Farmers, elevators fume at costly grain train delays; oil trains to blame?

The grain elevators at Agassiz Valley Grain in Barnesville, Minn., are overflowing with corn and soybeans and waiting for trains to haul the grain away.

Don't bother checking a schedule, though. No one knows exactly when the trains are coming.

Train delays have been chronic all winter at Agassiz Valley and across the Midwest. Engines are running five to 10 days late, creating an increasingly costly backup. Farmers can't haul grain from their farm storage to the elevator because the grain can't move to market.

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Burlington Northern Santa Fe railroad told agricultural shippers last week 1,463 rail cars in Minnesota and 7,474 in North Dakota were not running on schedule. The average delay is about three weeks.

"We had a train that was supposed to show up this morning that was sitting overnight in west central North Dakota because they couldn't get a crew to it," said Tyler Woitzel, who coordinates grain shipments at the Agassiz Valley elevator.

Shippers got a chance on Wednesday to air their complaints in Fargo to staff from the federal Surface Transportation Board. It's unclear, though, what regulators can do to fix the situation.

A bevy of things to blame

BNSF blames delays on winter weather and significant increases in rail traffic hauling containers, trucks, coal and crude oil from the booming Bakken oil fields in western North Dakota. It declined an interview request, but in an email exchange said it's added 250 locomotives in the past two months and will buy another 125 to help move more cars. It also said it plans to hire 5,000 new employees this year.

The efforts, though, may not be enough to ease the frustration.

Dozens of elevators around the Midwest spent millions of dollars upgrading their loading facilities in the past 15 years. The railroads pushed hard for the elevator expansion, promising price breaks and better service. A recent USDA report, however, found rail shipping rates for all farm commodities have increased 36 percent since 2004, while railroad costs rose 29 percent.

"A lot of grain elevators in North Dakota, Minnesota, South Dakota and Montana went ahead and spent that money and now they're left with poor service and that just isn't right," said North Dakota Grain Dealers Association executive vice president Steve Strege.

The shipping costs are slicing into farmer's profits, said Woitzel.

"Trains are very expensive right now to load. They've gone up significantly, especially in the last six months or so," he said. "You're talking $5,000, $6,000 a car if we want to load one right now."

The big jump in crude oil cars from the Bakken has drawn lots of scrutiny. BNSF, however, says crude shipments only make up 4 percent of its traffic and are not the primary reason for system wide delays.

Still, crude oil trains are increasing. A BNSF official this week predicted oil shipments will nearly double to 1.5 million barrels per day in the next few years.

Crystal Sugar looks for help

David Berg often looks out his office window at American Crystal Sugar to see an oil train rolling through Moorhead. Like grain, the Upper Midwest sugar business has been hurt by the train delays.

Berg, American Crystal's president, is asking the Surface Transportation Board for help. He warns his company could lose sugar contracts if the situation doesn't improve soon.

In a typical year the company would load 40-50 train cars a day with sugar to ship around the country, Berg said. But recently, train cars haven't been arriving regularly. So shipments are delayed and sugar storage bins are full.

"We don't want projections, we want performance," he said. The railroad's owners are "good business people," but BNSF has "not performed very well, or I think up to their own expectations in the past several weeks."

American Crystal owns train cars used to haul coal from Wyoming to power sugar processing plants in the Red River Valley. In the past, BNSF delivered a trainload of coal every six days, Berg said. Now it takes 12 days and as a result the company has a very limited coal supply.

"I don't want to have to run to Washington with every problem that ever happens," Berg said of his discussions with federal regulators. "We just don't know what else to do. We're bound to the railroad and when it doesn't perform we're sitting in a very difficult position."

Berg says projected increases in crude oil and other rail traffic again this year worry him.

"We don't have good signals, good indications that this is just a winter of 2013-14 problem," he added. "We're concerned that this is just gonna be something that is really truly is systemic, that's going to be with us for a long time."