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Industry Preparations to the Columbia-Snake River
by Dr. Ken Casavant
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Excerpt from report is below or click Full Report
3.2 Wheat Industry Structure and Operations
Of the survey respondents, Northern and Southern Washington elevators each ship about 89 million bushels1 per year, Northern Idaho firms ship 41 million bushels per year, Eastern Oregon elevators ship 33 million bushels per year and Southern Idaho firms ship 7.5 million bushels per year (Table 3.1).
1 One bushel of wheat is equal to 60 pounds and 2,000 pounds is equal to one U.S. ton, so one bushel is equal to 0.03 U.S. tons.
Southern Washington elevators ship the most wheat in the Pacific Northwest. This region includes Whitman County, which "has consistently been the number one wheat-producing county in the United States every year since 1978" (Washington Grain Commission). For this sample, both Northern Washington and Southern Washington firms each ship about 35 percent of all wheat in the Pacific Northwest; Northern Idaho firms ship about 16 percent; Eastern Oregon elevators ship about 13 percent; and Southern Idaho elevators ship only 3 percent of all wheat in the Pacific Northwest (Figure 3.1). The percentages and volumes above have been verified as accurate averages by personal communication with Glen Squires, Vice President of the Washington Grain Commission. This survey captures 95 percent of wheat shipments from the Pacific Northwest (Washington Grain Commission and Idaho Wheat Commission).
| Region | Number of Firms | Annual Tonnage Shipped in Bushels | Percentage of the Total Annual Tonnage Shipped | |
|---|---|---|---|---|
| Eastern Oregon | 5 | 32,800,000 | 12.68% | |
| Northern Idaho | 5 | 40,600,000 | 15.69% | |
| Southern Idaho | 3 | 7,500,000 | 2.90% | |
| Northern Washington | 5 | 87,900,000 | 33.98% | |
| Southern Washington | 8 | 89,912,000 | 34.75% | |
| Pacific Northwest | 26 | 258,712,000 | 100.0% | |
The heart of this study is to determine how shippers choose and use alternative modes, in ordinary times and during the extended lock outage. In the Pacific Northwest, a combination of modes is generally used to transport commodity goods. Combinations of transportation modes include truck-barge2, rail-barge3 and truck-rail. Although rail-barge and truck-rail were not exclusively designated in the survey and the figures below, survey respondents included rail-barge shipments in the category of truck-barge and truck-rail movements in the category of rail.
2 Truck-barge is the combination of trucking a commodity to a barge-loading facility and then shipping the product by barge to its destination.
3 Rail-barge has recently made an appearance in the Pacific Northwest. Currently, only two elevators transport wheat by this mode.
According to survey respondents, Eastern Oregon elevators move 92 percent of their wheat by truck-barge, 7 percent by rail and only 1 percent by truck (Table 3.2). Northern Idaho elevators move most all of their wheat by truck-barge (79 percent) and the rest by rail (21 percent) and truck (less than 1 percent). Southern Idaho elevators move a third of wheat shipments by truck to final market, 22 percent by truck-barge and 45 percent by rail. Northern Washington wheat firms mostly move wheat by rail (71 percent); only 15 percent of wheat moves by truck-barge and 14 percent by truck in Northern Washington. Southern Washington elevators move 97.5 percent of their wheat by truck-barge, 1.5 percent by rail and 1 percent by truck (Figure 3.2).
The most obvious finding is that wheat firms in the Pacific Northwest move a majority of their product, about 61 percent, by truck-barge (Table 3.2). This is due to the low cost and convenience of barge transportation (see references). The Columbia-Snake River is centrally located within the Pacific Northwest and wheat farms have been strategically situated near the river. It is often convenient for producers to simply load wheat into trucks and drive the product to centrally-located river terminals, or barge-loading facilities to be shipped west. The truck-barge option avoids the hassle, cost and emissions of trucking the wheat twice, once from the farm to a country elevator and once from a country elevator to a river terminal.
Another trend to notice is that Northern Washington and Southern Idaho mostly employ rail to transport wheat; about 71 percent of Northern Washington wheat and 45 percent of Southern Idaho wheat moves by rail (Figure 3.2). This is an outcome of the availability of several multiple rail car-loading facilities in these regions. These facilities have been strategically located in Northern Washington and Southern Idaho since wheat producers are a substantial distance from the Columbia-Snake River, where truck-barge is generally not economically feasible.
