The Role of Rail in Agricultural Transportation

Railroad Transportation: An Essential Piece of the U.S. Agricultural Supply Chain

Agricultural producers—farmers—are dispersed over the entire country. Unlike most other industries, they are unable to move their operations—the land ties them, often to a particular climate. As a result, they must be able to transport their products to markets, many of which are located long distances from the farm. Efficient and reliable rail service is particularly important for U.S. agriculture. For rural areas that are distant from water transportation and end markets, rail transportation is virtually the only cost-effective shipping alternative available for low-value, bulk commodities.
This analysis uses the Surface Transportation Board's Public Carload Waybill Sample to examine trends in agricultural products by rail since 2005.

What Agricultural Goods Move by Rail?

The chart on the right shows a summation of rail carloads for agricultural commodities over the most recent five years of data, at the 5-digit Standard Transportation Commodity Code (STCC) level. Ag carloads predominantly comprise corn (01132), wheat (01144), and soybeans (01144). For agriculture, grain (0113) is the top 4-digit STCC, which also includes grain-not-elsewhere-classified (01139), sorghum (01136), barley (01131), and oats (01133). Other major carload shipments include soybean cake, flour, and other grain by-products (20923); corn syrup (20461); and agricultural chemicals (287, which, at the 3-digit STCC is not pictured).

Agriculture is the 4th Largest User of Rail by Tonnage

The chart on the left shows that Farm Products (STCC 01, which includes grains and oilseeds) is the 4th largest 2-digit STCC commodity on the rail system, by tonnage, and Food or Kindred Products (STCC 20) is 6th. By tonnage, the top five categories are Coal, Chemicals, Nonmetallic Minerals, Farm Products, and Miscellaneous Mixed Shipments (which is almost all intermodal). By carloads, however, the chart on the right shows that Farm Products is 8th, while Food or Kindred Products is still 6th. The top five categories by carloads are Miscellaneous Mixed Shipments, Coal, Chemicals, Transportation Equipment, and Nonmetallic Minerals. The contrast between the charts highlights the fact that farm products tend be relatively dense and heavy per car. Within each chart, you can click on a slice of the pie to "drill-down" from the 2-digit STCC level to the individual 5-digit STCC commodities within that slice.

Railroads Support Export and Domestic Markets

Much agricultural production occurs in the interior. Railroads bring this production to market, such as delivering soybeans to the Pacific Northwest or wheat to the Texas Gulf for export. Railroads also supply domestic markets, such as shipping grain to California, Texas, Georgia, North Carolina, and other States for feed. The maps below show rail flows—developed by Oak Ridge National Laboratory using the Surface Transportation Board’s confidential Carload Waybill Sample—for corn, wheat, soybeans, all agricultural commodities combined, and all rail freight combined in 2015. For corn, wheat, and soybeans, the maps are paired with county-level production (from USDA’s National Agricultural Statistics Service) and export volumes (from USDA’s Federal Grain Inspection Service). Click on the arrows to scroll through the maps.

Trends in Railroading for Agriculture

The rail and grain industries are dynamic. In the late 1970s, there were over 50 Class I railroads, but there are only 7 today. Since the partial deregulation of railroads in the 1980s, railroads have been continuously innovating and finding ways to reduce costs by scaling up the size of operations and capturing cost benefits through economies of scale. Over the years, agricultural users of rail freight have shipped larger volumes (per train) over longer distances. Several figures are included below, which depict major trends in railroading for agriculture over time. These include seasonal volumes, shipment distances, shipment sizes, car types, and car ownership (railroad-owned versus private).

Agricultural Rail Volumes

This chart shows total corn, soybean, wheat, soybean cake (meal), and corn syrup rail tons since 2005, which are some of the main agricultural commodities moved by rail. Corn volumes generally decreased through 2013 but have been generally increasing since, such that over this time period, corn volumes have not significantly differed. In contrast, wheat rail volumes have trended downward during this period. Movements of soybeans and soybean cake have gradually increased while corn syrup shipments have remained fairly constant.

Seasonality in Grain Volumes

Agricultural production is highly seasonal, which can affect the timing of shipments. The figure below—which plots corn, soybean, and wheat carloads by month—illustrates this seasonality. For example, wheat carloads tend to increase in the main harvest months of June, July, and August. Similarly, soybean carloads tend to peak in October, indicating that soon after the crop is harvested, a sizable portion is being shipped to market. Though most corn is harvested in September to November, the drop in its carloads in October may be due to the higher demand to ship soybeans (since the oil content in soybeans makes them more susceptible to spoilage once in storage). Wheat shipments are also relatively low in October. While total corn, wheat, and soybean volumes are typically highest in October, the partially offsetting decrease in corn and wheat compared to the increase for soybeans suggests some substitution between commodities as they compete for rail capacity.

Shipment Distances

Railroads are well-suited to haul products long distances, including agricultural commodities like grain. Grain shipments by rail continue to trend toward longer distances, with the average distance increasing almost every year, mainly due to increased distances for corn and soybeans. Most corn and soybean shipments by rail travel over 1,500 miles, while most wheat tends to travel between 501 and 1,500 miles.

Shipment Sizes

Railroads have increasingly combined more cars per shipment to reduce costs per ton. For all grain commodities, bigger shipments, in terms of the number of cars, have accounted for a growing share of the tonnage moved. However, there is some variation by commodity. For example, most corn and soybeans move in shipment sets of at least 75 cars, with the share growing over time. While most wheat also moves in these large sets, its volumes have been relatively stable. Large amounts of wheat still move in shipments of 6-49 cars.

Car Types

Given the dominance of grain in the movement of agricultural products by rail, most agricultural tonnage moves in covered hoppers. More specifically, there has been growth in larger covered hopper cars, where the tonnage moved in C114 cars (capable of holding 286,000 pounds when loaded) has increased, with the tonnage falling for C113 cars (263,000 pounds when loaded). The use of larger hopper cars has resulted in reduced costs to railroads and some savings to shippers by improving labor and locomotive efficiencies and reducing rail congestion through the use of fewer cars. Since the mid-1990s, the use of larger C114 cars has increased; its share exceeded the proportion of C113 grain shipments by the mid-2000s. However, the adoption pattern has differed among crops. For instance, corn shipments saw relatively rapid growth in the use of C114 cars in the 1990s, where wheat adoption has been more gradual.

Car Ownership

For years, the fleet of railcar hoppers has been increasingly privately-owned (versus railroad-owned). For example, according to the Association of American Railroad's Rail Equipment Reports, private hopper cars accounted for about 50 percent of the fleet in the late 1990s, growing to about 75 percent in the mid-2010s. The figure to the left shows privately- versus railroad-owned usage in terms of tonnage moved (not fleet size). Given the railroad-owned fleet is much smaller, the somewhat similar volumes over the period suggest railroad-owned cars experience higher usage and volumes.