Category Archives: Farming

Farming, Rail industry

Farmers Union Calls Ability to Deliver Grain Shipments by Rail at Harvest ‘Substantially Inadequate’

Repost from National Farmers Union
[Editor: This media alert does not name the massive expansion of crude by rail shipments in the upper Midwest as the cause for lack of rail cars for shipping farm commodities, but there is little doubt this is the problem.  – RS]

August 6, 2014
Contact: David Thews, 202-554-1600,  dthews@nfudc.org
NFU Calls Ability to Deliver Grain Shipments by Rail at Harvest ‘Substantially Inadequate’
Warns Surface Transportation Board Farmers May Be Forced to Dump Grain

WASHINGTON (August 6, 2014) – National Farmers Union (NFU) President Roger Johnson warned the Surface Transportation Board (STB) that BNSF Railway (BNSF) and Canadian Pacific (CP)’s ability to deliver grain and ethanol at harvest are “substantially inadequate” and are resulting in farmers piling grain on the ground because of lack of transportation options.

“We are especially concerned regarding wheat, since harvest has already started and grain remains in the bin from last year’s harvest,” noted Johnson in a letter today to the STB chairman and vice chairman.  “While BNSF claims that the total number of late shipments of wheat has declined nationwide, 95.42 percent of all past due cars are concentrated in Montana, North Dakota, South Dakota and Minnesota. BNSF has promised to improve their performance, but we are still subject to delays and Average Train Speed at year-long lows,” the letter notes.

“Grain shipments in North Dakota are critical,” said Johnson.   BNSF reported in its latest weekly update that there have been 2,399 delayed rail cars with an average delay of 23.6 days. CP reported 22,457 open requests with an average of 11.71 weeks.   The letter cites anecdotal evidence from four different grain elevators indicating that their oldest orders are from early March and shuttle orders are up to 2,000 cars behind. “These numbers are staggering and simply unacceptable,” he said.

Johnson notes that in South Dakota, NFU members are hearing about significant delays directly from local grain elevators across the state. At one particular elevator that handles 15 million bushels of grain per year, 3 million of those bushels will not move before this year’s harvest.  “Due to the backlog, farmers are now dumping wheat on the ground because the elevators will not take on the increased liability,” he said.

Johnson also voiced his concern about the ethanol industry, which relies heavily on rail for transportation.  “While the June 20 decision rightfully addressed grain shipments, we encourage STB to consider shipments of ethanol as a priority as well,” he said.  “Failure to bring ethanol to market will hurt consumers because of higher gasoline prices, and will work against our efforts to offset imports of foreign oil.”

A full copy of the letter is here.

National Farmers Union has been working since 1902 to protect and enhance the economic well-being and quality of life for family farmers, ranchers and rural communities through advocating grassroots-driven policy positions adopted by its membership.

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Bakken Shale, Coal, Crude By Rail, Farming

Crude by rail causing delays for rail shipments of other goods

Repost from The Wall Street Journal
[Editor: We missed this significant article from last March.  Also on the delays of farming shipments, see the Reuters report of April 15, 2014: Farmers: Oil trains may delay fertilizer shipments.  – R]

Surge in Rail Shipments of Oil Sidetracks Other Industries

Pileups at BNSF Railway Is Causing Delays for Shippers of Goods Ranging From Coal to Sugar
By Betsy Morris, Jacob Bunge and John W. Miller, March 13, 2014
A train carrying crude oil heads west through the small town of Shelby, Mont., in November. A major snarl in railroad traffic is ricocheting through the supply chains of businesses across the U.S. AP

A major snarl in railroad traffic is ricocheting through the supply chains of businesses across the U.S., causing delays and losses for shippers of goods ranging from coal to sugar.

Many of the problems stem from pileups at BNSF Railway Co. in a critical northern stretch of the country where it is shipping crude oil from North Dakota’s booming Bakken Shale region. The railroad, one of the biggest in North America, was already taxed by the heavy demand for oil transport. But its difficulties multiplied when it ran out of locomotives and crew, as a bitter winter forced it to use smaller trains.

That has caused a ripple effect across the country as shipments have been delayed. Deliveries of empty grain cars to farmers and grain elevators in the Midwest and Great Plains are running about two to three weeks late, the railroad says. The chief of a major sugar producer said he likes to load 50 railcars a day this time of year, but BNSF sometimes brings more than 50 and sometimes 30.

An executive close to big utility companies says coal-fired power plant inventories are running much lower than the usual 30 days. “The railroads tell us they aren’t serving power plants until their inventories are in single-digit days,” he said.

