Christopher Walljasper

CHICAGO (Reuters). – The delays in shipping grains from the United States due to rail backlogs are contributing to inflation. This was stated by food and grain company representatives at a hearing held this week.

Russia’s incursion in Ukraine has pushed up the prices for wheat, corn, and vegetable oil after the COVID-19 pandemic. Rail delays may further increase costs, which could weigh on consumers.

“This is the bread price going up. Martin J. Oberman (chair of the Surface Transportation Board, STB), who oversees Class I railroad carriers, said that this is because ethanol has not been mixed with gasoline and the pump price going up.”

Berkshire Hathaway, Inc (NYSE:) Inc and BNSF Railway were also present at the hearing. Union Pacific Corp (NYSE:) Norfolk Southern Corp (NYSE) CSX Corp NASDAQ:, Canadian National Railway (TSX 🙂 Company Canadian Pacific Railway Ltd.

Jon Setterdahl is the Landus Cooperative’s product and service Leader. He stated that the rail transit time from Landus Cooperative has more than doubled.

Landus purchases grain from over 7,000 Iowa farmers and describes turning down farmer loads of soybeans and corn because country grain storage elevators had to wait 20 days before rail carriers could pick up the loaded grain cars. This was up from one week and a quarter.

Setterdahl said that the March delay caused five delayed trains to arrive in April. That is a shortage of 2.250 million bushels of grain.

The Bureau of Labor Statistics reported that food prices in the United States rose by 8.8% from one year before.

According to rail carriers, the delay is due to extreme weather conditions and an increase in shipping demand towards the end 2021.

The shippers claim that cost-saving measures implemented by railways before the pandemic were to blame. They include labor force cuts and the storage of locomotives for fuel. Additionally, they complain about the lengthening and slowing down of trains up to three miles (4.8 km).

BNSF was the country’s largest rail carrier of agricultural goods. It reduced its workforce at its yard, train and engine yards by 20% the year before the pandemic. Another fifth of its employees were furloughed in May 2020 according to STB.

Eamon Monahan is vice president for environmental affairs at the Corn Refiners Association. “When railroads talk about it being a COVID problem or related to labor shortages throughout the economy, that’s their latest excuse,” Monahan said. “This will be a long, arduous issue for years.”

Cindy Sanborn (chief operating officer, Norfolk Southern Corp), which is owner of Norfolk Southern Railway said that the company needs to continue innovating and remaining competitive with other forms of transport.

Shippers disagree with the assertion that rail is a competitor to trucking.

Monahan stated, “Our members do not produce truckloads of carloads.” Monahan said, “It’s trainloads. Rail is the only way to operate our industry.