Railroads Hauling Less Coal, Oil, Grain

Pat Powers mumbled something this morning about needing the Dakota Access pipeline to free up rail cars for agriculture products. But the decreased railroad volumes that I reported in March continue to sideline railroad workers:

Industry observers blame lower coal shipments as a major reason for the shipment decline. BNSF, the largest railroad in North Dakota, reported its national volumes were down 6 percent in the first quarter of this year compared to last year, and coal shipments alone were down 33 percent. Its first quarter profits dropped 25 percent.

…U.S. carload traffic dropped 16.1 percent in April compared to the same month in 2015, according to the Association of American Railroads. But excluding coal, carloads were down just 2.8 percent from April 2015.

…Meanwhile, exports of crude oil by rail out of the Williston Basin, which includes North Dakota, has dropped from more than 800,000 barrels per day in late 2014 to roughly 500,000 barrels per day in February, according to the estimates from the North Dakota Pipeline Authority… [John Hageman, “Railroads See Lower Volumes; BNSF Furloughs Hundreds in North Dakota, Union Says,” Ag Week, 2016.05.16].

Even grain shipments are down:

Canadian Pacific, the other major railroad in North Dakota, reported a 15 percent drop in its U.S. grain carloads in the first quarter of this year, contributing to an overall decline of 4 percent. BNSF’s volumes of agriculture products were up 1 percent in the first quarter of this year [Hageman, 2016.05.16].

Dang: instead of pretending that pipelines create jobs, maybe Marty Jackley and Mike Rounds should stop advocating for oil pipeline companies and encourage more rail traffic to protect American jobs.


18 Responses to Railroads Hauling Less Coal, Oil, Grain

  1. Paul Seamans

    During Mike Rounds’ senate campaign Mike claimed that building the Bakken onramp would free up four unit trains. The actual figure for 100,000 barrels per day is closer to one and one half trains. It would be interesting to hear Mike’s latest take on this. Is it possible for Mike to support TransCanada and BNSF at the same time.

  2. oil and grain will rebound, I believe that to be a fact, some of the drop in grain is just coincidence, and could rebound this quarter. Oil is down, but it should go up somewhat slightly this quarter with a somewhat decent rebound in oil price.

    However coal, coal is a different story, 2/3rds of all coal companies are in bankruptcy, others are close. Coal plants are closing, and unlike oil, other things, are not going to just start right back up, most are closed for good. If any new coal plants are constructed in the next ten years, they’d be few are far between, not anywhere near what is currently being shut down.

    The benefits of rail, is that if the price falls, if the product becomes outdated and scarce, there will always be another similar product that can be used on the train. Where as a pipeline, they are kinda limited, I suppose you could use it for ethanol, but again, ethanol-oil same industry.

  3. Nick Nemec

    If there truly is a shortage of rail cars why is it common to see 25 grain hopper cars parked on the siding at Holabird, where there is no operating grain elevator, for weeks on end? My only answer is that there in no demand for them during the times they are parked there and they are simply being stockpiled until needed. The railroads will never build up to meet the peak demands of a very cyclical industry, agriculture. We need lots of cars at harvest and fewer the rest of the year. The industry has rightly adopted a model where grain is stockpiled locally during harvest and shipped out over the year to meet demand and contracts. The present method levels out the peaks and valleys as well as possible to maximize effective use of infrastructure.

    Powers should stick to those issues he knows something about, printing campaign yard signs and collecting old political buttons.

  4. Steve Sibson

    Cory, did you know railroads create more global warming than pipelines?

  5. mike from iowa

    There might be a whole lot less corn planted this year if the weather doesn’t straighten up. Many farmers around NW iowa have yet to complete corn planting and very few have any soybeans in the ground as of yet.

    Maybe there will be a glut of cars available for a crop that is not.

  6. Paul you actually beleive slick Mike do you,

  7. Wayne Pauli

    During a recent rip to the Hub City my wife and I noticed one heck of a large backlog of empty rail cars east of Aberdeen. There were lots of them just sitting there. We had the “build the pipeline so we can move commodity” discussion…Then laughed it off as just noise.

  8. Wayne Pauli

    that would be trip, not rip…sorry about that, and so is my left index finger for not hitting that “t” key.

  9. The drops in rail shipments of fossil fuels is good. The law of supply and demand has brought the price of oil well below the cost of producing bitumen (tar sands oil) which hopefully translates to reductions in fracking and methane fumes. The challenge ahead is to ramp up production of clean energy and jobs.

  10. There is a sure fire way to get the railways moving and to keep hiring more people to work on the lines, add freight. Take the huge amount of freight being sent over the highways that keep falling apart because of the weight, and send that by rail. Make the trucks smaller so they are not so destructive to the highways like they do in Europe. It can all work if we want it to.

  11. Jerry makes a good point. We need to send more freight over rail. Upgrading our rail system should be in concert with improving our highways, our ports, and pipelines. I would be happy to see an intermodal hub set up in Huron, Aberdeen or Sioux Falls. That means the railroad companies are going to have to step up. So far, Rapid City, Pierre and Eastern have done a good job.

  12. Bill Dithmer

    I dont think there is a shortage of rail cars. There is a shortage in farmers that want to sell their grain for drastically reduced prices from what they were using to figure opperating expenses. If no grain is moving there is no need for cars.

    It might get real interesting in a couple months when a farmer starts feeling the crunch for storage, and has to move something to have room for new crops.

    That $5000 an acre land doesnt look near as shinny as it did two years ago. Times like this gives ag lenders ulcers, and drives ag beggers toward their addictions.

    The Blindman

  13. Bill, that is another part of the puzzle. Farmers have done such a good job, they have farmed themselves right out of a job. granted some rail cars can be used to store some grain in, unless there is a viable market for that grain, it is just going to set on the tracks. The rail roads don’t make as much moving corn as they do oil or coal.

  14. Sibby, broaden your view. Pipelines haul a product whose extraction and consumption increases carbon emissions. Railroads reduce the need for the product those pipelines carry by hauling all sorts of cargo and people more efficiently.

  15. And I like Jerry’s point: expand rail transport, reduce truck use, save even more fuel and wear and tear on highways.

  16. Robert McTaggart

    Don’t most of the trains run on diesel today?

  17. diesel train engines run 24/7/365 whether hauling coal or not. drive into the Rockies in beautiful Yampa valley around Steam Boat Springs and you’ll see dozens at a time just sitting, running. Denver too. Grand Junction. anywhere there is heavy rail traffic carrying coal.

    its all the union’s fault though because they prevent railroads from running engineers and conductors more than a healthy, reasonable number of hours per day. the trains just have to sit for new crews, waiting, waiting, not moving, engines running, still running.

    if only we could just fluidize it all and put it into invisible pipelines so an ag state like SD could have republican legislators build them across our aquifers for the unbelievable construction jobs and efficiencies, so grain doesn’t get foreclosed from transportation to market.

    ah, the good old days. when we were all white, fat and happy. when America was great. when Koch’s had no federal regulations obstructing maximum profit, minimum costs. (play patriotic music in background). snnniffff