Union Pacific Railroad will soon start hauling a grain product about 2,000 miles in unit trains of hopper cars from the Midwest to Southern California, and then transload it to intermodal trainloads of marine containers bound for Asia.
UP officials said the “plant-to-port” program, which pairs the efficiencies of bulk commodity long-haul transportation out of the U.S. interior with large-scale transloading into ocean containers plentiful at the West Coast, will start around midsummer with shipments of distillers dried grains.
“This new unit train service provides a first-of-its-kind, plant-to-port transportation solution for our DDG customers,” said Paul Hammes, UP’s vice president and general manager for agricultural products.
UP is also designing the service so it can expand over time to bulk grain and processed grain products. By uniting large-volume unit trainloads from the heartland with a consistently large supply of marine containers at the coast, such a service could improve the shipment economics and expand the amount of other grain exports as well as DDGs that move in boxes.
DDGs are protein-rich byproducts of distilling ethanol or other alcohol products from grains — mainly corn but sometimes other grains as well. They make for a high-value animal feed both at home and abroad; China has become a growing market for U.S.-generated DDGs out of the Midwest Corn Belt as that country’s meat consumption has grown, raising demand for feed.
U.S. exports of the material grew an estimated 60 percent in 2010 after doubling in 2009, according to the U.S. Grains Council.
Although some DDGs move overseas in bulk ships, the containerized product often is railed by UP in a relatively few carloads at a time to coastal transload facilities operated by third parties. Or it is trucked or railed from ethanol plants to interior transload sites — including Minneapolis, Chicago and Kansas City — where railroads have intermodal ramps and third-party handlers have lined up a supply of 40-foot marine containers.
That supply isn’t always simple to arrange. “There have been times in the Midwest,” said Ryan Pichler, UP’s director of business development for agricultural products, “when (marine) container availability wasn’t there.”
Last year’s intermodal market crunch was just such a time, as ocean ship lines that control import-laden marine containers often paid railroads to return them fast and empty from the heartland so ships could get them back to Asia and reload with more U.S.-bound consumer goods.
In 2010, transload operators increasingly transferred imports at the coasts into 53-foot containers designed for domestic shipments; ship lines could then avoid watching 40-foot marine boxes head inland for weeks at a time, but many exporters were left scrambling for equipment.
“Over the last year or so, we’ve had a lot of feedback from the grain marketplace” about increasing the capacity to transload grain and grain products into containers, Pichler said. “We’ve created this product to be able to meet the demand.”
Instead of bringing the boxes to the grain region, UP will bring grain in bulk to the containers. Railroad officials have finalized plans to build a barn-like DDG transload facility in coming months at Yermo, Calif., outside Barstow, at a UP railyard.
The facility will take in big covered hopper cars that empty grain into a conveyor system. The belts will load DDGs into a long line of pre-positioned 40-foot containers, brought in from UP’s Intermodal Container Transfer Facility at Long Beach, Calif., about 120 miles away.
Matt Bosch, UP’s senior product manager for feed ingredients, said the Yermo site will start by bringing in a full 80-car unit train once a week from the Midwest to connect with a pre-staged stacktrain with 300 marine containers. And because each intermodal train out of Yermo will go directly to on-dock loading areas at Los Angeles and Long Beach port terminals, its 300 weekly loaded boxes will avoid truck drayage.
The bulk trains will originate at 15 to 20 sites for unit trains in Minnesota, Nebraska, Iowa and Illinois, and take approximately six days to reach Yermo. The transload facility will operate five days a week with up to 15 workers. UP also can line up all parts of the move for customers through its Union Pacific Distribution Services unit.
UP officials say the existing third-party transload operations along the coast and in the heartland will continue as before, so the Yermo project will not take any business from them.
But for new business in containerized DDGs, and eventually other grains exporting out of Southern California, UP hopes this plant-to-port program will demonstrate the cost savings of pairing unit grain trains with a plentiful coastal container supply.
Contact John D. Boyd at email@example.com.