Rail service in the face of a record-setting harvest is up to the challenge according to industry experts. Recent upgrades to rail service combined with soft commodity prices should allow the flow of soybeans and corn from the Midwest to export destinations on the coasts.
“We expect rail service to be good for the 2015 harvest,” Mike Steenhoek, the executive director of the Soy Transportation Coalition, said. “Railroads have invested vigorously over the past year, so they have responded to demand.”
Congestion and delays in previous years are believed to be relieved this year because of several factors. The top seven rail carriers have made infrastructure improvements over the past year, and a drop in petroleum production means less traffic on the rail lines according to Steenhoek.
“Union Pacific plans to spend $4.2 billion on capital investments this year. Of that, we expect to spend about $1.85 billion for infrastructure replacement,” Kristen South of Union Pacific said. “As part of our business planning process, we continuously evaluate how projected volumes fit within the confines of network capacity and make corresponding adjustments to our capital plan as volume and returns dictate.”
South went on to say that Union Pacific is expecting a muted peak season but are ready for the demand if market forces change.
“We have more than 2,000 covered hoppers in storage available to meet unanticipated surges in equipment needs for grain,” She said.
The stronger U.S. dollar and softening export markets have also removed pressure from rail service according to Steenhoek.
“Farmers are holding on to their grain so we are expecting much of the 2015 crop will be stored,” he said. “That means they will impose less of it on the rail network, and they will have adequate capacity to handle what comes their way.”
By Joe Murphy, ISA member communications manager