Regulators said Monday that the Canadian Pacific Railway, one of two key railroads that serve Minnesota farmers, isn't making enough progress in shipping a huge backlog of grain.
Millions of bushels of corn and soybeans from 2013's harvest are still in storage because of an overburdened rail system in the upper Midwest. The big goal now is to ship last year's crop before this year's harvest -- expected to be large -- comes in.
In June, the U.S. Surface Transportation Board ordered Canadian Pacific and Burlington Northern Santa Fe Railway Co., the two main railroads serving the region, to provide regular reports of their efforts to transport last year's crop. In a letter made public Monday, the U.S. Department of Agriculture said Canadian Pacific is still behind.
"Despite some progress ... USDA remains concerned about CP's ability to resolve its backlog and the lack of transparency in CP's reporting to the [Surface Transportation] Board," USDA's Edward Avalos, undersecretary for marketing and regulatory programs, wrote.
"Grain elevators in some locations, such as South Dakota and Minnesota, could run out of storage capacity during the upcoming harvest, requiring grain be stored on the ground and running the risk of spoiling," the USDA letter said. "The projected size of the upcoming harvest creates a high potential for loss in the affected states."
Canadian Pacific, whose U.S. operations are based in Minneapolis, said in a statement that it is working closely with its customers and is "committed to having the resources in place for this fall. CP's operating plan going forward into the fall is focused on ongoing improvement in the velocity of our trains and effective utilization of our railcar fleet in order to deliver more cars each week."
The USDA estimates Canadian Pacific would need to move 4,725 rail cars per week to clear the grain backlog by Oct. 3. But in July the railroad was moving an average of 1,969 cars per week, the USDA's letter said.
Minnesota is one of the nation's largest producers of corn and soybeans. The upper Midwest, including Minnesota, is also a major grower of spring wheat. The spring wheat harvest has already begun, putting more pressure on a rail system stretched to its limits by the booming North Dakota oil patch.
Bob Zelenka, executive director of the Minnesota Grain and Feed Association, said farmers are worried about the rail-car bottleneck. "There's really a concern over whether we will have the majority of our old crop out when the new crop comes in."
Zelenka said Burlington Northern Santa Fe is running behind, too, but not as much as Canadian Pacific, and that Burlington Northern Santa Fe has told shippers it will be caught up by September.
In a statement, Burlington Northern Santa Fe said it "continues to see gradual improvement across our network for all customers. Specific to agricultural customers, we remain focused on moving last year's crop in time for this year's harvest." The company said it "will continue to make steady progress into September."
Business on 08/14/2014