WHEAT MARKET
TRANSPORTATION
COMPETITIVENESS
Kimberly Vachal, PhD
Agricultural and Industrial Freight Center
Upper Great Plains Transportation Institute, NDSU
April 2010
Enhancing mobility of people and goods in rural America.
Overview
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Background
Market Flows
Characteristics
Trends
Future Work
Enhancing mobility of people and goods in rural America.
Focus: Scope/Competitive Position
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US produces over 2B
bushels of wheat annual
ND production
concentrated in HRS and
durum – local, domestic,
and export markets;
imports also a factor
Canadian
proximity/access
Intramodal, intermodal,
product, and geographic
competition factors
US Wheat Production
2007/08 to 2009/10
White
11%
HRW
43%
SRW
20%
Durum
4%
HRS
22%
Source: NASS, USDA, 2010
Enhancing mobility of people and goods in rural America.
Competition
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Intramodal
Intermodal
Product
Geographic
Enhancing mobility of people and goods in rural America.
Intramodal Competition
Rail Grain Originations, 1980
Source: American Association of Railroads
Rail Grain Originations, 2007
Intermodal Competition
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Barge Accessibility
Local Processing – Trucks
…Container?
Enhancing mobility of people and goods in rural America.
Producer Truck Investments
Enhancing mobility of people and goods in rural America.
Shuttle Investment
1999=7
2010=49*
*Update in Progress,.
Enhancing mobility of people and goods in rural America.
Why is Rail Important?
HRS Wheat
Durum
Why is Rail Important?
Mode, Share of Bushels
HRS Wheat
Durum
70%
70%
60%
60%
50%
50%
40%
40%
1-24 Cars
25-49 Cars
30%
20%
10%
0%
50-99 Cars
Truck
100 Cars or More
1-24 Cars
30%
20%
10%
0%
-10%
*Preliminary; Source: NDPSC Grain Movement Data
25-49 Cars
50-99 Cars
Truck
100 Cars or More
Is Rail Important?
Rail Utilization for Wheat
Enhancing mobility of people and goods in rural America.
Is Rail Important?
U.S. Wheat Exports
Relative
Dependence
Enhancing mobility of people and goods in rural America.
Is Rail A Factor?
50%
40%
30%
HRW
20%
HRS
Durum
10%
0%
1990/91
1992/93
1994/95
1996/97
1998/99
2000/01
2002/03
2004/05
2006/07
2008/09
Imports as Share of Domestic Use
60%
Enhancing mobility of people and goods in rural America.
Waybill Market Flows, 2008
North Dakota
Kansas
South Dakota
Montana
Canada
Northeastern
2%
0%
0%
0%
34%
Southern Western
1%
61%
5%
17%
1%
62%
0%
6%
21%
28%
South- Mountain Thousand
western Pacific
Bushels
7%
28%
365,557
65%
13%
303,476
26%
10%
145,451
1%
93%
163,041
11%
5%
84,650
Enhancing mobility of people and goods in rural America.
Market Concentration/Diversification
80%
60%
Northeastern
Southern
Western
Southwestern
Mountain Pacific
40%
20%
South Dakota
Source: STB Public Use Waybill, U.S. DOT, 2008
North Dakota
Montana
Kansas
0%
Canada
Rail Share Shipped by BEA Territory
100%
State
Enhancing mobility of people and goods in rural America.
