What's Riding on Rail?

From March/April 2011 C Magazine
Lead Story
What's Riding on Rail?

CHS seamlessly connects its grain-shipping customers and internal clients to expanding markets in the United States and abroad.

This time of year, the Mountain View Co-op grain elevator at Collins, Mont., is surrounded by fields sprouting with tender, green wheat and mountain ranges gleaming with snow. This scenic, remote setting is connected to the global grain trade by the ribbons of rail running through it.

Railroads that link elevators at Collins and elsewhere to export and domestic markets serve as rural lifelines. Providing further life support to these grain shippers is CHS, a company that keeps its collected fingers on the pulse of rail shipping.

A CHS core strength is the ability to manage the grain supply chain for the well-being of its operations and those of its local shipper-customers, including Mountain View Co-op. Coordinating long-distance shipping from crop-growing areas to domestic and export destinations is its grain-marketing lifeblood, which requires strong vital signs through every link of the chain.

"We manage trading positions based on freight as one of the key components, and we manage export sales based on what we expect logistically," says Dan Mack, CHS vice president of transportation

Strong carrier relationships position CHS well to monitor rail freight capacity, resources, pricing and infrastructure. "CHS is diversified by geography, by commodity and by railroad. That gives us a broader, more encompassing scope than other companies, and a better fix on trends," he says.

Aimed at Asia
Overriding all other trends is the increasingly healthy Asian appetite for U.S. commodities, a hunger that is contributing to what Mack calls a "rail renaissance." Agriculture gobbles up 11 percent of all U.S. rail freight volume and nearly 20 percent in western regions, he says. Those needs are increasing — with a 6 percent rise from 2009 to 2010 alone — as exports to Asia expand through Pacific Northwest (PNW) ports.

Coal commands 27 percent of all rail capacity and will require more trains to the PNW in the future, if its Pacific Rim exports materialize as expected. And intermodal traffic should pick up along with upticks in the general economy.

Rising demand is already causing strain on the transportation system, says Mack. "In some geographies, we're tapping on the roof of rail capacity."

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