BNSF isn’t the only railroad with capacity problems, but its woes have been aggravated by a big grain harvest and its surging crude business.

The railroad knew it was in trouble when winter hit. “We found ourselves behind the curve,” said Bob Lease, vice president, service design and performance, for BNSF. “Now, we are finding we can’t fill all of the demand” as quickly as usual.

The backlogs could wind up costing shippers hundreds of millions of dollars, says Steve Sharp, president of Consumers United for Rail Equity, a group representing agriculture companies, manufacturers and utilities. His group has been pushing for tougher railroad regulation.

Andrew Walmsley, director of congressional relations for the American Farm Bureau Federation, a trade group for farmers, worries that continued capacity problems could hurt U.S. competitiveness in the world arena. “Our reliability as a trading partner comes into question anytime we can’t provide the most cost-competitive price in a predictable and timely manner,” he said.

BNSF is scrambling. The railroad is leasing and buying locomotives by the hundreds and hiring new crews. In mid-February it began building new track on top of frozen snow-covered ground along its main oil-patch route. It normally wouldn’t have attempted such a project until spring.

Mr. Lease says traffic should become more “normalized” by April 1, but he concedes that the railroad’s challenges will extend through 2014. “It takes a while to unravel,” he said.

BNSF, a unit of Warren Buffett’s  Berkshire Hathaway Inc.,  BRKB +1.19%     invented the business of carrying crude oil by rail when it launched its first long oil train, essentially a rolling pipeline, in 2009. The business has sharply exceeded its expectations. Shipments of crude by rail from North Dakota rocketed to a peak of 800,000 barrels a day last October from fewer than 100,000 barrels a day in 2010.

The surge has contributed to a tangle with potentially widespread impact. Larry Stranghoener, chief financial officer of fertilizer maker  Mosaic Co.  MOS +0.73%     , says that transport problems, including the crunch in railroad capacity, could spell “a slower season.”

“The primary preoccupation of our sales force, our supply chain and our customers frankly is getting product to them in time for the spring season,” he told the Minneapolis-area company’s investors Wednesday. Any delays transporting Mosaic’s fertilizer to dealers could cause them to defer additional orders, he said.

Some shippers, eager to move their products, have opted to use trucks. Trucking rates compare with rail costs within a 500-mile radius, but beyond that companies can wind up paying four to five times as much on a per-ton basis, says one shipping official.

At Black Gold Farms, based in Grand Forks, N.D., Chief Executive Gregg Halverson says his company has had to pay more to hire trucks to transport its potatoes, which it sells to chip makers.

“There’s more demand for truck transportation, and that hits us between the eyes,” Mr. Halverson said. “It’s not only the actual availability of the trucks, but trucking firms having trouble getting drivers, because of demand from the oil patch.” He declined to estimate how much more he is paying for trucks.

American Crystal Sugar Co., which says it supplies about 15% of the nation’s sugar, had to slow production at three of its five plants for 11 days in mid-February because it was running out of storage space while waiting for trains to ship its sugar to food companies. That has disrupted the Moorhead, Minn.-based cooperative’s just-in-time delivery system, said David Berg, its chief executive. “The railroad just threw that into complete chaos,” he said.

He said delays in outbound shipments of sugar have interfered with the production schedules of American Crystal’s customers, many of them major food manufacturers.

While he said he wasn’t aware of any food companies that have had to halt production, “They’ve been running on fumes for weeks,” he said. “We’ve been humping trucks all over the U.S. to keep people in supply.” American Crystal supplies  General Mills Inc.,  GIS +1.27%      Kraft Foods Group Inc.,  KRFT +1.30%     Nestlé SA, Mars Inc. and  Kellogg Co.  K +1.09%     , among others.

Mr. Berg and Perry Cerminara, director of global sweetener and energy-risk management at  Hershey Co.  HSY +0.07%     , called the problems caused by BNSF “serious” in a March 4 letter to regulators and stressed the “urgent” need to fix them. Mr. Cerminara wrote on behalf of the Sweetener Users Association, representing food manufacturers.

A spokesman for BNSF said it is working with customers individually to address their most critical issues and plans record spending on expansion this year.

Utilities are hoping railroads can improve their capacity before the busy summer season. “We try to build up inventories to around 40 days, so we’re counting on spring,” said one official at a coal-fired power plant. But, he added, “We’re not counting on a magic bullet.”

