Wheat Market Transportation Competitiveness Kimberly Vachal, PhD Agricultural and Industrial Freight Center Upper Great Plains Transportation Institute, NDSU Prepared for North Dakota Wheat Commission December 2010 April 2010
Overview • Background • Market Flows • Characteristics • Trends • Future Work
Focus: Scope/Competitive Position • 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 Source: NASS, USDA, 2010
Competition • Intramodal • Intermodal • Product • Geographic
Intramodal Competition Rail Grain Originations, 1980 Rail Grain Originations, 2007 Source: American Association of Railroads
Intermodal Competition • Barge Accessibility • Local Processing – Trucks • …Container?
Shuttle Investment 1999=7 2010=49* *Update in Progress,.
Why is Rail Important? HRS Wheat Durum
Why is Rail Important? HRS Wheat Durum *Preliminary; Source: NDPSC Grain Movement Data
Is Rail Important? Rail Utilization for Wheat
Is Rail Important? U.S. Wheat Exports Relative Dependence
Market Concentration/Diversification Source: STB Public Use Waybill, U.S. DOT, 2008
Waybill Market Flows Shift East to West: Grand Forks BEA, 8% to 44% Minot BEA, 23% to 42% Fargo BEA, 10% to 52%
Rail Industry Rate Trends Source: Association of American Railroads, Freight Commodity Statistics. Adapted from USDA, 2010
Grain and Oilseed Revenue per Ton Source: USDA, 2010 from STB Waybill Summary. FCS, car premiums/discounts not included in tariff revenue.
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.
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.
Local Tariff Rate Trends, Wheat Minneapolis Portland $ per Car $ per Car Source: BNSF Published Tariff FCS, car premiums/discounts not included in tariff rate. Approximately 37 bushels/ton and 3,333 bushels per car.
Summary Points • 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
Future Research • Factors for Focusing Efforts in Supply Chain Opportunities/Transport Competitiveness • Expand Descriptive Analysis • Modeling • 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)