USDA report examines impact of rail congestion and underscores importance of robust rail network

WASHINGTON, D.C. – U.S. Senators Amy Klobuchar (D-Minn.) and John Thune (R-S.D.) today commented on a newly released report that they called for from the U.S. Department of Agriculture examining the rail service challenges in the Upper Midwest in 2013 and 2014 and the implications these issues had on the region’s agricultural sectors. The report examines the causes and effects of rail congestion and underscores the importance of ensuring robust rail network capacity and investment in the future.

“Reliable and affordable rail service is critical for providing Minnesota’s agriculture producers with access to markets beyond our state’s borders,” Klobuchar said. “While service has improved in recent months, delays have caused lost sales, involuntary shutdowns at processing facilities and disruption to agriculture markets. This report underscores the importance of strong rail service to agricultural producers and will serve as a critical tool as we continue to improve rail service in Minnesota and across the country.”

“Grain car backlogs, storage issues, and rail car premiums affect transportation costs and commodity prices, which are critically important to our agricultural producers in South Dakota,” said Thune. “This report is an important resource for understanding future vulnerabilities and the importance of maintaining strong rail service for our agricultural producers and other shippers. While the railroads have made important gains in rail service in recent months, we need to work to ensure that this service continues. As chairman of the Senate Commerce Committee and a member of the Senate Agriculture Committee, I look forward to working on long-term solutions that address the increasing demands for prompt, reliable, and safe service.”

The report finds that in September of 2014 some of the major grain producing states most impacted by poor rail performance‎ had remaining grain and oilseed stocks in storage up to 40 percent higher than in previous years. USDA notes that the situation left less permanent storage available to accommodate another record harvest, as production and stocks exceeded permanent capacity by over 900 million bushels during the 2014-2015 harvest. The report also finds capacity issues and service concerns caused shippers to pay record-high car premiums, 28 to 150 percent above the average previous levels for roughly 65 consecutive weeks.

Access to the full USDA report is available here.