Large U.S. soybean and corn (maize) crops and strong exports are expected to tax transportation capacities this fall, especially with storage options limited in many areas. Increased demand for grain shipping services and rising fuel prices already have pushed transportation costs higher. And as occurred during the height of winter and spring wheat harvests, rail deliveries of grain and oilseeds are expected to lag as the fall harvest in the U.S. progresses.

Adding to concerns about fall grain transportation is the record early harvest of soybeans and especially of corn compared with last year’s late harvest. As of Oct. 10, corn in the 18 largest producing states was 51% harvested, far ahead of 13% at the same time last year and well ahead of 30% as the 2005-09 average for the date, the U.S. Department of Agriculture (USDA) said in its Oct. 13 Weekly Weather and Crop Bulletin. Soybeans in the 18 major states were 67% harvested as of Oct. 10, well ahead of 22% last year and 48% as the five-year average. The grain sorghum harvest reached 52% completed in the 11 major states, also ahead of 33% a year ago and 43% as the average, the USDA said.

“Warm weather, sunshine, and minimal precipitation provided near-ideal harvest conditions for corn and soybean producers across the Corn Belt, Great Lakes States, and the Northern and Central Great Plains,” the USDA said in the bulletin for the week ended Oct. 10. “In these areas, significant harvest advancement occurred during the week, pushing harvest to an even more rapid pace. Nationally, this is a record corn and soybean harvest pace for Oct. 10.”

The USDA noted in its Oct. 7 Grain Transportation Report that continued dry weather throughout the Midwest may accelerate harvest and “create additional demand for transportation services.” The department said railroads originated 23,177 carloads of grain during the week ended Sept. 25, up 19% from a year earlier and 9% above the three-year average. Barge grain movement totaled 511,944 tons for the week ended Oct. 2, up 76% from a year ago. And during the week ended Sept. 30, there were 44 ocean-going vessels loaded at the Gulf, up 13% from last year, with 74 vessels waiting to be loaded in the next 10 days, up 14% from a year earlier.

Rail rates were up sharply for the week and from last year. Non-shuttle secondary railcar bids and offers were $444 above tariff during the week ended Oct. 2, the USDA said in the Oct. 7 report, up $106 from $338 above a week earlier and compared with $101 above tariff during the week ended Oct. 3, 2009. Average shuttle train rates were $1,238 above tariff for the week ended Oct. 2, 2010, up $1,313 from $75 below a week earlier and compared with $380 above tariff a year ago.

The weekly rail transport cost indicator (difference between nearby secondary rail market bid and average bid for base year 2000, which equals 100) was 539 the week ended Oct. 6, more than double 208 a year ago, according to the USDA.

The volume of grain needing to be shipped is expected to especially bog down the rail system. The USDA forecast the largest U.S. soybean crop ever at 3.408 billion bushels, up 1% from last year and up 15% from 2008. The 2010 corn crop, estimated at 12.664 billion bushels, while trimmed from earlier forecasts due to lower-than-expected yields, still is seen as the third-largest ever after 2009 and 2007 and is up 5% from 2008. The 2010 hard red winter wheat crop, estimated at 1.018 billion bushels, was up 11% from 2009 with delays of a week to 10 days common across the state of Kansas at the height of harvest earlier in the summer.

While railroads have done the usual pre-placement of rail cars in anticipation of demand to ship the fall crops, trade sources fully expect delays, with some already noting a drop in rail car “velocity,” or the number of rail car trips between the same points during a month.

In addition to large crops, strong grain and soybean exports have increased demand for rail and barge shipments to U.S. ports this year com- pared with 2009 and created some concern about export capacity, or backlogs created by accidents, floods or sheer volume.

For example, part of the Houston, Texas shipping channel was closed Oct. 3 when barges hit a tower supporting power lines over the channel. Although the channel was reopened Oct. 6, the Coast Guard indicated it would be several days before vessel traffic was back to normal. The USDA said two elevators with ships loaded or waiting to load were affected.

“Since the elevators are full of grain, this has added to existing rail congestion in the Houston area because the elevators cannot unload railcars until empty vessels arrive,” the USDA said. “During 2009, the affected elevators accounted for about half of Texas Gulf wheat and sorghum shipments.” A temporary rail embargo was in place until the situation improved.

Exports were expected heavy for soybeans, corn and especially wheat due to shortages from other exporting countries, especially Russia and Ukraine. Soybean exports in 2010-11 (September-August) were projected by the USDA in its Oct. 8 World Agricultural Supply and Demand Estimates at a record 1.52 billion bushels, up 1% from the previous record in 2009-10 of 1.498 billion bushels. Corn exports for the same marketing year period were projected at 2 billion bushels in 2010-11, up slightly from 1.987 billion bushels a year earlier. And wheat exports for 2010-11 (June-May) were projected at 1.25 billion bushels, up 42% from 881 million bushels in 2009-10.

