Grain Transport: Modal Trends and Infrastructure Implications

Publication Date: January 2005

Publisher: Library of Congress. Congressional Research Service

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Abstract:

The 109th Congress is expected to take up reauthorization of funding programs for surface and marine transportation infrastructure that were debated but not enacted by the 108th Congress. Grain shipping has been either a central part or at least an element of the policy debate on many of the infrastructure funding proposals. Most notably, a key infrastructure project under consideration is enlarging the locks on the Upper Mississippi River and Illinois Waterway (UMR-IWW) to speed up passage of barge tows. Grain shipping has also figured prominently in debates over federal aid for rail infrastructure, particularly for short line rail track located in agricultural states. Highway policy discussions particularly relevant to grain transportation include funding rural interstates and other federal-aid designated roads to support the growth of heavy grain hauling trucks and improving the truck routes connecting highways with ports and rail terminals.

Over the past two decades, the amount of grain transported has increased by nearly 70%. While all modes have participated in this growth, they have done so at different rates. Barge modal share has decreased slightly, rail share has decreased substantially, and trucking's share has increased substantially. The doubling of domestic demand for grain and static export demand has favored truck transport because trucks generally have an advantage in moving grain over shorter distances. Barges and railroads favor hauling large volumes of grain long distances, which suits the export market. Farm and rail consolidation has also favored truck transport. Large farms may find it more economical to own their own fleet of trucks because trucking offers more flexibility as to when, where, and how much grain is delivered. By using trucks, farmers can better time their deliveries to grain elevators in order to receive the highest price. As a result of rail consolidation, many of the smaller country elevators and short line railroads are being bypassed in the grain delivery network, leaving grain farmers to rely more on trucks to deliver grain to the larger elevators. While the bulk method for shipping grain dominates, a new logistics pattern utilizing containers is also emerging.

As described in this report, the grain supply chain is a multifaceted system. Changes or developments with one component of the system will likely affect the ability of other components to perform efficiently. The complexity of the grain supply chain raises a number of issues for Congress as it evaluates pending investment decisions in surface and marine transportation infrastructure. One issue is if a systems-level perspective can lead to more sound investment decisions than a mode-specific perspective. Another issue is balancing the desire for transportation efficiency with local economic development concerns. Concern for local economic development raises the question of whether supporting a grain value-chain as opposed to a grain volume-chain would create more jobs and income for rural communities. The additional infrastructure costs that utilizing larger vehicles imposes on others is also an issue. Finally, whether system users should pay a greater share of the cost of infrastructure improvements is a key policy issue. This report will not be updated.