Thirty three percent of wheat coming from Southern Idaho and 14 percent of wheat coming from Northern Washington is shipped via truck to a final market (Figure 3.2). This could be because of the isolated nature of these regions, lack of rail access in the area (more likely for Idaho) or close proximity to flour mills, breweries and other facilities that process grain.
| Region | Number of Firms | Direct Truck to Final Market | Truck-Barge | Rail |
|---|---|---|---|---|
| Eastern Oregon | 5 | 1.0% | 91.8% | 7.2% |
| Northern Idaho | 5 | 0.3% | 78.9% | 20.8% |
| Southern Idaho | 3 | 33.3% | 21.7% | 45.0% |
| Northern Washington | 5 | 14.0% | 14.6% | 71.4% |
| Southern Washington | 8 | 0.9% | 97.5% | 1.6% |
| Pacific Northwest | 26 | 9.9% | 60.9% | 29.2% |
| (bluefish adjusts for volume differences by region, Table 3.1) | 6.2% | 63.5% | 30.3% | |
Transportation rates in the Pacific Northwest vary due to distance, fuel usage, mode and other variables. However, in a very general finding, truck-barge ($0.55 per bushel) is at least 10 cents per bushel less than rail and truck (Table 3.3). Direct truck to final market is the most expensive form of transportation in the Pacific Northwest at 89 cents per bushel.
If all modes are considered, on average for the firms in each region, Eastern Oregon wheat elevators pay $0.50 per bushel for trucking and an average $0.29 per bushel for truck-barge; rail rates in Eastern Oregon are $0.58 per bushel (Table 3.3). Northern Idaho wheat firms pay $1.50 per bushel for trucking, $0.58 per bushel for truck-barge and $0.73 per bushel for rail. Southern Idaho wheat elevators have available rates of $0.71 per bushel for trucking, $0.86 per bushel for truck-barge and $0.83 per bushel for rail. Northern Washington wheat firms pay $0.52 per bushel for trucking, $0.57 per bushel for truck-barge and $0.54 per bushel for rail. Finally, Southern Washington wheat firms pay $1.12 per bushel to truck wheat, $0.47 per bushel to barge wheat and $0.55 to rail wheat (Figure 3.3).
The only regions in which truck-barge is more costly than both rail and truck are Southern Idaho and Northern Washington (Figure 3.3). This is most likely due to the fact that the firms in these regions represented in the survey were a substantial distance from the Columbia-Snake River. As was mentioned before, these areas have a number of multiple railcar loading facilities, which make rail the less expensive transportation option. Truck-barge costs in Southern Idaho and Northern Washington are an average $0.86 and $0.57 per bushel compared to rail costs of $0.83 and $0.54 per bushel and trucking costs of $0.71 and $0.52 per bushel, respectively.
Eastern Oregon firms have the lowest rate for truck-barge, $0.29 per bushel (Table 3.3). Elevators surveyed in this region were all located within a 20 mile radius of the Columbia-River making truck-barge the most economical transportation choice. This region also has the lowest truck rate of $0.50 per bushel. Finally, Northern Washington elevators who participated in the survey experience the lowest rate for rail transportation at $0.54 per bushel. Again, Northern Washington has several multiple railcar loading facilities making rail transportation, on average, the efficient and cost-effective mode of transportation.
| Region | Number of Firms | Direct Truck to Final Market | Truck-Barge | Rail |
|---|---|---|---|---|
| Eastern Oregon | 5 | $0.50 | $0.29 | $0.58 |
| Northern Idaho | 5 | $1.50 | $0.58 | $0.73 |
| Southern Idaho | 3 | $0.71 | $0.86 | $0.83 |
| Northern Washington | 5 | $0.52 | $0.57 | $0.54 |
| Southern Washington | 8 | $1.22 | $0.47 | $0.55 |
| Pacific Northwest | 26 | $0.89 | $0.55 | $0.65 |
| (bluefish adjusts for volume differences by region, Table 3.1) | $0.92 | $0.51 | $0.59 | |
Seasonality of wheat movements is important because of the extended lock outage. After wheat harvest, not all of the grain is shipped right away. In the Pacific Northwest, 43 percent of harvest is shipped in the August to November period, 36 percent from December to March(roughly the period of the outage, the focus of this study) and 21 percent from April to July (Table 3.4).
