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Rail Report - Spring 2006
GIPSA Issues Rule Waiving Mandatory Inspection, Weighing of High-Quality Specialty Grains

The U.S. Department of Agriculture’s Grain Inspection, Packers and Stockyards Administration (GIPSA) has issued a final rule waiving the mandatory official inspection and weighing of “high-quality specialty grains’ exported in containers.

GIPSA said the waiver would remain in effect for no more than five years, and said it would consider making the waiver permanent thereafter. However, GIPSA said it would remove the waiver at any time if it determines it is not consistent with the objectives of the U.S. Grain Standards Act. The action finalizes an interim final rule issued on April 28.

The agency said it took the action to promote the marketing of high-quality specialty grains by U.S. exporters. Under the U.S. Grain Standards Act, all U.S. grain exports are required to be officially inspected and weighed by GIPSA or employees of states delegated by GIPSA to provide official services. However, GIPSA previously has exercised authority under the law to waive this requirement for truck and rail shipments to Canada and Mexico; grain shipped in bond; grain not sold by grade; when service is not available or in emergency situations; and for elevators and exporters shipping less than 15,000 metric tons during the current and preceding calendar year. Under the interim rule, high-quality specialty grains exported in a container also qualify for a waiver from mandatory inspection and weighing.

Traditionally, high-quality specialty grain export volumes had been at a level that qualified for the 15,000-metric-ton threshold that qualified for the exemption. But as exports of high-quality specialty grain have increased, volumes began to exceed the 15,000-metric-ton waiver threshold, requiring shippers to have high-quality specialty grains exported in containers officially inspected and weighed. The cost of such service is approximated at $1.80 per ton compared to an average $.34 per ton for bulk commodity exports.

GIPSA said waiving the requirement for official inspections and weighing would be consistent with the law’s objectives since the contract specifications for high-quality specialty grains far exceed the standards for grains established under the U.S. Grain Standards Act. Further, the shipments usually involve dedicated buyers and sellers that have an ongoing business relationship and understand each other’s specific needs and capabilities, the agency noted.

Under the final rule, a high-quality specialty grain is defined as grain sold under contract terms that: 1) specify quality better than the grade limits for U.S. No. 1 grain except for the factor test weight; or 2) specify “organic” as defined under the Organic Foods Production Act of 1990.
Under the final rule, GIPSA requires that records generated during the normal course of business that pertained to such shipments be retained for three years. The records are to be made available to GIPSA upon request.

GIPSA said in the near future it will develop further guidance on requirements for high-quality specialty grains exported in containers.

BNSF Adds Railways to Web Site’s Interline Pricing

BNSF Railway Company (BNSF) has announced that carload customers now can also obtain interline prices at bnsf.com for shipments originating on BNSF and terminating on the Canadian Pacific Railway (CPR) and Norfolk Southern Railway (NS).

From bnsf.com, customers can review transportation prices for most general merchandise carload commodities from all BNSF origins to any destination served by CSX Transportation and some of its affiliated shortlines, the Canadian National Railway Company, the Canadian Pacific Railway and Norfolk Southern Railway.

“Our carload customers have long requested an easier and more efficient way to obtain prices for movements originating on our railroad and terminating on another,” says Denis Smith, BNSF vice president, Industrial Products Marketing. “Previously to get an interline price, carload customers had to call the originating railroad, and the originating railroad would have to call the destination railroad and then get back to the customer. Now, customers can visit bnsf.com and instantaneously get a price from point A to point B on any participating destination railroad.”

“BNSF could not have done this alone,” Smith says. “It took the collaboration of several Class 1 railroads to develop the technology to be able to provide an instantaneous and easy-to-use pricing tool.” To obtain a price, go to bnsf.com, click prices, and select price look up.

Intermodal Up, Carload Freight Down, Reports AAR

Intermodal volume was up but carload traffic was down on U.S. railroads during the week ended December 17 in comparison with the corresponding week last year, reports the Association of American Railroads (AAR).

Intermodal volume of 235,066 trailers or containers was up 2.8 percent from last year, with container volume rising 2.2 percent and trailer volume up 4.2 percent.

