STB Pressures Two Railroads to Speed Fertilizer Shipments

This story appears in the April 21 print edition of Transport Topics.

BNSF Railway and Canadian Pacific Railway, the primary railroads in oil-rich North Dakota, last week came under federal pressure to accelerate fertilizer shipments to the region after delays on both lines slowed that freight as planting deadlines approach.

The Surface Transportation Board directed the railroads to provide weekly status reports on fertilizer shipments after an April 10 hearing where farmers and other agricultural interests pleaded for relief.

North Dakota “isn’t just about oil” production that’s booming in the state’s Bakken energy region, said farmer Bob Wisness of Watford City, speaking at the hearing on behalf of the North Dakota Grain Growers Association.

“It seems oil, coal and container shipments are ahead of grain in the list of shipping priorities,” said Roger Johnson, president of the National Farmers Union, focusing on service difficulties in Montana, Minnesota and South Dakota.

Oil shipments by BNSF rose 43% last year as the railroad capitalized on the domestic oil production boom. BNSF, which has said delays will persist all year on routes through North Dakota and neighboring states, also is the largest hauler of truck/rail freight that has been held up.

Last week, J.B. Hunt Transport Services, the largest user of rail intermodal service, blamed storms and related rail delays for reducing its shipments 4% during the quarter.

The Bakken is producing 1.1 million barrels of oil per day, Johnson said, compared with 800,000 barrels at the same time last year and 200,000 barrels in 2009.

BNSF spokeswoman Amy Cases said in an e-mailed statement that “we understand the shortness of the [fertilizer] season and the necessity of timely delivery,” saying steps are being taken to facilitate the movements.

Canadian Pacific didn’t respond to requests for comment from Transport Topics.

“I cannot blame the railroad for wanting to maximize their profit, but their choices are putting thousands of North Dakota’s farmers in jeopardy,” Wisness said. “On my farm, at least three-fourths of my 2013 production is still in the bins,” he said in reference to the shortage of railcars.

STB’s decision five days after the hearing signaled its concern.

“This directive is intended to focus each carrier’s attention on these very time-sensitive deliveries while the carriers simultaneously work to address the extensive service and car-supply issues for all commodities and to get those commodities moving on the rail network,” the board said.

Dave Andresen, CEO of Full Circle Ag, a farm services cooperative, told STB that the cooperative has been notified by one fertilizer supplier that it can send only 66% of its shipments that farmers paid millions of dollars for last fall and winter.

The crisis is immediate because “the planting season is over for corn at the end of May,” Andresen said.

“So if we’re concerned about rail service hauling more corn out this fall, we may have just fixed part of the problem because it may not get planted, plain and simple,” he said.

Andresen asked that the board allow competing carriers to use the tracks owned by the railroads that service the farm areas.

South Dakota Secretary of Agriculture Lucas Lentsch read a letter at the hearing from Gov. Dennis Daugaard (R) that said the shortage of railcars for farm products already has caused crops to spoil in storage facilities. He added that ethanol producers are being hurt as well as farmers.

“The shortage of railcars is so acute that our storage facilities may not have enough space to accommodate the wheat harvested this summer and the corn and soybean harvest this fall,” the governor’s letter said.

As part of its order, STB said the two railroads are to supply fertilizer delivery data in their weekly reports, by state and showing the number of cars, shipped or received, cars billed to agricultural destinations and the number of cars placed at receivers’ facilities during each prior week.