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[quote]QUOTE: Originally posted by RRKen [quote]QUOTE: Originally posted by futuremodal [quote]QUOTE: Originally posted by Murphy Siding Thirty-five miles north of me,at Wentworth, S.D. is an ethanol plant built about 5 years ago. It is near the end of a little used brach line to the grain elevators at Madison, S.D. It was built there, knowing full well, that there would never be any unit train loads in or out. And yet, they still chose that location. What do you suppose they know that we (and Dave) don't. Oh.....it's also in the center of about 10,000 square miles of cornfields, and 10 miles from Interstate 29,and 30 miles from Interstate 90.[;)] [/quote] Did you even read the article? The gist of the article is that future growth in ethanol production facilities must conform to unit train dynamics, both for inbound corn and outbound products. Thus, the "all unit train or nothing" spector.[/quote] The reality is right now, it is not that way. When I look at a list of cars billed out, I see lots and lots of singles. Out of 215 last night, none were units, none. It is some customers and marketers who want the units. Right now, there are only three terminals in the U.S. that can handle them; Watson, CA; Sewaren, NJ, and Albany, NY. (yes I know the aricle says four, if you count Pipola, AZ, which ADM has to itself last I looked) Otherwise, you are just parceling up trains at one end then parcelling them out at the destination. There are a few locations that can take unit trains of DDGs. Pixley, Ca comes to mind as one of them. Otherwise all those cars are singles as well. Although more large terminals will be in the future, you cannot have them in some small location in Michigan or Ohio where they may use only five tank cars a month. So there will always be singles running. I am thinking of places like Richmond, VA, or Spartensburg, SC in particular. I will also dispute the gentleman from Iowa Interstate about inbound corn shipments by rail. Since the first plant here opened in 1998 until now, I have yet to see one inbound train of corn to their facilities. In fact, this area used to send ADM in Clinton, IA trains about once or twice a week. ADM had five or six commited trainsets of cars and power to fulfill the commitiment. This year, only one elevator has shipped to ADM from this area. And the reason is the competition from local ethanol plants. Why get a lower price for your grain at ADM because of transport, when you can get a better price in your county? And that is exactly what the producers here feel. ADM and Cargill in Eddyville for that matter, must seek out other markets, and in the past three or four years have. The only folks this does not really effect is the cattlemen, who now use DDGs as a feed instead of whole grain. An example is the feed lot in Maracopia, AZ. They get multiple unit trains of corn for feed. But now they are building their own ethanol plant. While they will see better prices on local DDGs, they will not see much savings on whole grain as they still must trainsport it from places like Iowa or Nebraska, who has a surplus. Same goes with the California feedlots. I think the term becomes non-competitive. Lastly single car cycle times. I will not dispute that a unit train gives excellant car cycle. All the trains we have sent to Albany have turned in ten days from shipper siding to shipper siding. But Albany can unload 100 cars in 24 hours. Not all end terminals can do that kind of capacity. Surely the ethanol plants cannot load that fast, so they must accumulate cars about a week or more before they can ship a unit. One way around it the marketers have been using is to line up two plants to fill out a unit. Works out rather well since the second plant is right on the way to the destination. In the last few years, I have watched as single cars get about 12 to 15 day cycles to the West Coast and back. Now that the West Coast is not a market we serve, the times get shorter. However, it has always depended on the terminal to unload them. And they tend to be the biggest part of delays of cars. Marketers ship cars based on unloading schedules. But they do not control the end terminal, just sell to them. If Ozul, CA for example gets backed up, those cars they cannot handle have to sit somewhere. And that somewhere is a railroad yard or siding. Meantime, there is more on the way already. Don't get me wrong, the ethanol industry is changing and will continue to. Average plant size in 2002 was 40 mmg/y, now the norm is 100 mmg/y. Production process has also changed. Marketers will meld both rail with barge and truck to deliver the product to the racks. But you will not eliminate the single car shipments, and ethanol plants will not be competitive if they need to ship in whole grains by rail, no matter the economy of scale. [/quote] RRKen, may I assume that you work for UP? If so, UP's current commitment to serve carload requests is not suprising. Up here in the PNW, while BNSF is committed to doing whatever it takes to get grain growers to truck their grain to the Ritzville shuttle loader and end carload requests at smaller elevators on BNSF's system and shortline connections, UP is doing just the opposite. They are allowing their shortline connections to distribute and collect carload lots of grain, then bringing them all to a logical UP connection to run 'em as an abreviated unit train to either one of the Lower Columbia deep water ports, or (depending on congestion conditions in the Gorge) short hauling the semi unit train to the Wallula barge port. What is occuring because of this willingness to serve carload grain loading facilities is that UP's share of grain shipments out of Eastern Washington is growing compared to BNSF's. There have even been instances where elevator operators on BNSF or former BNSF served elevators have trucked their grain to an elevator served by a UP shortline. Amazing what a little customer service can accomplish! (Oh look Ed! I just complimented a railroad![;)]) As for Mr. Miller at IAIS, I would not take his prophecy lightly. Economies of scale are a priority when considering investment in production facilities. He states that a 100m gallon plant is considered small in his view, so what does he envision for a normal large scale plant? 1 billion gallons a year? If so, it is unlikely that all the grain needed for such a plant can be trucked in from the surrounding region. A 1 billion gallon ethanol plant would require 400 million bushels, or 114,000 carloads, or about 400,000 truckloads! Under this scenario, such a plant would have to bring in most of it's grain requirement from longer distances away, at least a few hundred miles even in corn country. Therefore, such a plant would require unit trains of grain coming in. The question then is if the economies of scale outweigh the increased transportation costs for the inputs, even if it's only half that size (500m g/yr).
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