Carload freight, which does not include the intermodal data, totaled 325,102 cars for the week, down 2.0 percent from the comparable week last year. Loadings were down 4.7 percent in the East but up 0.2 percent in the West. Total volume was estimated at 33.3 billion ton-miles, down 0.9 percent from last year.

The AAR reports that 13 of 19 commodity groups were down from last year, with farm products other than grain off 25.4 percent; nonmetallic minerals down 23.3 percent; and primary forest products off 13.1 percent. Among the gainers were lumber and wood products up 8.0 percent and metallic ores, up 4.4 percent.

Cumulative volume for the first 50 weeks of 2005 totaled 16.6 million carloads, up 0.6 percent from 2004; 11.3 million trailers or containers, up 5.9 percent; and total volume of an estimated 1.6 trillion ton-miles, up 2.1 percent from last year.

On Canadian railroads, during the week ended December 17, carload traffic totaled 74,415 cars, down 3.9 percent from last year while intermodal volume totaled 43,402 trailers or containers, up 1.3 percent from last year.

Cumulative originations for the first 50 weeks of 2005 on the Canadian railroads totaled 3.8 million carloads, down 1.4 percent from last year, and nearly 2.2 million trailers and containers, up 3.4 percent from last year.

Combined cumulative volume for the first 50 weeks of 2005 on U.S. and Canadian railroads totaled 20.4 million carloads, up 0.2 percent from last year and 13.5 million trailers and containers, up 5.5 percent from last year.

The AAR also reported that originated carload freight on the Mexican railroad Kansas City Southern de Mexico (KCSM) during the week ended December12 totaled 7,408 cars, down 26.3 percent from last year. KCSM reported intermodal volume of 3,379 originated trailers or containers, down 28.5 percent from the 50th week of 2004.

For the first 50 weeks of 2005, KCSM reported cumulative originated volume of 412,717 cars, down 5.8 percent from last year, and 192,699 trailers or containers, up 0.9 percent.

Railroads reporting to AAR account for 87 percent of U.S. carload freight and 96 percent of rail intermodal volume. When the U.S. operations of Canadian railroads are included, the figures increase to 96 percent and 100 percent. The Canadian railroads reporting to the AAR account for 91 percent of Canadian rail traffic. Railroads provide more than 40 percent of U.S. intercity freight transportation, more than any other mode, and rail traffic figures are regarded as an important economic indicator.

Railroad Fact Book Now Available

Class I U.S. railroads provided a record 1.66 trillion ton-miles of freight service in 2004. They also took almost 11 million trailers and containers (a record) off the nation’s highways.

This information and more can be found in the 2005 edition of Railroad Facts, published by the Association of American Railroads (AAR). The pocket-sized reference focuses mainly on Class I railroads and contains data for 2004 and selected prior years — in some cases as far back as 1929.

The book contains 80 pages of facts on finance, traffic, operations, plant and equipment, employment and compensation, fuel consumption and cost, and loss and damage. It also contains a profile of each Class I railroad, Amtrak, the two major Canadian railroads, and the two largest Mexican railways.

Copies are available for non-AAR members for $15 for one copy; $12 per copy for 2-10 copies; and $10 per copy for orders over 10 copies. The cost for AAR members is $5 per book. To order, visit the AAR web site at www.aar.org and go to AAR store/publications.

Canadian Pacific Announces Investment Plans

Canadian Pacific Railway plans capital investment of $810 million to $825 million in 2006, a decline from approximately $920 million in 2005 when the railway carried out its largest capacity expansion program in two decades.

The 2006 capital program will be concentrated on track infrastructure, locomotive power, information technology and intermodal terminals and other service facilities. This includes approximately:

• $570 million to maintain and upgrade rail, ballast, crossties and automated signal systems, and to extend and build sidings, which are used as passing lanes in single-track areas;

• $160 million for locomotive maintenance, overhaul and acquisitions, ensuring CPR has the hauling capacity to meet customer demand and service requirements;

• $50 million for information technology to support continued improvement in executing scheduled railway operations; and

• $25 million to expand capacity in intermodal terminals and maintain other service facilities to accommodate growing freight volumes.

The remainder of the 2006 capital program will support targeted growth opportunities in higher-yield markets and improved efficiency and productivity. Financial results in this article are reported in Canadian dollars.

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