Moving Grain: Bulk Ocean Freight Rates Start Year with Softer Tone

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Container ships, San Francisco Bay. Photo: NOAA

Bulk Ocean Freight Rates Started Year 2020 With a Softer Tone

Ocean freight rates for shipping bulk grains fell during the first week of the year, compared to the previous week and the same period a year ago. As of January 2, the rate for shipping a metric ton (mt) of grain from the U.S. Gulf to Japan was $45.75—2 percent less than the previous week and 3 percent less than the same period a year ago.

The rate from the Pacific Northwest (PNW) to Japan was $25 per mt—2 percent less than the previous week and unchanged from the same period last year. Historically, ocean freight rate markets change little during December and January because of the various holidays. Also, 29 oceangoing grain vessels were loaded during the week ending January 2, nearly as many as in the same week last year (30 vessels).

Rate changes depend on many factors including the recently enforced International Maritime Organization regulations on low sulfur emission by oceangoing vessels and other trade issues.

Short Line Railroads Get Renewed Tax Credits and New Express Loan Program

In December, Congress extended the short line railroad tax credit (45G) through 2022. Capped at $3,500 per track mile annually, the credit grants an amount of 50 cents for each private dollar invested in qualified track maintenance and railroad infrastructure projects. The tax credit is expected to aid in deferred track maintenance for the short line rail industry.

Also, a new Department of Transportation pilot program—the Rail Rehabilitation and Improvement Financing Express Program (RRIF Express)—aims to reduce the time and costs associated with securing RRIF loans through lower rates, waived risk premiums, fee assistance, and expedited loan processing.

Short line and regional railroads originate or terminate over 10 percent of the railed grain and soybean tonnage. For more information on short line agriculture transportation and assistance programs, see the 2018 cooperative research between USDA and Kansas State University.

DOT Requests Information on the National Freight Strategic Plan

The Department of Transportation (DOT) announced a request for information from the public and stakeholders to guide the development of the National Freight Strategic Plan (NFSP). The plan includes 11 statutorily required components to address multimodal freight transportation.

DOT is required to develop NFSP as part of the Fixing America’s Surface Transportation (FAST) Act. Comments are sought by February 10, 2020.

Snapshots by Sector

Export Sales

For the week ending December 26, unshipped balances of wheat, corn, and soybeans totaled 23.3 mmt. This represented a 29-percent decrease in outstanding sales, compared to the same time last year.

Net corn export sales reached 0.531 mmt, down 15 percent from the past week. Net soybean export sales were 0.330 mmt, down 55 percent from the previous week. Net weekly wheat export sales reached .313 mmt, down 56 percent from the previous week.

Rail

U.S. Class I railroads originated 15,524 grain carloads during the week ending December 28. This was a 28-percent decrease from the previous week, 16 percent less than last year, and 13 percent lower than the 3-year average.

Average January shuttle secondary railcar bids/offers (per car) were $417 below tariff for the week ending January 2. This was $54 less than last week and $117 lower than this week last year. There were no non-shuttle bids/offers this week.

Barge

For the week ending January 4, barge grain movements totaled 528,627 tons. This was an 11-percent decrease from the previous week and 43 percent more than the same period last year.

For the week ending January 4, 353 grain barges moved down river—25 fewer than the previous week. There were 688 grain barges unloaded in New Orleans, 17 percent more than the previous week.

Ocean

For the week ending January 2, 29 oceangoing grain vessels were loaded in the Gulf—3.3 percent fewer than the same period last year. Within the next 10 days (starting January 3), 44 vessels were expected to be loaded—15.4 percent fewer than the same period last year.

As of January 2, the rate for shipping a metric ton (mt) of grain from the U.S. Gulf to Japan was $45.75. The rate from PNW to Japan was $25.00 per mt.

Fuel

For the week ending January 6, the U.S. average diesel fuel price increased 1 cent from the previous week to $3.079 per gallon, 6.6 cents above the same week last year.

Full report.




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