Milner, Ross

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Bulletin 468 GRAIN TRANSPORTATION In Ohio Cooperative Extension Service The Ohio State University GRAIN TRANSPORTATION IN OHIO By ROSS MILNER* This report deals with the volume of grain shipped by rail and by truck from country elevators in Ohio. In June, 1965, a questionnaire was mailed to all country elevator managers in Ohio to inquire the volume of corn, wheat, and soybeans shipped by rail and truck for each of the three marketing years, 1962-63, 1963-64, and 1964-65. Also, managers were asked to indicate changes they expected to make in the year 1964-65 in rail versus truck shipments. Replies were placed on computer cards and tabu-lated. Objectives of the Study-1. To determine the proportion of grain currently transported by railroads and trucks in selected areas in Ohio. 2. To determine responses by managers of grain firms to recent changes in rail rate charges for transporting corn. Situation The function of grain carriers is to move grain to points of greater demand within the state, the United States, or the world. Ohio grain is moved in large quantities to all three areas. In 1964-65, Ohio sales of corn amounted to 5 per cent, wheat 3 per cent, soybeans 6 per cent, and oats 3 per cent of respective sales in the United States. Sales of grain produced in Ohio vary significantly from year to year. Sales during the last three years are shown in Table 1. Table 1 Grain Sales in Ohio in Bushels Marketing Year Corn Bu. Wheat Bu. 1962-63 82,979,000 35,405,000 1963-64 99,631 ,000 50,031,000 1964-65 80,835,000 40,245,000 Average 87,815,000 41,894,000 Source: CrPr 1 Statistical Reporting Service, USDA. *Professor, grain marketing, Cooperative Extension Service Soybeans Bu. 43,075,000 39,569,000 40,017,000 40,887,000 Oats Bu. 15,944,000 13,135,000 12,686,000 15,588,000 Acknowledgments: Francis Walker, Associate Professor, Department of Agricultural Economics and Rural Sociology, made valuoble contributions to this study. The 128 country managers and 8 term-minal managers who provided information also made an essential contribution. 2 The northwestern two-thirds of Ohio is the principal grain sales area in the state. Types of Transportation Available The Ohio grain industry has a choice between rail and highway carriers in nearly all communities. There is an excellent network of both railroads and highways. The problem of choosing between rail and truck transportation is becoming more involved and more im-portant. Railroads and trucks have speeded up competition by offer-ing new types of rates and services. Price rate competition between the two types of carriers has also increased. Ohio, unlike many states, does not have intra-state waterways which permit the use of barges. Although the Ohio River is avail-able, it is not used for transporting grain grown in Ohio. The small volume of surplus grain for sale adjacent to the River and higher priced markets in eastern United States discourage the use of it. The St. Lawrence Seaway opened in 1959 and has provided an additional export outlet for sales of northwestern Ohio grain. This market outlet is highly competitive with domestic markets in eastern United States. Although the Seaway has many Ohio ports, Toledo is the only port used for exporting grain produced in Ohio. The Seaway is available for domestic grain transportation, but to date domestic shipments from Ohio have not been important. Changes in Transportation Rates Require Changes in Grain Marketing Changes in transportation costs and services have created a need for many country elevators, terminals, and processors to replan and reorganize their plants and their functions. These involve plant loca-tion, rail siding, truck dumps, scales, and loading facilities. Making rail rates based on mileage to the processor or exporter may create a need for much more storage capacity at country locations. Country elevators, terminals, and processors are all concerned with the re-planning that should be done because of these new types of rail tariffs. For example, it has been commonly believed that these rates would induce corn shippers to change from indirect routing through terminals to direct routing from producing points to points of con-sumption. Thus, terminals would be by-passed. The new type of rail rate is referred to as the 'imileage rate." Mileage rates consist of published rates from numerous small geo-graphic areas to other small geographic areas. Mileage rates vary with the distance between areas, although not in direct proportion. At present, they do not provide for stopping-in-transit privileges, or for indirect routing via terminal warehouses. (However, such pro-visions, with charges for additional services, have been proposed.) Thus, mileage rates are lower than traditional rates which provide 3 "'"" .... ., ....... " ................. , ..... .,., .... " ... "" Ohio ;, '"bd\v\ded Into "Couot<Y Elevoto< A<eo•" bo"'d oo ,,.o,ket ,;,,.