With the second quarter potash results posted, it is interesting to note that all of the major North American producers reported continued logistical issues with delivery of fertilizer to customers. A majority of North American fertilizer is moved via the rail system, with thirty six percent of the fertilizer in the United States transported by rail. Most of the major rail systems have reported an increase in the number of rail cars shipped for the first half of 2014 as compared to 2013. The chart below indicates total rail cars shipped comparing 2014 to 2013 on a percentage difference basis.Unfortunately, reliable data to sort out how many rail cars of fertilizer by carrier becomes much more difficult as each carrier categorizes fertilizer loads differently. Canadian Pacific specifically spells out fertilizer shipments, while CN and BNSF lump fertilizers in with other agricultural products. Finally Union Pacific combines fertilizers with other chemicals.
For the carriers that spell out fertilizer shipments, CP decreased fertilizer shipments by over 9 percent for Q2 2014 compared to 2013, shipping 49 thousand cars. UP increased fertilizer shipments by 2.4 percent shipping 52 thousand cars in Q2.
As mentioned CN and BNSF’s data is mixed with the shipment of other agricultural products. However CN saw an increase of over 13 percent for H1, and BNSF saw increases of over 2 percent for the shipment of these products. This stands to reason with the large 2013 crop harvests as well as record fertilizer shipments in North America.
It can be expected that there will continue to be pressure on the logistics of shipping fertilizers over the near term as empty fertilizer bins are being reported across North America, and record crop production is being forecast for the United States. For example as of mid-May, BNSF reported a past due backlog of 6,800 cars for agricultural product shipments for North Dakota alone.
If you would like to discuss the impact that logistics may have on your fertilizer project, please contact Schlumpberger Inc.