State Variation in Railroad Wheat Rates

Wheat shippers in the Central Plains states have no cost effective transportation alternative to railroads. Wheat produced in these areas moves long distances to domestic processing and consumption locations or to ports for export. Wheat shippers in the Great Plains don’t have direct access to barge loading locations and trucks provide no intermodal competition for these movements. Wheat shippers in Montana and North Dakota are highly dependent on rail transport because they are distant from barge loading locations and intra-railroad competition is limited. In North Dakota, the BNSF controls 78 % of the Class I rail mileage, and in Montana, the BNSF controls 94%. Montana ships nearly 100 % of its wheat by rail. Unlike Montana and North Dakota, the BNSF and UP have roughly equal track mileage in Kansas. The BNSF has 44 % of the Class I rail mileage and the UP, 55%. Also, both railroads serve the major Kansas grain storage and market centers. A 2010 USDA study found that in 1988, Montana and North Dakota had the highest rail grai