Key Takeaways:

  • The United States is the world’s biggest grain producer — average annual U.S. grain production from 2007 to 2016 was 561 million tons — and freight railroads play a critical role transporting that grain here and abroad.
  • In 2016, S. Class I railroads moved 1.54 million carloads of grain (5.6% of total carloads) carrying 149.4 million tons (9.6% of total tons) and earning gross revenue of $5.6 billion (8.6% of total revenue).
  • Illinois, Minnesota, Nebraska, and North Dakota are the top states for rail originations of grain while Washington, Texas, Illinois and California are generally the top states for rail terminations.

Corn, soybeans, oats, wheat, rice, rye, sorghum and barley — all considered grains — are used for a variety of purposes ranging from products for human consumption (flour, corn syrup, soybean meal) to animal feed and ethanol production.

Large fluctuations in U.S. grain production are common from one year to the next due to factors such as weather. U.S. grain exports also fluctuate sharply due to market and regulatory factors, including global grain production, exchange rates and crop yields in competing grain exporting countries.

Meeting Demand

Despite these complexities, railroads constantly work to improve their service so they can better meet the market demands of their grain customers. Adequate grain car capacity is critical to efficient grain marketing and transportation, which is why railroads work with freight car providers to supply a rail car fleet that is as large as can be justified economically. In recent years, railroads have acquired thousands of new high-capacity covered hoppers for carrying grain and increasingly use highly efficient “shuttle trains” to move high volumes of grain reliably and cost-effectively. As of year-end 2016, the North American railroad grain car fleet consisted of nearly 274,000 cars (owned by railroads and non-railroads) with a capacity of 1.38 billion cubic feet.

Recent forecasts from the Federal Highway Administration found that total U.S. freight shipments will rise from an estimated 41% by 2040. To prepare for this demand, freight railroads have spent more than $660 billion — of their own funds, not taxpayer’s — from 1980 through 2016 on infrastructure and equipment, better customer coordination, new communications tools and streamlined operations.

Types of Grain

Corn

U.S. freight railroads carry more corn than any other type of grain. From 2007-2016, corn accounted, on average, for 68.9 million tons (49% of total rail grain tonnage) and $2.2 billion in gross revenue (44% of total grain revenue).

Corn is grown in large quantities in many different states, but mainly in the Midwest. It accounted for 65% of U.S. grain production, on average, from 2007 to 2016. However, because the amount of corn produced can change significantly from year to year, the corn share of U.S. grain production varied from 62% to 68% and the volume produced varied by 123 million tons.

Corn consumption patterns also change. In 2007, feed accounted for around 46% of U.S. corn consumption and ethanol for about 24%. In 2016, feed and ethanol both accounted for 37% of corn consumption.

Soybeans

Soybeans accounted for 18% of U.S. grain production from 2007 to 2016, far less than corn, but the soybean share varied from 15% to 20%. Over that period, exports accounted for 45% of soybean use — more than three times the export share for corn — and only around 3% of soybeans went to animal feed. Most of the rest was crushed at processing plants throughout the country to produce soybean oil and soybean meal. Soybeans are generally grown in large quantities in the same states that produce large quantities of corn.

Wheat

Wheat is grown mainly (depending on the type) in the northern tier of U.S. states, including the Dakotas, Montana and Idaho, or the plains of Kansas, Oklahoma and Texas. Wheat accounted for 12% of U.S. grain production from 2007 to 2016. Over the past 10 years, 47% of U.S. wheat utilization has gone to exports, slightly more than soybeans and far more than corn. Wheat that is not exported is usually processed to produce food for human consumption, including bread, pastries and pasta.