Waybill Market Flows
2008
Grand Forks. ND-MN
Portland-Salem. OR-WA
Territory - Western
Chicago-Gary-Kenosha. IL-IN-WI
St. Louis. MO-IL
Minneapolis-St. Paul. MN-WI-IA
Houston-Galveston-Brazoria. TX
Minot. ND
Portland-Salem. OR-WA
St. Louis. MO-IL
Territory - Western
Chicago-Gary-Kenosha. IL-IN-WI
Minneapolis-St. Paul. MN-WI-IA
San Antonio. TX
Bismarck. ND-MT-SD
Chicago-Gary-Kenosha. IL-IN-WI
Portland-Salem. OR-WA
Minneapolis-St. Paul. MN-WI-IA
Territory - Western
Los Angeles-Riverside-OrangeCnty.CA-AZ
St. Louis. MO-IL
Fargo-Moorhead. ND-MN
Chicago-Gary-Kenosha. IL-IN-WI
Portland-Salem. OR-WA
Territory - Western
St. Louis. MO-IL
Minneapolis-St. Paul. MN-WI-IA
Rochester. MN-IA-WI
Avg 99-01 Avg 06-08 Avg 99-01 Avg 06-08
35,109 1,019,011
133,022
780,680
584,339
203,977
348,098
542,917
187,894
185,820
71,123
107,020
2%
6%
26%
15%
8%
3%
25%
19%
5%
13%
5%
3%
371,838
336,573
195,989
195,291
73,579
69,524
338,520
155,130
33,290
184,674
92,793
16,571
558,146
266,924
353,712
65,097
89,750
37,550
21%
9%
2%
11%
6%
1%
26%
12%
16%
3%
4%
2%
562,941
275,010
153,758
135,421
131,628
121,397
355,184
461,367
91,388
109,333
17,877
147,367
187,647
336,733
123,789
456,742
109,346
270,662
22%
29%
6%
7%
1%
9%
8%
14%
5%
19%
5%
11%
556,258
556,194
328,330
279,435
172,891
93,002
712,659
118,968
114,445
327,624
201,901
0
185,419
546,296
580,568
374,695
127,376
66,998
30%
5%
5%
14%
8%
0%
7%
20%
21%
14%
5%
2%
1,073,243
759,993
611,932
318,100
197,101
136,131
Shift East to West:
Grand Forks BEA, 8% to 44%
Minot BEA, 23% to 42%
Fargo BEA, 10% to 52%
Enhancing mobility of people and goods in rural America.
Rail Industry Rate Trends
Source: Association of American Railroads, Freight Commodity Statistics. Adapted from USDA, 2010
Enhancing mobility of people and goods in rural America.
Grain and Oilseed Revenue per Ton
Source: USDA, 2010 from STB Waybill Summary.
FCS, car premiums/discounts not included in tariff revenue.
Enhancing mobility of people and goods in rural America.
Grain and Oilseed Nominal RPTM, by
Shipment Size
Source: USDA, 2010 from STB Waybill Summary.
FCS, car premiums/discounts not included in tariff revenue.
Approximately 37 bushels/ton and 3,333 bushels per car.
Enhancing mobility of people and goods in rural America.
Wheat – Average Shipping Rate
Compared to Average Farm Price
Source: STB and NASS adapted from USDA, 2010
FCS, car premiums/discounts not included in tariff revenue.
Approximately 37 bushels/ton and 3,333 bushels per car.
Enhancing mobility of people and goods in rural America.
Local Tariff Rate Trends, Wheat
Portland
$4,800
$2,900
$4,600
$ per Car
$3,100
$2,700
$4,400
$4,200
$2,500
$4,000
Single
Single
$2,300
Multi
Multi
$3,800
Unit
Unit/DET
Shuttle
$2,100
$3,600
$1,900
2009
2008
2005
2004
2003
2002
2001
2000
1999
$3,000
1998
$1,500
1997
$3,200
1996
$1,700
1995
$3,400
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2008
2009
$ per Car
Minneapolis
Source: BNSF Published Tariff
FCS, car premiums/discounts not included in tariff rate.
Approximately 37 bushels/ton and 3,333 bushels per car.
Enhancing mobility of people and goods in rural America.
Summary Points
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The data reveal shifts in some of the origin-destination
corridors
Concentration v. diversification in US and Canadian
origin-destination patterns
A spike and non-traditional patterns in deliveries to the
Duluth market is identified for the most recent marketing
year as well as an increasing trend in durum imports for
the U.S. consumer market.
Narrowing in rail rate spreads among shipment sizes
Lower expenditures per bushel mile in rail wheat
markets, but unclear regarding implications related to
competitiveness in rail alternatives and market access
Enhancing mobility of people and goods in rural America.
Future Research
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Factors for Focusing Efforts in Supply Chain
Opportunities/Transport Competitiveness
Expand Descriptive Analysis
Modeling
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Wheat Supply Chain Scenarios & Sensitivity
Optimization – Partial Equilibrium Model for HRS and
Durum Market Flows
Factorial Analysis – Role of Intramodal and Intermodal
Competition (1999, 2005, 2009)
Enhancing mobility of people and goods in rural America.
Discussion
Enhancing mobility of people and goods in rural America.