Rail Service Investments Improve Service for 2015 Fall HarvestWed, 02 Dec 2015 19:59:36 CST
The ability to move grain in the U.S. has improved significantly over a year ago. During the 2014 fall harvest, the nation was struggling to move commodities with competition for rail cars from the energy sector. CHS Director of Rail Services Brock Lautenschlager said the situation has improved and he doesnít see any systemic issues for rail service this year. The rail roads have invested record amounts of capital to expand their shipping capacity. He said the rail road companies have purchased additional locomotives and hired more crews, but at this point the railroads have locomotives in storage and crews on furlough, waiting for demand to come back.
A year ago, there was a lot of competition for rail cars with the development of the Bakken in North Dakota and Montana. With lower oil prices, the growth and development of the Bakken has slowed. Lautenschlager said the demand for rail cars in the northern U.S. tier states has decreased from earlier projections. In response, rail prices have remained flat.
Demand for rail cars for grain has remained stable, but U.S. grain exports have struggled. Lautenschlager said CHS expects agriculture will continue to face those head winds over the next 12 to 24 months due to the strong U.S. dollar and large global grain stocks.
In looking at the outlook for CHS, Lautenschlager said their company expects lower commodity prices for this next year than in historical years. While there isnít a lot of grain moving off the farm right now, he said CHS is making plans to handle more grain when that happens.
With concerns of derailments in this country, the U.S. government has issued a mandate for the rail road industry to adopt a new tanker car. Lautenschlager said this new standard will impact the ethanol industry. To meet those standards, companies will have to upgrade existing tankers in buying new rail cars that meets those safety standards. The cost of buying new railcars has dropped significantly in the past 12 months with lower demand. Companies will have until 2023 to update to the new tank cars.
Radio Oklahoma Network's Leslie Smith caught up with Lautenschlager at the National Association of Farm Broadcasting. Click or tap on the LISTEN BAR below to listen to the full interview.
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