—Tony C. Dreibus, Annie Gasparro, Chester Dawson, David George-Cosh and Laura Stevens contributed to this article.
Bakken Crude, DOT-111, Farming, Federal Rail Administration, Rail accidents, Rail routing, Tank car design

Iowans worry: unsafe tank cars, hazardous loads, unsafe speeds

Repost from KCRG ABC9, Eastern Iowa

Outdated Rail Cars Carry Dangerous Loads Through Iowa

By Erin Jordan, The Gazette


FAIRFAX, Iowa — Will Forester spends his days fixing boats. But he thinks about trains.

Every 10 to 20 minutes, he hears the horn of a Union Pacific train as it approaches Forester Marine in downtown Fairfax. The freight trains hauling coal hoppers, tank cars and flatbeds roar by his boat-repair shop, shaking the century-old former depot and making Forester’s ears ring.

“They go by at about 70 miles per hour,” Forester said. “It’s just pretty fast for a little town.”

Included on those trains are DOT-111s, tank cars used to carry ethanol, crude oil and other hazardous liquids across the country despite concerns about the cars’ risk of puncture and fire in a derailment.

Several high-profile train wrecks, including a fiery crash in Canada last summer that killed 47 people, have renewed scrutiny of the DOT-111s, regarded in Iowa and across the nation as the workhorse of the energy industry.

Although never intended for high-speed use, DOT-111s may be driven through some parts of Iowa at nearly four times their recommended speed.

The Canadian government has ordered all DOT-111 cars be upgraded within three years. So far, the U.S. Department of Transportation has issued only piecemeal restrictions and voluntary recommendations.

Outdated cars, hazardous loads

The next time you’re stopped for a train, look for black, tube-shaped tank cars. Those are likely DOT-111s.

“At any one time, you can see literally dozens and dozens of 111s going by,” said Tom Ulrich, operation officer for the Linn County Emergency Management Agency.

If a train derails, hazardous-materials teams are charged with preventing leaks that might cause fire, an explosion or a spill that could damage the environment or kill animals. But officials don’t always know the type or volume of hazardous materials moving through their jurisdictions.

A 2010 commodity study in Johnson County showed 443 million gallons of flammable liquids traveled the Iowa Interstate Railroad, which runs through Iowa City. Flammables included ethanol, petroleum products and paint.

Another 2.3 million gallons of corrosives — including hydrochloric acid, battery acid and potassium hydroxide — shipped via Iowa Interstate and Cedar Rapids and Iowa City Railroad (CRANDIC) in 2010, the study showed.

Other hazardous materials moving by rail in Johnson County in 2010 included environmentally hazardous substances, anhydrous ammonia and pesticides.

Linn County almost certainly has higher volumes, Ulrich said. But officials won’t know until after a regional commodity study starting this summer.

Linn County will contribute $9,000 to the first phase of the study, which eventually will include Benton, Buchanan, Cedar, Clayton, Clinton, Delaware, Fayette, Jackson and Jones counties. The local emergency planning committee for the smaller counties already has received $18,000 in Homeland Security grants toward the project, committee chairman Mike Ryan said.

Most rail transport safe

Most hazardous materials are shipped via rail without incident, said Tom Simpson, president of the Railway Supply Institute, a trade group that acts on behalf of suppliers to North American railroads.

“Over 99 percent of hazardous shipments arrive safely,” he said. “DOT-111’s operate every day of the year safely. They have been built to the standards the DOT has in place.”

There are about 97,000 DOT-111s carrying flammable liquids across the country, Simpson said. More than 40 percent of the cars are carrying crude oil and another 30 percent are freighting ethanol.

“You can see the DOT-111s are an important part of our domestic energy-development service,” he said.

The rail car industry started making safer tank cars in 2011, but with a national uptick in crude production, the DOT-111s are critical to shipping oil from places such as North Dakota and Colorado to refineries in Texas and Louisiana.

Bakken crude a concern

The Bakken formation, which covers about 200,000 square miles in North Dakota, Montana and Canada, has been known to be a vast oil source since the 1950s. But hydraulic fracturing, or fracking, has boomed in recent years.

Bakken crude has more flammable gasses and is more likely to explode, the federal government has warned.

Forty-seven people were killed July 6 when a runaway 74-car freight train derailed in Lac-Megantic, Quebec. The train, carrying Bakken crude in DOT-111 tank cars, started fire and several tank cars exploded, destroying more than 30 buildings.

The area was flooded with crude and other chemicals that are still being cleaned up today.