Among the respondents, Eastern Oregon wheat firms ship 37 percent of their wheat from December to March, 23 percent from April to July and 40 percent from August to November (Table 3.4). Northern Idaho wheat elevators ship 42 percent of their wheat from December to March, 19.5 percent from April to July and 38.5 percent from August to November. Southern Idaho wheat firms ship over half of their wheat (55 percent) from August to November; 32 percent moves from December to March and only 13 percent moves from April to July. Northern Washington wheat elevators move 38 percent of their wheat from December to March, 24 percent from April to July and 38 percent from August to November. Finally, Southern Washington wheat firms move 32 percent of their wheat from December to March, 24 percent from April to July and 44 percent from August to November (Figure 3.4).
A seasonality finding that stands out is that Northern Idaho and Northern Washington elevators each ship about 40 percent of their wheat from December to March instead of from August to November, as the rest of the regions do (Figure 3.4). Besides Northern Idaho and Northern Washington, the majority of the Pacific Northwest's wheat moves from August to November, a smaller portion moves from December to March and the least amount of wheat is shipped from April to July.
Southern Idaho and Southern Washington wheat firms ship over 40 percent of their wheat just after harvest, from August to November (Figure 3.4). All of the regions ship over 30 percent of their wheat from December to March, the period in which the extended lock outage will occur. As stated earlier, 61 percent of wheat in the Pacific Northwest travels by truck-barge (Table 3.2). And according to all of the respondents, 36 percent of wheat ships from December to March (Table 3.4). Sixty-one percent of 259 million bushels, the amount of wheat shipped from the Pacific Northwest in a typical year, is 158 million bushels or 4.75 million tons. Thirty six percent of 4.75 million tons is 1.7 million tons, meaning 1.7 million tons of wheat could have to move by a different mode of transportation other than barge from December 2010 through March 2011, the time in which the extended lock outage will occur. Another alternative would be moving wheat prior to or after the lock closure as was partially illustrated in Figure 2.23.
| Average Percentage of Wheat Shipped | ||||
|---|---|---|---|---|
| Region | Number of Firms | December - March | April - July | August - November |
| Eastern Oregon | 5 | 37.0% | 23.0% | 40.0% |
| Northern Idaho | 5 | 42.0% | 19.5% | 38.5% |
| Southern Idaho | 3 | 31.7% | 13.3% | 55.0% |
| Northern Washington | 5 | 38.6% | 23.6% | 37.8% |
| Southern Washington | 8 | 32.5% | 23.6% | 43.9% |
| Pacific Northwest | 26 | 36.4% | 20.6% | 43.0% |
| (bluefish adjusts for volume differences by region, Table 3.1) | 36.6% | 22.6% | 40.8% | |
3.3 Conclusions of Survey Results
This survey allowed the authors to set up a benchmark for rate structures, seasonality and modal choices for wheat elevators in the Pacific Northwest. After the extended lock closure occurs and barge transportation returns to the Columbia-Snake River, these survey results can be compared to what actually occurs to understand how the outage impacts wheat shipments and sales in the Pacific Northwest.
Southern Washington, including the county of Whitman, ships the highest percentage of wheat in the Pacific Northwest. However, in general, Washington wheat elevators move 70 percent of all shipments from the three states.
Wheat firms in the Pacific Northwest move most of their product, about 61 percent, by truck- barge, due to the low cost and convenience of barge transportation (see references). However, Northern Washington firms mostly employ rail to transport wheat, about 71 percent.
Thirty three of wheat coming from Southern Idaho and 14 percent from Northern Washington is shipped via truck to a final market. This could be because of the isolated nature of these regions or close proximity to flour mills, breweries and other facilities that process grain.
In general, on average, truck-barge is at least 10 cents per bushel less than rail and truck. Direct truck to final market is the most expensive form of transportation in the Pacific Northwest at 89 cents per bushel and is seldom used. Northern Washington and Southern Idaho are the only regions in which barge is more costly than both rail and truck.
Northern Idaho and Northern Washington elevators both ship most of their wheat from December to March instead of from August to November, as contrasted to the rest of the regions. For all regions besides Northern Idaho and Washington, the majority of wheat is shipped from August to November, then from December to March and the least amount of wheat is shipped from April to July.
All regions of the Pacific Northwest (among survey respondents) ship over 30 percent of their wheat from December to March, the period in which the extended lock outage will occur. This means that 1.7 million tons of wheat will have to move by a different mode of transportation other than barge from December 2010 through March 2011, the time in which the extended lock outage will occur.
The percentages and volumes in this section have been compared to total figures for the state and have been verified as accurate averages by the Washington Grain Commission.
Related Pages:
Adjustments to Tables 3.2, 3.3 and 3.4 Excel spreadsheet by bluefish
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