Drought, Railroad Strike Combination a “Perfect Storm” for Shippers

Shipping challenges continue to make life difficult for farmers and sellers who need to move commodities to overseas markets. Mike Seyfert, president and CEO of the National Grain and Feed Association, says the falling levels on U.S. waterways plus the threat of a potential railroad strike is almost a perfect storm.

“It is kind of the perfect storm of what we’ve seen with some of the rail challenges and the river challenges we’ve had. And if I had $1 for every time someone has been in the industry 30-40 years this year has told me I’ve never seen this before, I can send both my kids to college, and I can still retire very comfortably. I think it has certainly been a challenge. We’ve still got some challenges on the rail side. If you look at year-over-year numbers, we’re still needing to get back, but if you look at where we were in April, we’ve come a long way on that front, I will say. So, we’re doing better. But when you throw in the challenges on the river and you throw in the threat of a rail strike, it’s been a challenging year, there’s no doubt about that.”

Seyfert talks about the scope of the challenge a rail strike would present for shipping U.S. commodities.

“You figure 25 percent of the grain and oil seeds, both commodities are moved by rail, and then you add in almost an equivalent number of cars are moved when you combine flour, biofuels, ethanol, DDGs, and soymeal. It’s a huge impact from moving products for export, moving products for processing, moving products for feeding animals, it would be a significant impact very quickly. I mean, we saw the challenges we had earlier in the year. Imagine shutting down the whole system.”

He talks about the outcome NGFA is hoping to see in the railroad situation.

“The best thing that could happen would be for those unions that have rejected the labor agreement to stay at the table and be able to work out an agreement with the railroads. That is the best-case scenario. If that doesn’t happen when we get into the second week of December, where a strike is a possibility, then we’re going to need Congress to intervene. But the best-case scenario would be the parties getting it worked out amongst themselves and not having to get the government involved. Whether it’s our members on our issues or producers on others, the less we can keep the government involved, usually the happier folks are, and I think if the private parties can work it out, that would certainly be the most ideal situation.”