as long as 4.8 kilometres, which they say have increased congestion, downtime and delays.
BNSF, the largest agricultural rail shipper in the nation, reduced its train, yard and engine workforce by 20 percent in the year prior to the pandemic, furloughing another fifth of its workers in May 2020, according to the STB.
“When the railroads talk about this being a COVID issue, or related to labour shortages across the economy, that’s their latest excuse,” said Eamon Monahan, vice-president of environmental affairs for the Corn Refiners Association. “This is absolutely a years-long issue.”
Cindy Sanborn, chief operating officer of Norfolk Southern Corp., which owns Norfolk Southern Railway, said cost-saving innovations implemented in the last decade are needed to innovate and remain competitive with trucking and other modes of transportation.
But shippers reject the argument that rail competes with trucking.
“Our members don’t produce truckloads or carloads,” said Monahan. “It is trainloads. Our industry can only operate by rail.”
