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Wheat Market Transportation Competitiveness

Wheat Market Transportation Competitiveness. Kimberly Vachal, PhD Agricultural and Industrial Freight Center Upper Great Plains Transportation Institute, NDSU. Prepared for North Dakota Wheat Commission December 2010. April 2010. Overview. Background Market Flows Characteristics Trends

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Wheat Market Transportation Competitiveness

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  1. Wheat Market Transportation Competitiveness Kimberly Vachal, PhD Agricultural and Industrial Freight Center Upper Great Plains Transportation Institute, NDSU Prepared for North Dakota Wheat Commission December 2010 April 2010

  2. Overview • Background • Market Flows • Characteristics • Trends • Future Work

  3. Focus: Scope/Competitive Position • US produces over 2B bushels of wheat annual • ND production concentrated in HRS and durum – local, domestic, and export markets; imports also a factor • Canadian proximity/access • Intramodal, intermodal, product, and geographic competition factors US Wheat Production 2007/08 to 2009/10 Source: NASS, USDA, 2010

  4. Competition • Intramodal • Intermodal • Product • Geographic

  5. Intramodal Competition Rail Grain Originations, 1980 Rail Grain Originations, 2007 Source: American Association of Railroads

  6. Intermodal Competition • Barge Accessibility • Local Processing – Trucks • …Container?

  7. Producer Truck Investments

  8. Shuttle Investment 1999=7 2010=49* *Update in Progress,.

  9. Why is Rail Important? HRS Wheat Durum

  10. Why is Rail Important? HRS Wheat Durum *Preliminary; Source: NDPSC Grain Movement Data

  11. Is Rail Important? Rail Utilization for Wheat

  12. Is Rail Important? U.S. Wheat Exports Relative Dependence

  13. Is Rail A Factor?

  14. Waybill Market Flows, 2008

  15. Market Concentration/Diversification Source: STB Public Use Waybill, U.S. DOT, 2008

  16. Waybill Market Flows Shift East to West: Grand Forks BEA, 8% to 44% Minot BEA, 23% to 42% Fargo BEA, 10% to 52%

  17. Rail Industry Rate Trends Source: Association of American Railroads, Freight Commodity Statistics. Adapted from USDA, 2010

  18. Grain and Oilseed Revenue per Ton Source: USDA, 2010 from STB Waybill Summary. FCS, car premiums/discounts not included in tariff revenue.

  19. Grain and Oilseed Nominal RPTM, by Shipment Size Source: USDA, 2010 from STB Waybill Summary. FCS, car premiums/discounts not included in tariff revenue. Approximately 37 bushels/ton and 3,333 bushels per car.

  20. Wheat – Average Shipping Rate Compared to Average Farm Price Source: STB and NASS adapted from USDA, 2010 FCS, car premiums/discounts not included in tariff revenue. Approximately 37 bushels/ton and 3,333 bushels per car.

  21. Local Tariff Rate Trends, Wheat Minneapolis Portland $ per Car $ per Car Source: BNSF Published Tariff FCS, car premiums/discounts not included in tariff rate. Approximately 37 bushels/ton and 3,333 bushels per car.

  22. Summary Points • The data reveal shifts in some of the origin-destination corridors • Concentration v. diversification in US and Canadian origin-destination patterns • A spike and non-traditional patterns in deliveries to the Duluth market is identified for the most recent marketing year as well as an increasing trend in durum imports for the U.S. consumer market. • Narrowing in rail rate spreads among shipment sizes • Lower expenditures per bushel mile in rail wheat markets, but unclear regarding implications related to competitiveness in rail alternatives and market access

  23. Future Research • Factors for Focusing Efforts in Supply Chain Opportunities/Transport Competitiveness • Expand Descriptive Analysis • Modeling • Wheat Supply Chain Scenarios & Sensitivity • Optimization – Partial Equilibrium Model for HRS and Durum Market Flows • Factorial Analysis – Role of Intramodal and Intermodal Competition (1999, 2005, 2009)

  24. Discussion

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