\\o<ltl"'· \ovo\ved o<e ..,,,.;ool \o,otlo"'' ,o\\ <ote•, ood ,,.o,ket outl•"· "full services," if desired at no additional cost. CoroParisons maY be made of the percentages of corn shipped bY rail from countrY eleva-tors before and after mileage rates were introduced. Mileage rates were in effect on corn during the entire marketinl! year 1964-65. (TheY began in October 1964.) Also, the traditional fUll-service rates are still in effect. 4 This study, therefore, shows the relationship of rail to truck transportation of corn (and other grains) shipped from country points before and after mileage rates became effective. It does not, however, show the shipping destination. The tables show the rail volume in per cent of corn, wheat, and soybeans shipped from country elevators. Trucks transported the remaining percentage of the volume. For example, Table 2 shows that in the year 1964-1965 in the northern area rails transported 40 per cent of the corn ; hence, trucks transported 60 per cent of the corn. Implications Mileage rates were initiated by the railroads for the express purpose of increasing the volume of corn transported by rail. These rates were not effective during the corn marketing years, 1962-63 and 1963-64, but were effective during the entire marketing year 1964-65. Thus, comparisons may be made of the percentage of corn shipped by rail before and after mileage rates were introduced. Tables 2, 3, and 4 all show that there was a decline in 1964-65 in rail shipments from country elevators. This is true for the state as a whole and for all areas except the southern area and the "58112 cent section" of the central area. Have the railroads actually lost ton-mile transportation of grain originating in Ohio? The trend in ton miles by rail and truck are not available from this study. Table 2 Grain Shipped by Rail from Country Elevators by Areas* 1962-65 Marketing Northern Central Southern Western Eastern Ohio Year Area Area Area Area Area Area Percent of Grain Shipped by Rail CORN 1962-63 50 65 43 64 67 57 1963-64 48 75 56 64 46 58 1964-65 40 63 48 55 60 50 WHEAT 1962-63 52 96 88 66 97 75 1963-64 37 97 85 69 96 69 1964-65 50 92 87 75 91 74 SOYBEANS 1962-63 36 91 70 73 34 57 1963-64 35 92 81 73 26 60 1964-65 37 90 81 75 37 58 *See map for compos1hon of areas Percentages are determined from bushels shipped The percentage of corn transported by rail from country pomts decreased 1n all areas except the Southern area Table 3 shows, however, that there was a sharp increase in rail shipments of corn in the 5816¢ N Y rate sector of the Central area 5 Table 3 Percentage of Grain Shipped by Rail from Country Elevators in the 58 Yi Cent and 55 Yi Rail Rate Group Territories1 1962-65 Marketing Year 1962-63 1963-64 1964-65 1962-63 1963-64 1964-65 1962-63 1963-64 1964-65 1962-63 1963-64 1964-65 1962-63 1963-64 1964-65 Corn Wheat Rate to N.Y.C. Rate to N.Y.C. 58%¢ 55%¢ 581h¢ 55Y2¢ NORTHERN AREA 44 52 31 62 42 50 12 55 20 46 24 66 CENTRAL AREA 57 76 97 94 71 79 99 95 72 53 93 90 SOUTHERN AREA2 43 88 56 85 48 87 WESTERN AREA2 64 66 64 69 55 75 OHIO AREAS 56 56 72 69 59 57 66 66 50 48 72 72 Soybeans Rate to N.Y.C. 581h¢ 551h¢ 17 45 25 40 33 40 95 85 95 88 93 86 70 81 81 73 73 75 62 54 67 52 67 49 1 Transit rates are per hundred weight to New York City. Percentages are determined from bushels shipped. 2 The Southern and Western areas have only the 58% cent New York City transit rail rate. :; The Ohio Area in this table includes only the percentage of grain shipped by rail in Ohio from the 581h cent and 55Y2 cent transit rail rate group territories. Thus, shipments by rail and truck from 54 cent and 49 cent rail rate group territories in Eastern Ohio are omitted. Observations show that during the 1964-65 corn marketing year some shippers changed from rail to truck for "short hauls" between the country elevator and the terminal. From the terminal, corn then moved by rail to its more distant destinations. Thus, the previously used "transit rates," whereby corn had moved by rail from the country elevator to the terminal for stop-over, thence again by rail to its final destination, were forsaken. In these instances, trucks took over