Distribution 101

It was so interesting to listen to a speaker with a railroad background discuss transportation strategy as it relates to U.S. agriculture at an Illinois conference.

Much of the 34% gain in railroad transportation use has come from agriculture. This is nearly twice the increase in consumer industrial freight.

Much of the grain from the Dakotas, Minnesota and the Upper Midwest is going into the Pacific Northwest. Most of the corn produced in Illinois, Iowa and the Central Midwest is being shipped by rail into West Texas, Arkansas and Mexico. The Mexicans prefer this route versus shipping grain down the Mississippi River, then into Mexico, because higher quality grain reaches them due to less handling.

The recent hike in oil prices is adding incremental profits to some of the ethanol plants, amounting to as much as $1-2 million annually. The railroads are gearing up for the use of grains in other areas of our country and internationally by adding more engines. The typical locomotive engine costs $1.75 million. The industry would like to increase the distance per car from 200 miles per day to 350 miles per day. Our transportation infrastructure will be so critical in not only product delivery but also quality.

Side Note
My son, Kasey, is a railroad conductor here in Southwest Virginia. He’s loved trains since he was small, so it’s a dream come true for him to actually make a career of it.

Sports Perspective

  • I love to watch Boise State football. Who was the innovative group that came up with the blue field? What a branding idea!
  • College football is so competitive because of the scholarship reduction.
  • USC and Oklahoma may have the defense and experience to meet at the end.


Economic Perspective

  • Keep your eye on the Composite Leading Index; it is one-third the way to predicting a recession.
  • Pension plans could be in trouble at many big companies.


My e-mail address is:sullylab@vt.edu

Editors' note: Dave Kohl, The Corn and Soybean Digest Trends Editor, is an ag economist specializing in business management and ag finance. He recently retired from Virginia Tech, but continues to conduct applied research and travel extensively in the U.S. and Canada, teaching ag and banking seminars and speaking to producer and agribusiness groups.

To see Dave Kohl's previous road warrior adventures type Dave Kohl in the Search blank at the top of the page.

This online exclusive is brought to you by The Corn and Soybean Digest