In comments submitted Friday to the Surface Transportation Board, the Renewable Fuels Association stressed the importance of consistent, safe and timely rail transportation to the ethanol industry and its customers. The comments were submitted in response to a request from STB for input on recent trends and strategies for growth in the freight rail industry. RFA also submitted a new study showing that rail shipments of ethanol and grain are disproportionately affected during periods of rail capacity constraints and widespread service interruptions.
“The relationship between the freight rail industry and ethanol industry is closely intertwined, as roughly three-quarters of U.S. ethanol is shipped by rail,” wrote Justin Schultz, RFA’s director of environment, health and safety. “Efficient, reliable, and effective transportation services are crucial for this industry, which relies on rail, truck, and barge transportation for both inbound products (grain) and outbound fuel (ethanol). Rail is increasingly utilized due to its efficiency in bulk shipping.”
Schultz pointed out that ethanol producers are investing in modernized shipping infrastructure, such as expanding and upgrading rail loading and unloading facilities. They also support cost-effective innovations in tank car design and safety protocols to address safety concerns and regulatory requirements. Schultz said the ethanol industry also recognizes the environmental advantages of rail transportation, such as better fuel efficiency and a lower carbon footprint, compared to other transportation modes.
“Through cooperation, the ethanol and rail industries can continue to proactively address challenges and pursue innovative solutions to reverse recent trends and promote freight rail growth,” Schultz wrote. “By continuing to invest in infrastructure, safety, and efficiency, and by fostering collaborative partnerships, both shippers and rail carriers can drive positive change in the industry.”
Study Looks at Rail Inequity
A new third-party analysis released with RFA’s comments indicates that Class I railroads often appear to differentiate service levels across different commodities and customers. During periods of capacity constraints—whether due to equipment, weather, or labor challenges—the differentiation in service levels for different commodities becomes more pronounced. In general, trains carrying ethanol and grain tend to experience longer dwell times (delays), slower speeds, and longer turnaround times than trains carrying other goods like crude oil, coal, and intermodal shipping containers. This discrepancy is especially egregious between crude oil and ethanol shippers, as the equipment and crew requirements are essentially identical, yet service levels differ significantly.
Further, the study, prepared for RFA by HigbyBarrett, states that the unique operating conditions of ethanol plants place greater significance on efficient inbound (grain) and outbound (ethanol) rail service, particularly since ethanol plants often have limited storage capacities for grain and ethanol. Transportation service impediments can directly impact an ethanol plant’s ability to continue operations, and—if service interruptions last long enough—can ultimately result in suspended operations.
“Class I railroads prioritize service differently, depending on the customer type,” the study found. “During periods of railroad service challenges, some high-value railroad customers maintain consistently high levels of service as revealed through terminal dwell times and average train speeds. Grain and ethanol shippers experience the lowest service levels during these adverse periods for railroads, exhibiting higher than normal terminal dwell times and lower train speeds. Delays in transportation service have an opportunity cost from lost market sales, increased operational costs, and increased stock carrying costs.”