Domestic wheat consumption is likely to continue to grow
as intensive animal industries confront increasing water
costs and demand for animal proteins in Asia grows. Ethanol
production may also increase domestic demand for
all grains. This will result in smaller and less frequent
exportable surpluses of wheat from the east coast.
As a result, domestic customers are also
likely to play a more prominent role in variety development,
storage capacity and secondary markets. Rail cars to move
grain have been a persistent problem over the years.
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Such shortages, however, are not in themselves
an indication of the adequacy or inadequacy of the nation’s
railroads to move grain. Railcar shortages often reflect the shortcomings
of the mechanisms used to allocate rail grain capacity.
Under car allocation systems in which capacity is allocated on a
first-come-first-served basis, with little or no
adjustment in price, no amount of capacity can ensure that every
shipper wanting railcars during peak demand periods will get them.
Rail freight guarantee programs, which allow for
the allocation of grain transportation capacity
through price, offer shippers a mechanism for dealing with the risks
associated with car service under first-come-first-served car ordering
systems. In theory, these new allocation and pricing systems should
transfer the risk associated with equipment availability to those
shippers who continue to use general tariff/distribution car ordering
systems. In practice, this has not always been the case. The shippers
with guaranteed freight experienced lengthy delays in car placements,
and railroads paid out large amounts in penalties for failure to
place cars within guaranteed loading periods.
