NGFA, Growth Energy express concerns to Surface Transportation Board on rail shipments
July 08, 2014 | 01:29 PM
The National Grain and Feed Association Monday submitted a proposal to the federal Surface Transportation Board (STB) to establish new rules and procedures that captive grain shippers could use to challenge rail freight rates they believe are unreasonable, while Growth Energy sent a letter to the STB outlining ethanol industry concerns about substandard rail service.
In a news release, NGFA noted that under the 1980 Staggers Rail Act “shippers may challenge a rail rate that exceeds 180 percent of the rail carrier’s variable cost of providing the service (revenue-to-variable cost ratio), as long as there is no effective intermodal competition (such as truck or barge) for the transportation movement.”
“The NGFA's economic analysis found that for five commodities analyzed using the most recent (2012) aggregated rail rate data available, the Class I (major) carriers on average exceeded the 180 percent threshold on nearly 31 percent of corn shipments; 49 percent of wheat shipments; 43 percent of soybean shipments; 21 percent of soybean meal and soybean hull shipments; and 65 percent of ethanol shipments.”
NGFA said that in its view “the STB’s existing three methods for challenging unreasonable rates — the “stand-alone cost” (SAC), “simplified SAC” and “three-benchmark” methods — are inappropriate because they are “too cumbersome, costly and time-consuming given the nature and characteristics of agricultural commodity shipments.”
Instead, the NGFA is proposing an “agricultural commodity maximum rate methodology” for the STB to use for rail rate cases involving all commodities eligible for rail arbitration under NGFA’s Rail Arbitration Rules. This includes all grains and oilseeds and derived products, including corn and soybean meal and oil, flour, distillers grains and other feed ingredients, and ethanol and biodiesel.
NGFA, which represents the nation’s country elevators and input suppliers, released a version of the proposal that redacts highly confidential railroad business information (waybill data) that the group obtained from the STB under a protective order that prevents disclosing it unless authorized by STB. (See link)
Meanwhile, Growth Energy CEO Tom Buis wrote the STB that his group is concerned that the June 20 decision requiring Canadian Pacific Railway and BNSF Railway to resolve backlogs of their grain car orders did not directly address the shipment of ethanol.
“With over 61 percent of all ethanol delivered by rail, it is imperative that these issues be directly addressed and given the same priority as grain shipments,” Buis said.
“Earlier this year, we saw ethanol supply dwindle and prices skyrocket solely because of the inability to get rail cars to ship product — even to the point of having many plants reduce production. Ultimately, these service failures hurt the American consumer as these costs are borne in the form of higher gasoline prices, which impact every segment of the American economy,” he wrote.
“We want to get low-cost renewable fuels to the American people safely, quickly, and efficiently. We feel as though it is necessary for the board to immediately act to ensure that the railroads improve their service,” Buis added.
▪ National Grain and Feed Association — Comments Before Surface Transportation Board
▪ Growth Energy — Letter to Surface Transportation Board
In a news release, NGFA noted that under the 1980 Staggers Rail Act “shippers may challenge a rail rate that exceeds 180 percent of the rail carrier’s variable cost of providing the service (revenue-to-variable cost ratio), as long as there is no effective intermodal competition (such as truck or barge) for the transportation movement.”
“The NGFA's economic analysis found that for five commodities analyzed using the most recent (2012) aggregated rail rate data available, the Class I (major) carriers on average exceeded the 180 percent threshold on nearly 31 percent of corn shipments; 49 percent of wheat shipments; 43 percent of soybean shipments; 21 percent of soybean meal and soybean hull shipments; and 65 percent of ethanol shipments.”
NGFA said that in its view “the STB’s existing three methods for challenging unreasonable rates — the “stand-alone cost” (SAC), “simplified SAC” and “three-benchmark” methods — are inappropriate because they are “too cumbersome, costly and time-consuming given the nature and characteristics of agricultural commodity shipments.”
Instead, the NGFA is proposing an “agricultural commodity maximum rate methodology” for the STB to use for rail rate cases involving all commodities eligible for rail arbitration under NGFA’s Rail Arbitration Rules. This includes all grains and oilseeds and derived products, including corn and soybean meal and oil, flour, distillers grains and other feed ingredients, and ethanol and biodiesel.
NGFA, which represents the nation’s country elevators and input suppliers, released a version of the proposal that redacts highly confidential railroad business information (waybill data) that the group obtained from the STB under a protective order that prevents disclosing it unless authorized by STB. (See link)
Meanwhile, Growth Energy CEO Tom Buis wrote the STB that his group is concerned that the June 20 decision requiring Canadian Pacific Railway and BNSF Railway to resolve backlogs of their grain car orders did not directly address the shipment of ethanol.
“With over 61 percent of all ethanol delivered by rail, it is imperative that these issues be directly addressed and given the same priority as grain shipments,” Buis said.
“Earlier this year, we saw ethanol supply dwindle and prices skyrocket solely because of the inability to get rail cars to ship product — even to the point of having many plants reduce production. Ultimately, these service failures hurt the American consumer as these costs are borne in the form of higher gasoline prices, which impact every segment of the American economy,” he wrote.
“We want to get low-cost renewable fuels to the American people safely, quickly, and efficiently. We feel as though it is necessary for the board to immediately act to ensure that the railroads improve their service,” Buis added.
▪ National Grain and Feed Association — Comments Before Surface Transportation Board
▪ Growth Energy — Letter to Surface Transportation Board