the short hauls from country elevator to terminal, but rails retained the "long haul" from terminal to processor under the mile-age rate schedule. The net effect of rail mileage rates on volume of ton miles between rail and truck is not shown. The rail ton mileage, which originated at the country elevator, declined in 1964-65 (see Tables 2, 3, and 4). On the other hand, rail ton mileage between 6 other points may have increased as a result of rail mileage rate schedules. For example, a reduction in rail rates in the Southern Freight Territory (which extends northward to the Ohio River) has in-duced many Ohio shippers to southern processing points to transfer grain at the Ohio River from trucks to rails for the remaining haul. As a result of this transfer to rails, through shipments by truck from points of origin in Ohio to southern processing points have greatly declined. Thus, this change results in an increase in rail ton mileage. Opinion has been commonly expressed that mileage rates would cause a restructuring of functions performed by country elevators. This opinion provides that some country elevators would, in effect, become sub-terminals and would include the functions of terminal warehouses in their activities. Thus, the enlarged country elevator (or small terminal) would dry, blend, store, own, hedge, and mer-chandise grain and direct its transportation. Observations show that several country elevators are or have become sub-terminals. The study, however, supports the observation that many country elevators cannot quickly add these functions. Adding the additional functions requires a feasibility study, decision to make the change, planning, obtaining capital, building storage, Table 4 Grain Shipped by Rail from Country Elevators 1962-65 by Bushels of Storage Capacity at Country Elevators Bushels of Storage Capacity at the Country Elevator Marketing Under 50,000 100,000 150,000 200,000 300,000 Year 50,000 99,999 149,999 199,999 299,999 and Over Ohio Percent of Grain Shipped by Rail CORN 1962-63 65 79 73 66 47 47 57 1963-64 70 82 65 66 45 41 58 1964-65 53 76 54 61 40 42 50 WHEAT 1962-63 83 82 54 68 60 73 75 1963-64 78 77 53 49 46 74 69 1964-65 81 79 70 55 51 79 74 SOYBEANS 1962-63 65 64 55 39 44 61 57 1963-64 68 73 52 42 49 58 60 1964-65 62 70 71 44 49 58 58 Percentages are determined from bushels shipped. In moving corn, country elevators with over 200,000 bushels of storage capacity are using truck carriers more than the smaller elevators. 7 adding dryers, and acquiring additional knowledge of hedging, mer-chandising, and transportation. It is a matter of record that railroads are continuing to make changes in rail rate structures and tariffs. It seems apparent that both rails and trucks will use services and rates as competitive in-ducements to increase their shares of the grain transportation business. Basically, transportation affects nearly all the functions of the grain marketing industry. Thus, all members of the industry should give maximum consideration to present and probable future trans-portation costs and services by both rails and trucks as they plan their adjustments. Table 5 Anticipated Trends in Grain to be Shipped by Rail from Country Elevators 1965-66 (As Indicated by Country Elevator Respondents) Bushels of Storage Capacity at the Country Elevator Anticipated Under 50,000 100,000 150,000 200,000 300,000 Sum of Trend 50,000 99,999 149,000 199,999 299,999 and Over Replies Percent of Country Elevators Responding CORN Rail Increase 29 36 83 80 22 37 37 Truck Increase 27 43 0 0 33 45 30 No Change 30 21 17 20 34 6 24 No Reply 14 0 0 0 11 12 9 Total 100 100 100 100 100 100 100 WHEAT Rail Increase 29 29 33 60 11 31 29 Truck Increase 20 29 33 0 33 38 25 No Change 42 42 17 40 45 18 37 No Reply 9 0 17 0 11 13 99 Total 100 100 100 100 100 100 100 SOYBEANS Rail Increase 27 36 17 40 23 38 29 Truck Increase 24 21 50 20 23 31 26 No Change 38 43 17 40 43 19 35 No Reply 11 0 16 0 11 12 10 Total 100 100 100 100 100 100 100 Tobie 5 shows that country elevator managers are about equally divided in their opinions about the future trend in roil versus truck movement of corn, wheat, and soybeans. 11/65-5M The Ohio State University cooperation with the U. S. Department of Agriculture. Cooperative Extension Service, Roy M. Kottman, Director, Columbus, Ohio, 43210. Printed and distributed in furtherance of Acts of May 8 and June 30, 1914. 

Grain Transporation in Ohio

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Grain Transporation in Ohio

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