Grain Transportation Report, March 16, 2023

STB Approves First Class I Rail Merger in Over 20 Years-With ConditionsOn March 15, 2023, the Surface Transportation Board (STB) approved the proposed Class I railroad merger between Canadian Pacific Railway (CP) and Kansas City Southern Railway (KCS).Canadian Pacific Kansas City (CPKC) will provide the first-ever single-line service spanning Canada, the United States, and Mexico.STB anticipates two benefits of note to grain shippers: the merger is expected to facilitate the flow of grain from the Midwest to the Gulf Coast and Mexico and to enhance competition for traffic with other Class I railroads.However, to mitigate concerns over potential negative effects on competition, STB placed conditions on its approval of the merger.The conditions include keeping gateways to other Class I railroads open on commercially reasonable terms, submitting certain service data to assist STB in monitoring the merger, and submitting "Service Action Plans" to STB to address specific service issues if they arise.Requests for stay (i.e., to stop some aspect of the merger) and petitions for reconsideration must be filed with STB by March 27 and April 4, respectively.STB's decision becomes effective on April 14, 2023. Kansas To Invest in Nine Short Line Rail ProjectsOn February 28, the Kansas Governor announced that nine short line rail maintenance and rehabilitation projects will be awarded nearly $5 million as a part of the State's Short Line Rail Improvement Fund (SLRIF) program.The rail improvement projects are intended to strengthen Kansas's agricultural supply chain by connecting farmers to regional, national, and international markets.Six SLRIF recipients will use the funds for major track rehabilitation and rail replacement, and three recipients will use the funds for siding extensions and storage tracks.Each recipient will provide a 30-percent match, resulting in a total investment of nearly $6.5 million.Short lines provide rail access for rural grain producers and reduce overall reliance on trucks (resulting in lower emissions and less road/highway congestion and maintenance).However, government funding is often needed to provide adequate resources to maintain short line tracks. First Segment of Houston Ship Channel Expansion Project CompletedOn February 6, the Port of Houston announced the completion of the first section of the Houston Ship Channel expansion project, also known as Project 11. The newly completed section constitutes a deepening and widening of the 11.5 mile-channel and is expected to help increase safety, reduce congestion, and improve vessel transit times by approximately an hour, by reducing daylight restrictions.Project 11 was first announced in June of last year (Grain Transportation Report, June 16, 2022), and is scheduled for completion in 2025.The Port of Houston handled 5 percent of total U.S. exported bulk grains, soybeans, and grain products in 2020. Snapshots by Sector ExportSales For the week ending March 2, unshipped balances of wheat, corn, and soybeans for marketing year (MY) 2022/23 totaled 24.29 million metric tons (mmt), down 35 percent from the same time last year and down 1 percent from last week.Net corn export sales for MY 2022/23 were 1.412 mmt, up significantly from last week.Net soybean export sales were -0.023 mmt, down significantly from last week.Net weekly wheat export sales were 0.267 mmt, down 6 percent from last week.Rail U.S. Class I railroads originated 20,521 grain carloads during the week ending March 4.This was unchanged from the previous week, 17 percent fewer than last year, and 15 percent fewer than the 3-year average.Average March shuttle secondary railcar bids/offers (per car) were $159 below tariff for the week ending March 9.This was $60 more than last week and $1,609 lower than this week last year.Barge For the week ending March 11, barged grain movements totaled 438,250 tons.This was 9 percent higher than the previous week and 23 percent lower than the same period last year.For the week ending March 11, 285 grain barges moved down river-23 more than last week.There were 666 grain barges unloaded in the New Orleans region, 14 percent fewer than last week. OceanFor the week ending March 9, 30 oceangoing grain vessels were loaded in the Gulf-6 percent fewer than the same period last year.Within the next 10 days (starting March 10), 46 vessels were expected to be loaded-21 percent fewer than the same period last year.As of March 9, the rate for shipping a metric ton (mt) of grain from the U.S. Gulf to Japan was $52.50.This was unchanged from the previous week.The rate from the Pacific Northwest to Japan was $29.50 per mt, 2 percent more than the previous week. FuelFor the week ending March 13, the U.S. average diesel fuel price decreased 3.5 cents from the previous week to $4.247 per gallon, 100.3 cents below the same week last year.

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