Soybean export declines yield slower rail volumes
- A slower rate of rail volume growth in October 2018 is a result of more locally sourced frac sand and a decline in soybean exports, the Association of American Railroads said.
- In its latest Rail Time Indicators report, the trade group noted grain shipments fell 4.8% (5,620 carloads), while crushed stone, sand and gravel fell 9.6% (12,745 carloads) compared to last year's figures.
- Still, the declines were not enough to cause volumes to recede. Petroleum and petroleum products continued to lead carloads with 28.4% year-over-year growth in October, while coal volumes saw the first increase in five months. Overall, carloads grew 1% from last year, the trade group said in a press release.
The latest Rail Time Indicators break down the impact the U.S. trade war with China has had on soybean exports, showing the effects of shifts in sourcing networks do not take long to ripple out to transport trends.
"Unless you've been hiding under a rock, you know that the United States and China are in the middle of a trade dispute that began as a staring contest; escalated to rock, paper, scissors; and is now at the 'throwing things at each other' stage," the report reads. "Soybeans are intimately involved."
The AAR explains China has traditionally accounted for 60%, or about 35 million tons, of the U.S.' annual soybean exports. But since China imposed a 25% tariff on the grain product in early July, soybeans have stopped being exported to the country. The New York Times estimates, since September, U.S. soybean exports to China have fallen by roughly 6 million tons, with only 3 million of those being captured in foreign markets.
Railroads have seen this shift directly, as carloads of grain to ports have been held back in recent months. "Shipments to ports typically turn sharply higher around this time of year," the report reads. "It's early, but so far this doesn't seem to be happening as it normally does."
- Association of American Railroads Rail Traffic for October and the Week Ending November 3, 2018
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