Grain and Oilseed Shipment Sizes and Distance Hauled by Rail

Grain and railroads have an interdependent relationship. Grain is one of the most important commodities for railroads. It is the primary agricultural commodity moved by rail, comprising 7.9 percent by tons of all commodities, 94 percent by tons of all farm commodities, and 8.4 percent of total rail revenue in 2009. In turn, railroads represent a vital component of the grain network, hauling 33 percent of all grain transported in the United States in 2007. As domestic and export markets have evolved, railroads have continuously made efficiency strides through shuttle trains and the length of haul. Since 1994, grain and oilseed transportation has moved from small shipment sizes to shuttle-size shipments (75 or more railcars) for many grains and oilseeds, reflecting the lower costs of shuttle-size shipments, an increase in the number of domestic destinations capable of unloading shuttle-size shipments, and increased grain and oilseed exports in some years. In addition, the length of haul has increased for grains and oilseeds, reflecting competitive advantages of rail compared to truck on longer hauls, lower rail tariffs per mile for longer hauls, and changing grain and oilseed markets. However, development of the shuttle market has occurred differently among grain types and has not been explored at the individual commodity level. This paper uses the Surface Transportation Board Confidential Waybill Samples to quantify the changes in shipment size and length of haul for each major grain and oilseed (corn, soybean, wheat, sorghum, and barley) from 1994 to 2009. Changes in shipment size and length of haul are compared to production and usage changes for each of the major grains and oilseeds to gain more insight into the underlying reasons behind the changes. This procedure improves upon earlier analyses of the grain shuttle-size market by exploring the changes at the individual commodity level. The shuttle market for each grain has developed differently because exports, production, and usage have been different despite the overall push towards larger and longer hauls by the railroads in order to maximize efficiency. In 1994, the dominant size of shipment for all 5 grains was 6 to 49 railcars. However, there were initial differences in the lengths of haul: corn, soybeans, and barley were hauled mostly between 20 and 500 miles in 1994, but wheat and sorghum were hauled between 501 and 1,000 miles. By 2009, corn and soybeans were mostly hauled more than 1,500 miles, but the predominant category for each of the other grains did not change. Wheat has been the most consistent of the five grains over the period of study with very little change in exports, production, or usage. As such, it has had the fewest changes in shipment size or length of haul; the dominant shipment size and length of haul have remained the same throughout the time period. In contrast, a production increase in corn and soybeans due to corn-based ethanol and soybean exports has led to more shuttle-sized shipments of these commodities. Exports, the rise of large dairies, and a shift in animal production to regions distant from corn and soybean production regions have resulted in lengths of haul in excess of 1,500 miles becoming predominant. Soybeans have had the most dramatic change in length of haul because of increased exports and shipments to large animal feed regions which are not as susceptible to truck competition, as evidenced by rail’s increase in market share. On the other hand, corn’s length of haul has been mostly more than 1,500 miles only since 2008 when more ethanol plants were built, leading to stronger truck competition for the shorter movements to ethanol facilities and taking away some of rail’s share. Shuttle markets have developed differently for sorghum and barley despite decreased production in both. Sorghum for ethanol production and a higher percentage of exports among total usage have led to an increase in shuttle-sized shipments even though less is being exported overall. Barley production has declined due to corn and soybeans being more profitable, and barley exports have declined without a strong export demand. The predominant barley shipment size of 6 to 49 railcars and length of haul between 20 and 500 miles makes rail shipment of barley more susceptible to truck competition and has caused rail to lose market share over the time period.