Montana farmers are struggling to get their wheat to Pacific ports, as weather, construction and traffic take a toll on grain trains.
Wheat has been slow to move to the Pacific Northwest for several months and there is now talk of the 2013 crop still being shipped when this year’s harvest begins in late July. That’s not good news for Montana’s wheat economy, which has had annual sales exceeding $1 billion for five of the last six years. A glut created by wheat stuck at the elevator would push prices down.
“A lot of farmers are starting to get nervous,” said Lochiel Edwards, a Big Sandy grain farmer who represents the Montana Grain Growers Association on rail matters. The slowdown comes after a rapid increase in the number of Montana grain elevators capable of storing a million bushels of grain and quickly loading rail shuttles of 110 cars or more.
Bakken oil rail traffic has been cited as the cause for the shipping delay. During a recent public forum in Billings organized by the Northern Plains Resource Council, rail consultant Terry Whiteside told a small crowd that oil and coal shipments were to blame on the region’s only rail source to the coast, Burlington Northern Sante Fe.
“The Northern Tier is suffering the worst service meltdown in modern history and it started with surging ... coal and oil shipments, in 2012,” Whiteside said. “We have spent millions in Montana of farmer-producer money building these shuttle facilities. Shuttle facilities designed to do one thing, to get that traffic to Portland on time. Now we can’t do it.”
Edwards and others struggling to get wheat to the coast say there’s more to the delay than oil shipments. The slowdown became noticeable last fall as the 2013 crop began making its way to the Pacific Northwest. U.S. farmers produced a record corn crop. Canada’s grain crop was 50 percent larger than the previous year as well. The Northern Tier wheat crop was again a $1 billion contender.
Those commodities were lining up to flow west while BNSF was pushing its rail construction projects deep into fall. The company spent $4 billion on rail improvements last year, much of on improving traffic flow on its Chicago to Seattle line that crosses the far northern reaches of Montana and North Dakota.
Accommodating Bakken oil shipments was a major reason for that expansion. The construction itself, and the slow speeds that come with it, contributed to the fall slowdown, said Dan Mack, CHS vice president of rail transportation.
Mack said the construction, combined with the cold winter, and a new customer in Bakken oil, has been a challenge for BNSF and a challenge for agriculture. The prolonged delay has cost CHS business.
“We were forced to reduce the overall size of our export positions accordingly,” Mack said. “We didn’t feel we were maximizing our capacity. We couldn’t get any kind of reliable pipeline without any kind of consistency.”
Last year, from Chicago to Montana, BNSF had as many as 10 rail construction projects going simultaneously. Many of the projects involved new sidings; long stretches of sidetrack built parallel to the main line so BNSF’s 7,000-foot shuttle trains could pull over and allow each other to pass.
That construction meant rail crews weren’t able to pilot a train as far as they could normally before having to get off. Work shifts for train crews are set by hours, not miles, which meant crews slowed by construction had to pull over. Consequently, BNSF also needed more crews to get from Chicago to Seattle.
Traffic conditions didn’t improve when construction ended for the season. Winter hit with some of the coldest temperatures on record across the Northern United States. Steve Forsberg, BNSF spokesman, told The Gazette that a train’s air brakes run into problems in extreme cold. It becomes impossible to maintain air pressure through the 7,000 feet of hoses and seals when the temperature is extremely cold.
BNSF had to shorten its trains to 4,500 feet to accommodate the cold, Forsberg said, which has meant more trains on the track to haul a similar number of cars. Forsberg said it isn’t accurate to say rail and coal shipments are keeping grain from being shipped. Last year was BNSF’s busiest since 2006, when freight rail traffic was at an all-time high, but BNSF was nowhere near capacity, he said.
The shipping challenges this year look a lot like 2013. BNSF will spend $5 billion on improvements this year. Trains will have to slow down to accommodate that construction, though more than $1 billion of that money will pay for additional trains.
The amount of oil shipping by rail, roughly a million barrels a day from the Bakken, isn’t going to slow. Grain shipments will continue to be challenged, which will cut into business for CHS and others.
“The thing I think people need to understand is that oil is kind of new. It’s fast-growing, it’s noticeably impacting all of us. You can’t jump to the conclusion that it’s being preferred over everything else,” Mack said. “It’s had three or four years of continuous growth and continues to be on a growth curve. Over time it will find its place.”
CHS is also a fuel company, with a refinery in Laurel, but the company gets its oil by pipeline, not rail, Mack said.
The rail construction should help in the long run, Mack said. In the short term, there will be delays.