Ethanol and Distillers' Dried Grains with Solubles Transportation Dashboard
Snapshot of Latest Data
The ethanol supply chain includes all activities from feedstock production, processing, storage, and transportation to biofuel production, transportation, blending, and distribution to consumers. In general, the supply chain involves various distinct stages with different ownership entities such as farmers, biorefineries, blending terminals, distributors, and retailers. Feedstocks are the starting point of the supply chain, and the corn ethanol industry is the largest biofuel producer in the United States.
The transportation system plays an important role in the ethanol supply chain. Aside from simply being an essential component of moving ethanol and its inputs at each step of the process, transportation also affects how the supply chain is structured. For instance, the relative cost of moving biomass versus biofuel and coproducts is an important component of the decision over where to locate a biofuel plant, near the farm – typically concentrated in the Midwest – or near the consumer – typically in high population, coastal regions.
Transportation of Ethanol
The ethanol supply chain relies on railroads, trucks, and barges to transport ethanol from production or import locations to terminals where it is blended with gasoline at or near the point of retail distribution. Trucks are most critical for the relatively short-distance movement of harvested biomass from farms to local terminals, elevators, or nearby biorefineries for conversion to ethanol. However, once produced, railroads are the primary movers of ethanol and coproducts over long distances to consumption locations or export locations, and roughly 15 to 20 percent of these movements originate on short line railroads. In recent years, railroads have met the challenge of keeping up with rapid ethanol production increases, moving over 70 percent of all U.S. ethanol production.
Transportation is typically the third-highest contributor to the wholesale cost of ethanol—after feedstock and energy. Balancing transportation operating expenses with fixed infrastructure costs can be critical to sustained profitability for each ethanol plant.
The demand for shipping ethanol to export markets has also risen with the surge in U.S. ethanol production. While shipments to Canada and Mexico are primarily by rail or trucks, shipments to other destinations are by ocean. Although blending mandates have affected U.S. fuel ethanol exports to some countries, others may use it only as an additive to gasoline.
The pattern of U.S. trade in ethanol changed significantly after 2010, when the United States became a large exporter of ethanol—attributable to saturation in the domestic ethanol market and decreased availability of Brazilian ethanol exports to the rest of the world. As exports grow, so do rail movements of ethanol to the coastal export regions.
Exports of Distillers’ Dried Grains with Solubles (DDGS)
The primary coproduct of ethanol production is distillers’ grains. About a third of every bushel of corn used to make ethanol ends up as distillers’ grains, about 17.5 pounds if dried to approximately 10% moisture content. Distillers’ grains are popular with dairy producers and beef cattle feeders, with less use for hogs and poultry. It can be sold in wet form, or it can be dried to produce distillers’ dried grains (DDG). If the solubles left over from distillation are added, the product is referred to as DDGS. The product is less energy intensive and less expensive when sold in wet form, but its heavy weight requires it to be sold to locations near the ethanol plant to avoid high transportation costs. DDGS, which is lighter and easier to transport, is sold to locations that are more distant. The ethanol industry has continued to market DDGS overseas successfully, as exports have remained strong.
Bulk and Containerized DDGS Shipments
Exports of DDGS can easily shift between bulk and containerized ocean shipping. Several factors–such as container availability, freight rates, and shipment volume–determine the economic viability of bulk versus container. The growth in DDGS exports and changes in destination markets may also require the market to shift between bulk and containerized shipments. For example, some emerging destinations require mostly bulk shipment of DDGS whereas others can only accept containers.