UP Cites Tunnel Collapse and Crew Shortage Behind Recent Service Challenges
In a June 28 announcement, Union Pacific Railroad (UP) said that operating inventory and train velocity in June had receded to April levels, leading to congestion and a drop in service across its network. UP stated the May 29th collapse of a tunnel, located between Eugene and Chemult, OR, and a crew shortage were behind the recent drop in service.
During the tunnel repairs, traffic from the main line was rerouted through Salt Lake City, increasing transit time by an additional four to five days and impacting overall network fluidity. With tunnel repairs now complete, UP expects service to resume to normal levels in the next few weeks.
In addition, UP is recruiting heavily to increase its crew size, but supply will likely remain tight through the summer.
High Water Stalls Barge Traffic on Upper Mississippi River
For the week ending June 30, corn barge tonnages on the locking portions of the Mississippi, Ohio, and Arkansas rivers were 617 thousand tons, 14 percent lower than last week. Soybean tonnages were 249 thousand tons, 18 percent lower than last week.
Barge operations have been slowed by high water conditions on the Upper Mississippi River. During the same week, significant increases in wheat tonnages were reported on the Arkansas River, which had normal navigation conditions. Total wheat barge tonnages were 61 thousand tons, a weekly increase of 47 percent.
As of July 3, no Mississippi River locks are forecasted to be closed. However, the number of barges per tow has been restricted on portions of the river.
Grain News on AgFax
Grain Inspections Remain Strong through Second Quarter
For the week ending June 28, total inspections of grain (corn, wheat, soybeans) for export reached 2.7 million metric tons (mmt); up 12 percent from the past week, up 40 percent from the same period last year, and up 39 percent from the prior 3-year average.
Soybean inspections were up 64 percent from last week, while corn inspections were unchanged, and wheat inspections were down 11 percent. Mississippi Gulf inspections were up 38 percent from last week, with corn up 14 percent. Mississippi Gulf wheat and soybean inspections were up 95 and 94 percent, respectively, consistent with the levels from previous weeks after lower-than-normal inspections last week.
Pacific Northwest (PNW) inspections were down 8 percent. PNW soybean inspections were up 79 percent from lower-than-normal inspections last week, but corn and wheat inspections fell 20 and 5 percent, respectively. Total second quarter grain inspections were up 10 percent from last quarter and up 17 percent from the second quarter of 2018.
Snapshots by Sector
For the week ending June 21, unshipped balances of wheat, corn, and soybeans totaled 26.2 mmt, up 20 percent from the same time last year. Net weekly wheat export sales were .564 mmt, up 22 percent from the previous week. Net corn export sales were .850 mmt, up significantly from the previous week. Net soybean export sales were .358 mmt, up 19 percent from the previous week.
U.S. Class I railroads originated 24,104 grain carloads for the week ending June 23, up 4 percent from the previous week, 10 percent from last year, and 16 percent above the 3-year average.
Average July shuttle secondary railcar bids/offers, per car, were $454 above tariff for the week ending June 28, up $138 from last week, and $685 higher than last year. There were no non-shuttle bids/offers this week.
For the week ending June 30, barge grain movements totaled 928,835 tons, 13 percent lower than the previous week and down 2 percent from the same period last year.
For the week ending June 30, 588 grain barges moved down river, 142 barges less than the previous week. There were 790 grain barges unloaded in New Orleans, 2 percent lower than the previous week.
For the week ending June 28, 32 ocean-going grain vessels were loaded in the Gulf, 3 percent less than the same period last year. Forty vessels are expected to be loaded within the next 10 days, 23 percent less than the same period last year.
For the week ending June 28, the ocean freight rate for shipping bulk grain, from the Gulf to Japan, was $43.25 per metric ton, 1 percent less than the previous week. The cost of shipping from the PNW to Japan was $24.50 per metric ton, 1 percent less than the previous week.
For the week ending July 2, the U.S. average diesel fuel price increased 2 cents from the previous week, to $3.24 per gallon, 76 cents higher than the same week last year.