Rail Infrastructure Updates Necessary, Soybean Board Says

Railways could ease pressure on roads, saving transportation inputs, checkoff-funded study finds

Published on: Apr 11, 2013

As millions of bushels of U.S. grain commodities head to export markets via highway or waterway, a soy-checkoff-funded study says grains would ship more cheaply and efficiently by rail – if the U.S. railway system were up to the task.

"The U.S. soy industry needs a transportation system that runs smoothly in order to move our soybeans to markets, and railways are a major part of that," says Jared Hagert, coordinator of the United Soybean Board International Opportunities target area. "A big key to growing markets, both domestic and international, is being able to deliver our soybeans in an efficient manner."

The study, titled "Maintaining a Track Record of Success," examines the U.S. railway system and its ability to handle future growth in agricultural production and exports. This report suggests that if rail infrastructure investments are adequate to support growth, there will be a gradual shift from truck transportation to rail transportation each year, an action that could save fuel and money along the transportation chain.

Railways could ease pressure on roads, saving transportation inputs, checkoff-funded study finds
Railways could ease pressure on roads, saving transportation inputs, checkoff-funded study finds

Currently, rail and truck traffic carry the largest proportion of ton-miles of freight in the U.S., and since 1980 the rate of growth in trucking has exceeded that for rail. However, the study notes, this trend is shifting – based upon the latest estimates, rail may grow by 0.2% annually, leading to a modal share gain for rail and replacing some truck traffic.

Additionally, the study found, rail uses about one-third of the fuel per ton-mile compared with trucks and can reduce road congestion and the need for highway repairs. The annual cost of highway congestion is estimated at $101 billion annually – and cost savings per bushel of soybeans sent via rail could be $0.20 to $0.30.

The study shows that though investment costs will be necessary to move the rail industry ahead, it could pay off for soybean producers in more elevator and processor truck receiving capacity for high volume periods, minimizing wait time at harvest.

Funded by the soy checkoff and coordinated by the Soy Transportation Coalition, the study also examined the private investment anticipated to be made by railroad companies and the shippers and receivers that use it. In addition, the report looks at the soybean sector's challenges in becoming more efficient with its rail movements.

U.S. soybean exports are increasingly dependent on rail, as well as other pieces of the infrastructure for transport, between September and February. Fluid rail capacity to handle the surge in volume during those months is critical to the soy industry continuing to maximize the farm value of soybeans.

View the report "Maintaining a Track Record of Success."