This dataset contains average weekly bids/offers ($/car) among grain shippers in the "secondary railcar auction market" for guaranteed rail freight in near and future months. Railroads auction freight in the "primary railcar auction market," and grain shippers can trade this freight among themselves in the secondary railcar auction market.

These railcar markets evolved to enable rail movements of grain to be more responsive to market pressures. Published tariff rates tend to reflect the most likely market conditions to prevail given historical precedence and future expectations; railroads adjust many of their tariff rates only once or twice per year in order to set longer term prices that account for their fixed assets and optimize their networks. Furthermore, railroads are required by law to give a 20-day notice prior to changing tariffs. Therefore, rail rates are more insulated than other modes from weekly market changes and unexpected events, including weather or transportation service disruptions. But in the short term, as new information enters the market, the optimal allocation of railcar supply with shipper demand may no longer be most efficiently allocated by the prices set by tariff rates alone. This was a characteristic of rail service prior to the late 1980’s when service was priced at the tariff rate and available on a first-come-first-served basis.

Forward-guaranteed railcar service contracts were an innovation first offered by railroads in the late 1980’s. These contracts offer guaranteed railcar deliveries within a specific time frame and serve as instruments against risk caused by unexpected events. They allow the supply of railcars to be continually reallocated among shippers through an auction bidding process as new information comes into the market, providing an alternative to first-come-first-served service purchased through tariff rates. There are two types of railcar auction markets—the primary market, in which service contracts are originally sold by railroads to shippers, and the secondary market, in which shippers resell service contracts among themselves. Sales in the primary market are administered by the railroads; sales in the secondary market are administered by third-party brokers.

For more information on this markets, see the feature article in the February 19, 2015 Grain Transportation Report (link provided below).