More rail capacity is being added to the Northern Plains states, and that could begin to ease the shortage of railcars for potatoes and other agricultural commodities competing for freight capacity with the booming oil industry.
BNSF Railway Co. plans to invest about $1 billion to improve and expand rail capacity in states along its Northern Corridor, including parts of North Dakota, Washington, Montana, Illinois and Minnesota. About 40% of that investment is in North Dakota alone, where agricultural producers have faced the longest delays.
“It is a much bigger problem for some of the other (agricultural) commodities than it is for potatoes,” said Ted Kreis, marketing and communications director for the East Grand Forks, Minn.-based Northern Plains Potato Growers Association.
Potato shippers are using railcars for a small percentage of potato shipments now, he said. Grain elevators and sugar beet plants rely on rail freight transportation much more than potato shippers, he said.
“If service was better, we would probably use more,” he said.
Temperature management for refrigerated cars and the long wait to get the cars make rail less attractive than shipping by truck, he said.
Rail has moved as much as 30% of the potato crop in the Minnesota and North Dakota in some seasons, but Kreis said rail service is not currently competitive with truck freight. Rail costs have shot up because of the boom in demand for the oil industry in Northern Plains states, he said.
Some state officials estimate that rail car shortages and delays have cost North Dakota ag producers more than a half-billion dollars this past year, as the oil industry demands about 1,200 railcars per day to move crude oil to refineries all over the U.S.
Planned investments by BNSF Railway:
- $400 million in North Dakota;
- $120 million in Minnesota;
- $235 million in Washington;
- $160 million in Montana;
- $150 million in Illinois;
- $30 million in South Dakota; and
- $10 million in Idaho.