Union Pacific Railroad is pushing back the opening of its grain transloading facility at Yermo, Calif., to late 2011 or early 2012 amid a declining grain export market.
UP announced seven months ago that the facility in the summer would begin exporting distillers dried grain, an ethanol production byproduct, from the upper Midwest. UP also said it intends to eventually expand the facility to handle bulk grain and other processed grain products.
The grain export market has been softening. Spokesman Tom Lange said UP’s grain shipments were down 29 percent in the first week of November compared to the same period last year, and traffic was down 14 percent since Oct. 1. Grain traffic for all U.S. Class 1 railroads was off 14.2 percent year-over-year in October, according to figures from the Association of American Railroads, and has been falling on a week-to-week basis at a double-digit pace in November.
UP decided to build the Yermo facility when the export market was growing rapidly due to a drought in Russia. The drought has ended, and now Russia is back in the global export market with a bumper crop.
There is still interest in the UP facility because it will provide grain shippers in the Midwest something they have trouble accessing at home: empty containers. UP will operate a closed loop system in which it will ship unit trains of empty containers, plentiful in Los Angeles-Long Beach, to Yermo, about 120 miles east of Los Angeles.
UP will bring unit trains of hopper cars carrying grain from the Midwest to Yermo. A conveyor system will transload the grain from the hopper cars to the marine containers, and UP will then carry the loaded containers on unit trains to the ports for export.