US to Japan Grain Transportation Cost Indicators
U.S. Quarterly Transportation Cost Indicators: Corn, Soybeans, Wheat
The quarterly grain transportation cost indicators data is a proxy of total transportation costs and landed costs for shipping grain to Japan. Transportation costs are reflective of market conditions and the demand for grain and other bulk products. Several modes of transportation are involved in moving the grain from inland U.S. to the various export port regions, and on to their final destination. The quarterly costs data for shipping corn, soybeans, and wheat has been collected since the early 2000’s and has only changed slightly since that period. For instance, since 2014, shipping cost data for grain moved by barge from Minnesota to the Gulf during the first quarter was replaced by rail to St. Louis, Missouri, and then by barge to the U.S. Gulf . This change happened due to icy river conditions and lock closures that usually occur during the winter months.
The United States is the world’s leading producer of corn and second largest producer of soybeans, behind Brazil. The U.S is also the world's leading exporter of corn and the currently the second leading exporter of soybeans. Though they compete for the same markets, the two countries have different production practices and transportation infrastructures, which ultimately affect each country's competitiveness in the world market. The U.S. is the fourth leading producer of wheat and the third leading world exporter of wheat, behind Canada and Russia.
On average, approximately 60 percent of U.S. corn generally exits the U.S. Gulf and 23 percent of U.S. corn exits the Pacific Northwest (PNW). Also, on average, about 60 percent of U.S. soybeans exit the Gulf and 22 percent of soybeans exit the PNW. On average, PNW wheat exports normally account for about 54 percent of total wheat exports annually, and U.S. Gulf wheat exports usually represent about 34 percent of total U.S. wheat exports.
Quarterly Midwest Grain Transportation Costs
The figures below show historical quarterly transportation costs for shipping grain from the mid-west to the major U.S. port regions and modal share results for specific modes. Ocean freight rates for shipping grain from the U.S. to Japan peaked in 2008. Rail rates to ship grain to the Pacific Northwest and U.S. Gulf peaked in 2008. Quarterly trucking rates for moving grain from the North Central U.S to a rail yard peaked in 2014, but has remained relatively stable since then. Ocean rates and rail rates account for a major portion of grain transportation costs from the U.S. Gulf to Japan.
Annual U.S. Grain Transportation Costs
The first two figures below show historical annual transportation costs for moving corn and soybeans from Minnesota to the PNW and U.S. Gulf. Historically, transportation costs are higher for soybeans than for corn due to higher farm values and rail rates. These two figures also break the total transportation costs down by modes. The third figure shows the historical averages of transportation costs for selected years, and also indicates the modes used plus the export port region.
U.S. Total Landed Costs for Shipping Grain to Japan
The figure below shows the total landed costs for shipping grain from the U.S. to Japan. Total landed costs for shipping grain generally includes transportation costs (rail, barge, truck, and ocean rates) plus the commodity’s farm value. Similar to transportation costs, landed costs are historically higher for soybeans than for corn due to the high farm value and rail rates. Recently, corn total landed costs have shown increases due to higher farm values. Transportation and landed costs peaked in 2008 due to strong demand for U.S. grain caused by tight global supplies.