Milling & Baking News - June 15, 2010 - 27

Transportation and Distribution 

well as of ports for ocean vessels.
"To keep America's agriculture
strong and competitive in the global market, this network must be
maintained and strengthened," the
U.S.D.A. said.
Truck, rail tonnage shows recovery
Bulk and containerized freight shipments via truck and rail have been
rising steadily for several weeks, if
not months, along with the cost of
shipping on both land and water, indicating the improving health of the
nation's economy.
The American Trucking Association's For-Hire Truck Tonnage Index
increased for the sixth time in seven
months in April, the most recent
reporting period. The seasonally

adjusted index was 110.2% of the year
2000 base of 100, up 0.4% from March
and the highest since September 2008,
the A.T.A. said. April tonnage was up
9.4% from a year earlier, the largest
gain since January 2005. Year-to-date
tonnage rose 6% from the same period
in 2009, the A.T.A. said.
"Truck tonnage volumes continue
to improve at a solid, yet sustainable,
rate," said Bob Costello, chief economist for the A.T.A. "Tonnage is being
boosted by robust manufacturing output and stronger retail sales. For most
fleets, freight volumes felt better than
reported tonnage because the supply
situation, particularly in the truckload
sector, is turning quickly."
The rail industry is seeing a similar
rebound. In its latest monthly report,

the A.A.R. said intermodal volume
on U.S. freight railroads for the week
ended May 29 was the highest since
November 2008. Container volume was
up 39.5% and trailer volume was up
25.2% from the same week in 2009, with
containers up 19.4% but trailers down
23.3% from 2008, the A.A.R. said. The
largest increase was for farm products,
excluding grain, up 41% from 2008.
"For the first 21 weeks of 2010, U.S.
railroads reported cumulative volume
of 5,923,333 carloads, up 7.2% from
2009, but down 13.5% from 2008," the
A.A.R. said. Rail traffic had increased
12 consecutive weeks before falling
slightly the week ended May 22, although numbers remained well above
2009 levels. MBN
- Ron Sterk



Rail cars ample for winter wheat

rain rail carloads originated on five major U.S. railroads
year-to-date through May 22 were up 16% from a year ago,
according to data from the U.S. Department of Agriculture.
Rail delivery of all grain and oilseeds to ports was up 12% through
May 26, the U.S.D.A. said. But wheat was not part of the gain.
Lagging export demand for U.S. wheat has been an industry
malady all year due to ample global supplies and lower prices
from many (most) foreign supplies. Marketing-year-to-date export
wheat shipments as of May 20 were 17% behind the same period
last year, compared to 9% ahead for corn and 25% more for soybeans, with the combined total up 7%, according to U.S.D.A. data.
On a per-class basis, exports of soft red winter wheat were down
47% from a year earlier, hard red winter down 26%, hard red
spring down 1%, soft white winter up 16% and durum up 111%.
The lack of export demand has become especially acute during
the current hard red winter wheat harvest, resulting in ample rail
cars available to move new crop supply.
"There are plenty of cars because there is close to zero demand
and the protein is very low," Kevin Kaufman, group vice-president,
agricultural products at Burlington Northern Santa Fe Railroad,
said concerning this year's hard red winter wheat crop. "Wheat
cash basis levels are at record low numbers because there is no
bid from the Texas Gulf for export wheat. Elevators are canceling
car orders.
"The big story is the large crop, poor protein and no export demand. I have never seen it in my career. The cash basis in some
areas is as low as -$2 per bu (below the Kansas City July wheat
futures contract). Carrying charges are huge and wheat is being
stored everywhere, including the ground. Farmers obviously prefer
not to sell."
Mr. Kaufman said rates for rail cars in the hard red winter wheat
area were up $80 a car from a year ago.
The cost of shipping by unit and shuttle trains compared with
a year ago was up 9% to 18% for wheat, up 5% to 16% for soybeans and down 2% to up 14% for corn as of May 1, the U.S.D.A.

28 / June 15, 2010 Milling & Baking News

said based on data from four major railroads, including both tariff
and fuel surcharges.
Fuel surcharges, based on the Energy Information Administration's U.S. average highway diesel fuel price, with a two-month
lag, were well above year-ago levels.
The BNSF surcharge for grain and feed products was 46c per
car per mile for June and July, up from 25c in June and July 2009,
as posted on the company's web site. The surcharge added by the
Union Pacific Railroad was 20c per mile for the two-month period,
compared with zero a year ago. And the posted surcharge for Kansas City Southern Railroad will be 24c in July and is 23c in June,
also compared with zero a year earlier. The charges were based
on average highway diesel prices of $3.069 a gallon in May 2010,
$3.059 in April 2010, $2.092 in May 2009 (a multi-year low) and
$2.22 in April 2009.
Since retreating to a four-year low around $2.02 in March of
2009, average highway diesel prices steadily have climbed, topping near $3.13 a gallon in mid-May 2010. Diesel prices eased
modestly the past few weeks, but still were up about 30% from
a year ago.
Costs for shipping grain by water also have increased. Southbound barge freight rates to the Gulf as of June 1 were up from
4% to 43% from a year ago, with the largest increases from Cincinnati and lower Ohio (both up 43%), the U.S.D.A. said.
The cost of shipping bulk grain to overseas markets in the first
quarter of 2010 was about unchanged from the fourth quarter of
2009, but was up from 48% to 111% from the first quarter of last
year, according to O'Neil Commodity Consulting as reported by
the U.S.D.A. The rate for shipping bulk grain from the Gulf to Japan
was $67.29 a tonne in the first quarter, up 87% from the same period last year, to China was $65.54 a tonne, up 85%, to Rotterdam
was $24.92 a tonne, up 48%, and from the Pacific Northwest to
Japan was $39.67 a tonne, up 111%.
The U.S.D.A. said the world bulk vessel fleet was expected to
increase more than 50% in 2010. MBN

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Milling & Baking News - June 15, 2010

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