No Quick Fix To Railroad Congestion

Railroads says they are investing as much as they can and building as fast as they can, but it is going to take some time to truly increase capacity.

Do you have enough grain storage?

You might be asking yourself that question if you had attended the recent rail transportation meeting held by North Dakota’s U.S. Senators and the North Dakota State University Center for Agricultural Policy and Trade Studies.

Industry analysts don’t see a quick fix to the rail shortage problem. It could continue to be off-again, on-again problem anywhere from 3 to 10 years. This fall, it hasn't been a problem because grain prices are low and few people want to sell grain. 

Sure, you have built more grain bins in recent years. But did they just cover the added bushels you are producing due to higher yields, new crops (corn) and additional acres?

Do they allow you to store grain longer, maybe for 2 to 2 ½ years?

“My dad used to say that we grow wheat every year, but sell it every third year,” said Neal Fisher, North Dakota Wheat Commission administrator, who spoke at the meeting.

Lately, we’ve gotten pretty use to just-in-time sales, he said.

Selling off the combine or physically moving a lot of grain when the market rallies may no longer be possible given the shortage of locomotives, crews and track to ship grain out of the Northern Plains.

By sitting in on the railroad meeting for a brief time, I learned there’s no quick fix to the transportation problem. The railroads say they are investing and building as fast as they can. It takes a while to build capacity.

At the same time, demand for freight services from energy and manufacturing industries across the Northern Plains continues to grow.

It may take the railroads years to catch up. Some at the meeting said 3 to 5 years. One farmer said that judging for the last rail crisis he lived through, it might take 6 to 10 years.

Pete Hanebutt, North Dakota Farm Bureau’s director of public policy, said improving the system boils down to letting the free market work. “This problem doesn’t have a have a governmental, bureaucracy or an academic solution. It’s all about embracing capitalism.”

Railroads and ports will invest to meet demand. Elevators and farmers will invest in storage and transportation. Some farmers will invest in livestock, creating local more markets for grain and grain byproducts.

“We will work our way out of this,” he said.

It will just take some time.

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