June 10

USDA says grain transportation demand has increased compared to a year ago, but major railroads indicate they are handling current traffic levels easily. Continued strong domestic demand for grain and soybeans and stronger exports of wheat and corn are driving the increased need for transportation.

Both rail and barge shipment demands have increased over year-earlier levels. Increased wheat exports, partly the result of USDA donations, have driven up demand for rail transportation in the corridors connecting the Central and Southern Plains to the Texas Gulf. Stronger corn exports have contributed to increased demand for corn shipments to the Louisiana Gulf.

The report also says ocean freight rates have been low for several months, and the spread between rates to the Far East from the Gulf versus the Pacific Northwest strongly has favored Gulf shipments. The spread is expected to remain favorable to the Gulf for several more months.

Large grain and soybean stocks are keeping storage demand at unusually high levels heading into the summer harvest, the report notes.

One issue that rail shippers and receivers in the eastern United States will be watching the next few months is the June 1 takeover of Conrail operations by CSX Transportation and the Norfolk Southern. Although more than two years of planning has gone into the takeover, some merger-related problems may be inevitable, the report says.