In the third quarter of calendar 2010, total export inspections of wheat, corn and soybeans were 25.75 million tonnes, up 20% from the second quarter, up 8% from the same period last year and 6% above the five-year average, the USDA said in its Oct. 7 Grain Transportation Report.

“Third-quarter inspections also were the highest since 2007, which was a record year for U.S. grain exports,” the USDA said. “Demand increased for U.S. grain due to less competition from other major exporting countries. The increase could also be due in part to Russia’s ban on grain exports in mid-August due to a severe drought.”

Compared with the record year of 2007, total grain shipments from the Pacific Northwest were up 17% at 7.168 billion tonnes in the third quarter , from the U.S. Gulf were down 10% at 15.294 billion tonnes, and from the Great Lakes and eastern ports were down 44% at 1.182 billion tonnes, according to the USDA.

Wheat and soybean export inspections were up during the third quarter while corn inspections decreased. Wheat inspections totaled 8.3 million tonnes, up 36% from the same period last year and 4% above the five-year average, with significant increases to Nigeria and Latin America.

Soybean export inspections totaled 4.06 million tonnes, up 11% from the third quarter of 2009, “due to the larger crop and increasing Asian demand,” the USDA said. About 870 million tonnes, or 21%, of the total went to China during the period.

Export inspections of corn during the third quarter totaled 13.38 million tonnes, down 5% from a year earlier, “due in part to higher prices and some quality problems with the old crop,” the USDA said.

The USDA said vessel loading activity was likely to “pick up” due to the early corn and soybean harvests, strong export inspections and the large amount of undelivered export sales yet to be shipped.

Freight demand for products other than grain and oilseeds also was increasing, which in some cases competes for services, such as personnel or locomotive power for rail or trucks.

While grain shipments were up 19% from a year ago in the week ended Sept. 25, shipments of coal, which are about six times those of grain, were up 8%, the Association of American Railroads reported.

Truck tonnage, typically a leading indicator of economic change, has begun to recover, although with fits and starts, according to the American Trucking Association (ATA). The ATA’s seasonally adjusted truck tonnage index in August stood at 106.9% of the year 2000 base of 100, down 2.7% from July and the largest decrease since March 2009. But the index was up 2.9% from August 2009, the ATA said, and for the year tonnage was up 6.2% from the same period in 2009. The monthly index reached multi-year lows in the first half of 2009, climbed sharply in the fourth quarter of last year and has seen monthly swings both up and down in 2010.

“We fully anticipate sluggish economic growth for the remainder of this year and the latest tonnage numbers are reflecting that slowdown,” ATA chief economist Bob Costello said. Still, Costello said the trucking environment has “changed dramatically,” and “motor carriers can now do better with small increases in demand since so much supply left the industry during the recession.”

A major dilemma facing the industry for some time has been the declining number of truck drivers and consequently reduced truck availability. The driver “pool” is aging and attracting fewer drivers than are retiring, the ATA has noted.

While reports of truck availability related to grains have been mostly anecdotal, trade sources have indicated acute shortages at specific times and in specific areas. The problem will be accentuated with this year’s large corn and soybean harvests, sources suggested. The problem often spills into other areas during harvest, such as a lack of trucks available for millfeed hauling in the Southwest during the fall row crop harvest.

The USDA’s truck grain transport cost indicator, based on diesel fuel prices, was 201% of the year 2000 base of 100 as of Oct. 6, up from 173% a year earlier.

In its most recent Grain Transportation Quarterly Update, the USDA said the national average cost to haul grain by truck for 25 miles was $4.27 per mile in the second quarter, down 9% from the same period in 2009, the average for a 100-mile haul was $2.41 per mile, down 6%, and for 200 miles was $2.33 per mile, up 8% from last year. The department’s national grain truck usage index was unchanged from a year ago during the second quarter, but the truck availability index, which tracks the perceived ease of hiring a truck by grain elevators, was 2.3 during the quarter compared with 1.7 a year earlier, with 1 being very easy and 5 being very difficult to hire trucks.

In addition to increased demand, rail and truck shipping costs for grain and other products also have risen because of higher fuel costs, especially for diesel fuel.

The U.S. on-highway diesel price, used by railroads to determine fuel surcharges as well as directly affecting trucking costs, averaged $3 a gallon as of Oct. 5, up 16% from a year ago and the highest since late May, according to the Energy Information Administration of the U.S. Department of Energy. Average prices dipped below $2.90 a gallon only once since mid-March, compared with 2009 when the weekly U.S. average never rose above $2.81.

As a result, railroad fuel surcharges also are up considerably from last year, adding to the cost of shipping grain either to interior locations or to export elevators.

Ron Sterk is assistant editor of Milling & Baking News, sister publication of World Grain. He can be reached at