Railroad officials, Northern Plains producers testify at hearing

Farm Forum

A virtual who’s who of Northern Plains crop producers and railroad industry executives were in Washington, D.C., on April 10 to explain, vent and plan in regard to rail network backlogs occurring in South Dakota and beyond.

Close to 50 representatives on both sides of the delayed rail shipment issue spoke in front of Surface Transportation Board officials during a hearing that lasted most of the day at the board’s headquarters.

Many in the agriculture industry in South Dakota, North Dakota and Minnesota have expressed concern about stalled rail service, which, they say, has affected storage capacity and futures prices, among other indicators.

“Agriculture is facing a growing crises over the lack of timely rail service to ship our grain to domestic and foreign markets and bring in needed inputs for spring planting,” said farmer and Wheat Growers president Hal Clemensen. “Agriculture in the Dakotas and the upper Midwest is dependent on reliable rail service, and the poor performance by BNSF and Canadian Pacific railroads have a direct effect on prices.”

Though Canadian Pacific spokesman Ed Greenberg said he couldn’t comment on the number on April 10, Clemensen told board officials the railroad is currently behind by 1,900 rail car orders to Wheat Growers members alone. Since Jan. 1, Clemensen said, wheat producers have received “an average of only 38 cars per week, against an average of 350 cars ordered per week.”

Chiming in on the situation, Sen. John Thune, R-S.D., testified to the board about the importance of alleviating producers’ concerns.

“Unfortunately, the disruptions in rail service that farmers, ethanol producers and other small business owners have experienced this winter have had a very real impact,” Thune said. “This is not only on short-term operations, but also on planning for the remainder of the year when it comes to making business decisions.”

Backlogs acknowledged

Greenberg, along with BNSF officials who spoke during the hearing, acknowledged the backlogs, but essentially blamed poor winter weather and a number of significant storms in the past few months for the shortcomings.

“Canadian Pacific is very aware and sensitive to our customers and how reduced network velocity has impacted their businesses,” Greenberg said. “Canadian Pacific is working with them daily, and it is our railroad’s commitment to safely turn the situation around as quickly as possible. Extreme winter weather and extensive transportation congestion in Chicago have combined to have a significant influence on the entire railroad supply chain. The congestion issue is a complex one and continues to be a challenge. Canadian Pacific will continue to keep the communication channels open with its customers as our railroad works to return to above-average service levels.”

Communication lines between the railroad and its customers, however, left something to be desired in at least one instance this year, said Thune.

“North Central Farmers Elevator, located in Ipswich, placed a rail car order with Canadian Pacific on Jan. 24 with hopeful delivery to its facility on Jan. 27,” Thune said. “The cars arrived on March 17, seven weeks late. The late delivery was made even more frustrating by poor communication from Canadian Pacific, which failed to respond to inquiries about when the cars would arrive. The elevator faced significant economic hardships by these rail delays.”

Thune said he hoped BNSF and Canadian Pacific would be able to plan for future rail service needs in light of the “projected growth of crude oil transport in the Bakken and increased demand for coal.” Thune also requested that the board approve the pending sale of Canadian Pacific’s rail line in South Dakota — which was announced in January and includes a 660-mile stretch of rail from Tracy, Minn., to Rapid City — to Genesee and Wyoming.

Lost income

Representing the South Dakota Farmers Union at the hearing, farmer DuWayne Bosse said rail delays could cost farmers in South Dakota, North Dakota and Minnesota hundreds of millions of dollars in lost income and expenses.

“These delays are taking money directly out of the farmer’s pocket,” Bosse said. “Grain facilities are maxed out and grain is being dumped outside on the ground because people have no other option. We need to find a solution so that rail service is reliable and consistent.”

On April 9, Sen. Tim Johnson, D-S.D., brought his concern about rail service to Transportation Secretary Anthony Foxx at a separate U.S. Senate hearing, according to a news release sent by Johnson’s office.

“We need to take a hard look at how the dramatic increase in shipment of crude oil by rail is impacting the larger rail network,” Johnson said. “We also need to address the short- and long-term need to invest in our overall transportation infrastructure to ensure economic growth isn’t unnecessarily constrained.”

In an email statement on April 10, BNSF spokeswoman Amy McBeth said improvements are being made and results should be tangible soon.

“Signs of improvement can be seen in our current volume numbers,” McBeth said. “BNSF has responded by taking aggressive action to over-resource the railroad with people and locomotives to keep our customers’ freight moving. This year, BNSF is investing $5 billion in improving and expanding our network.”

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