KANSAS CITY — Moving freight by truck and by rail was generally smooth last week, grain market participants said. While finding available trucks and willing drivers remain a challenge long term, the situation had improved from previous weeks, traders said. Grain movement by rail was expedient for loaded cars, but two Class 1 railroads remained two to three weeks behind schedule in placing empty cars at origins.

Last week the Canadian Pacific Railway announced it had entered an agreement to purchase the Kansas City Southern railroad in a deal valued at $29 billion. Should the merger meet Surface Transportation Board approval and be implemented, it would be the first merger between two Class I railroads in over two decades and create the first US-Canada-Mexico rail network.

The combined rail company, to be named Canadian Pacific Kansas City, would allow grain companies and other shippers greater efficiency and supply chain integration as trade ramps up due to the passage of the USMCA pact of 2020.

The new company is expected to generate greater competition as it expands to 20,000 miles of rail and 20,000 employees. With expected revenues of about $8.7 billion, the merged rail network will remain the smallest of six Class 1 railroads.

Millers and traders were still digesting news of the merger and thinking about potential use of a CPKC network.

“It’s yet to be told,” one miller said. “There’s almost no winter wheat or spring wheat origination on the KCS. We’re already getting spring wheat out of the Dakotas on the CP.

“It might actually make it easier to take spring wheat to Mexico out of the domestic territory than it has been in the past, but on the flip side, maybe it helps bring Canadian wheat into the US farther south. I could paint it both ways so far.

“We’ll just have to see how they view it. Is it still going to run like two separate railroads with a US division and a Canadian division? How is it all going to work? Lot more questions than answers at this point.”

US durum millers told Milling & Baking News the merger would likely have very little effect on their business as it primarily gives the CP network a route to the Gulf.

Rail activity

The American Association of Railroads, in their latest update rail traffic report, notes that comparisons with the same week in 2020 are “inflated because of the widespread economy-wide shutdowns — and subsequent large reduction in rail volumes — last year at this time.”

Total US weekly rail traffic was 513,325 carloads and intermodal units, up 12% compared with the same week last year, in the week ended March 20, the latest for which data is available. That brought cumulative US carloads and units to 5,493,350 for 2021, an average of 499,395 per week, up 4% from 2020.

Taken separately, US carloads in the latest week totaled 230,605, up 3% compared with the same week in 2020, which brought cumulative 2021 carloads to 2,448,722, an average of 222,611 per week, down 4% from the same period in 2020. US weekly intermodal volume was 282,720 containers and trailers, up 20% from the same week in 2020, which brought cumulative 2021 units to 3,044,628 for an average of 276,784 per week, up 11% from the same period in 2020.

US grain carloads totaled 27,332 in the latest week, up 6,332 carloads, or 30%, from a year earlier. Grain was one of five carload commodity groups (out of 10) to post a year-over-year increase, the others being metallic ores and metals, up 11%; forest products, up 8%; coal, up 7%; and farm products and food excluding grain, up 1%.

North American rail volume for the week ended March 20 on 12 reporting US, Canadian and Mexican railroads totaled 332,173 carloads, up 1% compared with the same week in 2020, and 371,385 intermodal units, up 19% compared with last year. Total combined weekly rail traffic in North America was 703,558 carloads and intermodal units, up 10%. North American rail volume for the first 11 weeks of 2021 was 7,553,569 carloads and intermodal units, up 3% compared with 2020. North American grain carloads in the latest week totaled 39,494, up 29% from a year earlier, bringing cumulative North American grain carloads for 2021 to 408,651 for an average of 37,150 per week, up 28% from the same period in 2020.

Canadian railroads reported 81,088 carloads for the week, down 4%, and 73,409 intermodal units, up 21% compared with the same week in 2020. For the first 11 weeks of 2021, Canadian railroads reported cumulative rail traffic volume of 1,655,256 carloads, containers and trailers, up 6% from the same period in 2020. Canadian grain carloads in the latest week totaled 10,063, up 32% from the same week a year earlier, bringing cumulative grain carloads in 2021 to 107,439 for an average of 9,767 per week, up 39% from the same period in 2020.

Mexican railroads reported 20,480 carloads for the week, down 6% compared with the same week last year, and 15,256 intermodal units, down 3%. Cumulative volume on Mexican railroads for the first 11 weeks of 2021 was 404,963 carloads and intermodal containers and trailers, down 6% from the same period in 2020. Mexican grain carloads in the latest week totaled 2,099, up 7% year-over-year, bringing the cumulative total for the commodity group to 22,286 carloads in 2021 for an average of 2,026 per week, down 5% from the same period in 2020.

Barge activity

In the week ended March 20, US barge grain movements totaled 722,820 tons, down 11% from the previous week but up 29% compared with the same period in 2020, according to the US Army Corps of Engineers.

In the same week, 463 grain barges moved down river, 49 fewer barges than the previous week. There were 767 grain barges unloaded in New Orleans, 10% fewer than the previous week, according to the Corps and USDA’s Agricultural Marketing Service.

Ocean freight

For the week ended March 18, 37 oceangoing grain vessels were loaded in the Gulf, 54% more than the same period last year. In the 10 days starting March 19, 56 vessels were expected to be loaded, 47% more than the same period last year.

As of March 18, the rate for shipping a tonne of grain from the US Gulf to Japan was $60.25. This was 4% more than the previous week. The rate from the Pacific Northwest to Japan was $35 per tonne, up 8% from the previous week.

Trucking

For the week ended March 22, the US average diesel fuel price increased 0.3¢ from the previous week to $3.194 per gallon, 53.5¢ above the same week last year, according to the Energy Information Administration.