UPPER GREAT PLAINS TRANSPORTATION INSTITUTE
While service sector may be seen as an increasingly important factor in the U.S. economy, traditional natural resource based industries remain strong economic drivers in the upper Midwest. One of the longest-lived multimodal industries in this sector is agriculture. Agriculture is a national leader in demand of transportation services (FHWA 2012). Nationally, it accounted for 18 percent of all ton-miles transported in 2010. This demand is expected to grow 31 percent by 2020. Although over 80% of the agricultural ton-miles occur on the road system, the grain industry is an important user of rail and water services as well. Class I railroads reported that 1 in 10 tons originated is grain or food-related (Association of American Railroads 2010). Agriculture accounts for 12% of tons moved on the nations inland waterways (U.S. Army Corp of Engineers 2009). Importance of agricultural products to the nation’s deep water ports is evident in U.S. exports, as food/feeds/beverage end-use commodities accounted for 9% of the total value (U.S. Census 2012).
The demand and supply points in agricultural marketing chains are wide-reaching, with some agility to make immediate changes and longer-term shifts in modal choice and marketing patterns. Promoting effective hinterlands connections to national and international marketing channels is essential in long-term industry competitiveness and productivity. Monitoring the continued evolution of the industry is critical in prudent transportation resource and policy decisions in local markets, national corridors, and international gateways. Hence, work here to gain insight into agriculture through the activities of the local elevator industry in the region.
Effective grain production and marketing was essential in establishing the U.S. economy and transportation system. As in early grain trade days, elevators remain heavily involved in an intermediary logistics role. Their ability to gather and market in large shipments, which meet customer quality specifications and food safety conditions, is essential in the competitiveness of U.S. grains in the world market. In a continuing effort to promote competitively effective transportation decisions related to this industry, this report summarizes findings from a survey of elevators in Kansas, Minnesota, Nebraska, North Dakota, and South Dakota. It builds on an existing knowledgebase created in past survey efforts in the region (Qasmi et. al 2010, Jessep and Casavant 2005, Vachal and Tolliver 2001).
Cereal grains are attributed with 45% of the transportation demand within the agricultural sector (FHWA 2012). The five participant states had substantially larger shares of state freight ton- miles attributed to cereal grains (Figure 1.1). For North Dakota and South Dakota the cereal grains account for 80% of agricultural traffic. Minnesota has the lowest share comprised of cereal grains, with 60%, but this is still well above the national share. It is important to note that these demand figures include estimates of farm deliveries to storage or distribution/processing center (Oakridge National Laboratory 2010). The Commodity Flow Survey, which is used as a primary data source for the Freight Analysis Framework (FAF3) transportation flow, derives estimates based on other industry data sources since farms are not part of the freight shipping establishments considered in the survey population (FHWA 2012).
Grain is a transportation intensive agricultural sector, with profitability for this low-value, bulk product dependent on a reliable, cost-effective transportation network. As the value per ton increases, transportation costs generally become a lesser factor in the delivered product cost. Figure 1.2 shows a wide range in the value per ton for commodities. The relatively low value of grain is evident as its per ton value falls below that of waste and scrap products. The weighted value information was drawn from the most recent national survey of mining, manufacturing, wholesale, auxiliaries, and selected retail industries regarding transportation practices and commodity flows (Bureau of Transportation Statistics 2009).
About the Upper Great Plains Transportation Institute
“The Upper Great Plains Transportation Institute (UGPTI) is an independent center at North Dakota State University which is guided, in part, by an advisory council composed of representatives of various organizations industries and agencies affecting or affected by transportation.”