Wheat Market Transportation Competitiveness
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Enhancing mobility of people and goods in rural America. WHEAT MARKET TRANSPORTATION COMPETITIVENESS Prepared for North Dakota Wheat Commission December 2010 Kimberly Vachal, PhD Agricultural and Industrial Freight Center Upper Great Plains Transportation Institute, NDSU April 2010
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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 - PowerPoint PPT Presentation
Transcript of Wheat Market Transportation Competitiveness
Enhancing mobility of people and goods in rural America.
WHEAT MARKET TRANSPORTATION COMPETITIVENESS
Prepared forNorth Dakota Wheat CommissionDecember 2010
Kimberly Vachal, PhDAgricultural and Industrial Freight Center
Upper Great Plains Transportation Institute, NDSU
April 2010
Enhancing mobility of people and goods in rural America.
Overview• Background• Market Flows• Characteristics• Trends• Future Work
Enhancing mobility of people and goods in rural America.
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
HRW43%
HRS22%
Durum4%
SRW20%
White11%
Source: NASS, USDA, 2010
US Wheat Production 2007/08 to 2009/10
Enhancing mobility of people and goods in rural America.
Competition Intramodal Intermodal Product Geographic
Intramodal CompetitionRail Grain Originations, 1980
Rail Grain Originations, 2007
Source: American Association of Railroads
Enhancing mobility of people and goods in rural America.
Intermodal Competition Barge Accessibility Local Processing – Trucks …Container?
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Producer Truck Investments
Enhancing mobility of people and goods in rural America.
Shuttle Investment1999=7
2010=49*
*Update in Progress,.
Why is Rail Important?
HRS Wheat Durum
Why is Rail Important?
HRS Wheat Durum
2006/0
7
2007/0
8
2008/0
9
2009/1
0*0%
10%
20%
30%
40%
50%
60%
70%
1-24 Cars25-49 Cars50-99 CarsTruck100 Cars or More
Mode
, Sha
re o
f Bus
hels
2006/07 2007/08 2008/09 2009/10*-10%
0%
10%
20%
30%
40%
50%
60%
70%
1-24 Cars25-49 Cars50-99 CarsTruck100 Cars or More
*Preliminary; Source: NDPSC Grain Movement Data
Enhancing mobility of people and goods in rural America.
Is Rail Important?Rail Utilization for
Wheat
Enhancing mobility of people and goods in rural America.
Is Rail Important?U.S. Wheat Exports
Relative Dependence
Enhancing mobility of people and goods in rural America.
Is Rail A Factor?
0%
10%
20%
30%
40%
50%
60%
1990
/91
1992
/93
1994
/95
1996
/97
1998
/99
2000
/01
2002
/03
2004
/05
2006
/07
2008
/09
Impo
rts a
s Sh
are
of D
omes
tic U
se
HRW
HRS
Durum
Enhancing mobility of people and goods in rural America.
Waybill Market Flows, 2008North-
eastern Southern WesternSouth-
westernMountain
PacificThousand
BushelsNorth Dakota 2% 1% 61% 7% 28% 365,557 Kansas 0% 5% 17% 65% 13% 303,476 South Dakota 0% 1% 62% 26% 10% 145,451 Montana 0% 0% 6% 1% 93% 163,041 Canada 34% 21% 28% 11% 5% 84,650
Enhancing mobility of people and goods in rural America.
Market Concentration/Diversification
Cana
da
Kans
as
Mont
ana
North
Dak
ota
Sout
h Da
kota0%
20%
40%
60%
80%
100%
NortheasternSouthernWesternSouthwesternMountain Pacific
State
Rail
Shar
e Sh
ippe
d by
BEA
Ter
-rit
ory
Source: STB Public Use Waybill, U.S. DOT, 2008
Enhancing mobility of people and goods in rural America.
Waybill Market Flows2008 Avg 99-01 Avg 06-08 Avg 99-01 Avg 06-08
Grand Forks. ND-MNPortland-Salem. OR-WA 1,073,243 35,109 1,019,011 2% 25%Territory - Western 759,993 133,022 780,680 6% 19%Chicago-Gary-Kenosha. IL-IN-WI 611,932 584,339 203,977 26% 5%St. Louis. MO-IL 318,100 348,098 542,917 15% 13%Minneapolis-St. Paul. MN-WI-IA 197,101 187,894 185,820 8% 5%Houston-Galveston-Brazoria. TX 136,131 71,123 107,020 3% 3%
Minot. NDPortland-Salem. OR-WA 371,838 338,520 558,146 21% 26%St. Louis. MO-IL 336,573 155,130 266,924 9% 12%Territory - Western 195,989 33,290 353,712 2% 16%Chicago-Gary-Kenosha. IL-IN-WI 195,291 184,674 65,097 11% 3%Minneapolis-St. Paul. MN-WI-IA 73,579 92,793 89,750 6% 4%San Antonio. TX 69,524 16,571 37,550 1% 2%
Bismarck. ND-MT-SDChicago-Gary-Kenosha. IL-IN-WI 562,941 355,184 187,647 22% 8%Portland-Salem. OR-WA 275,010 461,367 336,733 29% 14%Minneapolis-St. Paul. MN-WI-IA 153,758 91,388 123,789 6% 5%Territory - Western 135,421 109,333 456,742 7% 19%Los Angeles-Riverside-OrangeCnty.CA-AZ 131,628 17,877 109,346 1% 5%St. Louis. MO-IL 121,397 147,367 270,662 9% 11%
Fargo-Moorhead. ND-MNChicago-Gary-Kenosha. IL-IN-WI 556,258 712,659 185,419 30% 7%Portland-Salem. OR-WA 556,194 118,968 546,296 5% 20%Territory - Western 328,330 114,445 580,568 5% 21%St. Louis. MO-IL 279,435 327,624 374,695 14% 14%Minneapolis-St. Paul. MN-WI-IA 172,891 201,901 127,376 8% 5%Rochester. MN-IA-WI 93,002 0 66,998 0% 2%
Shift East to West: Grand Forks BEA, 8% to 44% Minot BEA, 23% to 42% Fargo BEA, 10% to 52%
Enhancing mobility of people and goods in rural America.
Rail Industry Rate Trends
Source: Association of American Railroads, Freight Commodity Statistics. Adapted from USDA, 2010
Enhancing mobility of people and goods in rural America.
Grain and Oilseed Revenue per Ton
Source: USDA, 2010 from STB Waybill Summary.FCS, car premiums/discounts not included in tariff revenue.
Enhancing mobility of people and goods in rural America.
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.
Enhancing mobility of people and goods in rural America.
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.
Enhancing mobility of people and goods in rural America.
Local Tariff Rate Trends, Wheat
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2008
2009
$1,500
$1,700
$1,900
$2,100
$2,300
$2,500
$2,700
$2,900
$3,100
SingleMultiUnit/DET
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2008
2009
$3,000
$3,200
$3,400
$3,600
$3,800
$4,000
$4,200
$4,400
$4,600
$4,800
SingleMultiUnitShuttle
Minneapolis Portland
Source: BNSF Published TariffFCS, car premiums/discounts not included in tariff rate.Approximately 37 bushels/ton and 3,333 bushels per car.
$ pe
r Car
$ pe
r Car
Enhancing mobility of people and goods in rural America.
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
Enhancing mobility of people and goods in rural America.
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)
Enhancing mobility of people and goods in rural America.
Discussion
