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Grain Piles Up Waiting for Trains by Scott A. Yates Capital Press, November 28, 2003

SPOKANE -- You know delays receiving railroad cars have reached a critical point when the grain merchandiser of a major Northwest exporter publicly voices his criticism.

Tommy Williams, who works for CLD Pacific and serves as a member of the Washington Wheat Commission, made it clear the 50-plus-day delays in rail car deliveries is affecting the grain business.

“Transportation is the key driver for us. Unless we can get from farm to market in a timely fashion, we can have all the grain in the world and it is not going to mean very much,” he said.

Williams said he hopes a concerted push from wheat commissions around the nation along with input from other agricultural organizations can pull the political strings necessary “to get those railroads off their behind and do what they need to do to keep the industry alive and well.”

Keith Bailey, manager of Odessa Union Warehouse, said it is going to take a lot of pressure before the railroads “start waking up and realize they are driving the entire marketplace.”

Actually, it is one railroad in particular that is causing the current problems. BNSF, the company formed after the merger of Burlington Northern and the Santa Fe Railroad, is said to be dozens of train deliveries behind schedule at the elevator companies it services in Washington state.

There are several reasons being voiced to explain the backlog. Gus Melonas, a spokesman for the company, said a large Midwest harvest has the Western rail system “experiencing some constraints.”

Critics of the company have several different explanations for the backlog: too few hopper cars; not enough crews to operate the trains; poor coordination of cars; lack of power to run the trains. Most favor the latter reason. Melonas didn’t say what the problem was specifically. He did offer, however, that the company added an additional 232 locomotives to its fleet as of Oct. 15.

Whatever the reason for the delays, Bailey said, the result is that trains he ordered 50 days ago – and paid a premium to get on time – are as much as 50 days late. As for trains he ordered without a premium, he doesn’t expect to see them until next March.

Kevin Whitehall, manager of Central Washington Grain Growers, is also experiencing delays.

“BNSF says they’re running 30 days behind, but they are a lot further than that with us,” Whitehall said. “I’m probably 20 to 25 trains behind right now.”

That means a lot more grain trucks will be moving to the river this year just to catch up. It’s not his first choice, but Whitehall said he can’t sit and wait forever, thinking BNSF can erase the backlog anytime soon.

In the meantime, CWGG is buying wheat for cash. The company, however, doesn’t get paid by exporters until the grain’s delivered. As a result, Whitehall is having to borrow more money from banks.

Glen Squires, analyst at the WWC who works extensively on transportation issues, said the backlog of trains is the latest example of what happens with a lack of competition in the marketplace.

“The railroads know there is nobody else to haul the grain, and they will move it when they move it. They are not moving it to meet the market, and that is causing problems,” he said.

Willams said CLD Pacific is taking an economic hit as a result of the delays. Ships lined up ready to load, but without grain available to load them, charge a steep demurage rate for waiting in port. With ocean freight rates nearly doubling in the past six months, those rates have risen accordingly.

Although the Northwest is affected, Williams indicated the bigger problem for exporters is getting red wheat from Montana and the Midwest.

Although there is a small amount being trucked to the river from Montana, red wheat shipments from Northwest ports is really train-dependent.

But not everybody in the Northwest is affected by a shortage of trains. Tom Jeffries, manager of St. John Grain Growers, is on a Union Pacific line. He said UP is only running a week to 12 days behind in its train deliveries.