A train carrying crude nearly toppled a bridge in Philadelphia in January, and another crude oil train derailed and caught fire in downtown Lynchburg, Va., last month. That fire caused an evacuation of hundreds of people and spilled oil into the James River.

It’s hard to tell where Bakken oil is being shipped in Iowa.

Canadian Pacific, which describes itself as the “only rail carrier providing single line haul service between the Bakken and major crude oil markets in the Northeastern United States,” has an online map showing routes that appear to go from Mason City through Eastern Iowa towns that include New Hampton, Postville and Marquette.

A 2012 crude-by-rail map published by the U.S. Pipeline and Hazardous Materials Safety Administration shows heavy Bakken transports along the Canadian Pacific line that runs on the Iowa side of the Mississippi River.

Officials from Canadian Pacific and Union Pacific would not confirm whether Bakken oil is being shipped on their railroads.

“For security reasons, we don’t provide specifics,” Canadian Press spokesman Ed Greenberg said.

Onna Houck, corporate counsel for Iowa Interstate Railroad, said the company does not ship Bakken oil on its 500 miles of track in Iowa.

Starting in June, railroads that ship 1 million gallons of more of Bakken crude on a single train must notify each state’s emergency response commission, according to a May 7 emergency order from the U.S. Department of Transportation.

Ethanol shipped in DOT-111s

Ethanol also can be dangerous when it’s shipped in outdated tank cars.

An Oct. 7, 2011, trip on the Iowa Interstate Railroad ended in disaster when 26 cars jumped the tracks near Tiskilwa, Ill. Of 10 DOT-111s carrying ethanol, three erupted in massive fireballs causing officials to evacuate the town of 750 people, the National Transportation and Safety Board reported.

“The poor performance of DOT-111 general specification tank cars in derailments suggests that DOT-111 tank cars are inadequately designed to prevent punctures and breaches, and that catastrophic release of hazardous materials can be expected,” the NTSB said.

Iowa Interstate Railroad ships ethanol from plants with a combined capacity of more than 1 billion gallons, Houck said. Railroads can’t reject legal loads, even if the freight is hazardous material.

As the shippers own or lease the rail cars, railroads have little say over the use of DOT-111s.

ADM, which produces ethanol as part of its grain-processing operations in Cedar Rapids, declined to speak with The Gazette about its use of DOT-111s. Penford Products, which also has an ethanol plant, did not return calls seeking an interview.

Speed can influence derailments

It’s not just the materials inside a train but the speed that can increase risk.

Albert Ratner, a University of Iowa associate professor of mechanical engineering who studies fires during train derailments, said DOT-111s were designed to drive about 18 miles per hour. With less than half an inch of steel around the center, weak end caps and easily damaged valves, the DOT-111 doesn’t hold up well in a crash, he said.

“If you’re in areas where they’re going 40, 50 miles an hour, you’re really rolling the dice because if the car derails, the car’s not designed for that,” Ratner said.

Emergency manager Ulrich agreed.

“When they derail, even at low speeds, there’s the opportunity for the valving to shear off, top and bottom, and for the tank itself to be compromised,” he said.

The Union Pacific line through Fairfax has a speed limit of 70 miles per hour, with engineers reducing the speed to 50 mph only if there are 20 or more cars with hazardous materials, Union Pacific spokesman Mark Davis said.

“In a lot of rural communities, faster is better because the crossings aren’t blocked for as long,” Davis said.

The speed limit on Iowa Interstate Railroad is 40 mph. Canadian Pacific’s tracks through Iowa vary from 10 to 40 mph.

Stopgaps and precautions

The rail car supply industry so far has built more than 17,000 upgraded tankers that include thicker steel, stronger end caps and more protection for top fittings, Simpson said. They will have 55,000 by the end of 2015.

But until the DOT-111s can be replaced, the industry is using stopgaps and precautions.

The UI’s Ratner has researched fuel additives that prevent mist, which is often what ignites in a train derailment. The additives can save lives but cost five to 10 cents per gallon, he said.

Canadian Pacific introduced a $325-per-car surcharge in March for all older tank cars as a way to encourage shippers to upgrade, Greenberg said.

Union Pacific tries to keep its tracks in top condition to prevent derailments, invests heavily in education for employees about hauling hazardous materials and works with emergency managers in every county, Davis said.

Still, accidents happen. A train on UP lines dumped 6,500 gallons of oil during a derailment May 9 near LaSalle, Colo.

“We have to work with our customers to help make the transportation of their products safer,” Davis said.