Examination of TX as Grain Transportation Hub

This article has been reprinted from the Oct. 4 USDA Grain Transportation Report.

Texas occupies a unique and strategic place in U.S. Grain transportation logistics.

Its geography to the southeast is nestled along the Gulf coast, with easy access to export ports with ready access to Europe, or access to Asia via the Panama Canal.

It is also strategically located next to Mexico to the southwest, with easy cross border ground movements of exports to Mexico by truck and rail, and ocean movements for exports to Mexico and South America.

Thus, the geographical location of Texas makes it a strategic hub for grain transportation.

This article examines: (1) its characteristics as an important grain producing, consuming and exporting location, (2) how the different transportation modes of rail, truck and ocean are utilized, and (3) how its geography offers a transportation advantage with several shipping options.

Production: According to data provided by USDA’s National Agricultural Statistics Service, grain production in Texas is largely confined to the High Plains, North Central and Lower Valley Regions (see figure 1).

These regions produce 65 percent of its corn, 50 percent of its wheat, and 33 percent of its sorghum.

In 2017, the State Agricultural Survey of Texas reported 313 million bushels (mbu) of corn were produced in the State, 95 mbu of sorghum grain, 60 mbu of wheat, and 6 .8 mbu of soybeans.

Consumption: As a huge livestock producing State, Texas is a major consumer of grain, such as corn and sorghum used as feed grains for livestock.

Overall, Texas ranked number one in cattle and calves in the United States.

In addition, Texas has a large population where grains such as wheat and rice are used mainly for human consumption.

Export: Texas is a major hub for U.S. grains exports (see figure 2). About 25 mmt of grain passes through the custom districts of Texas.

Thirty nine percent consist of corn, 32 percent wheat, 20 percent sorghum and 10 percent soybeans.

A significant amount of grain crosses annually between Texas and Mexico.

The grains are transported by rail, truck and ocean vessels (see Mexico Transport Cost Indicator Report for grain routes to Mexico).

In addition, large amount of grains, especially wheat and sorghum pass through Texas Gulf ports on their way to foreign destinations, including South America, Africa and Asia.

Modal Analysis: Trucks are mostly used for the “last mile” leg of grain shipments to neighboring States, or for delivery of locally produced grain that is hauled shorter distances, such as transport to feedlots and processing facilities.

Trucks also haul grain to Mexico through the border crossing points (see figure 2).

Large quantities of grain are received in Texas for export and local consumption by rail.

These shipments are destined to local Texas livestock lots or processing plants. There were three Class 1 railroads operating in Texas: Union Pacific (UP), BNSF Railway, and Kansas City Southern Railway (KCS).

According to the Surface Transportation Board’s Waybill Sample, most grain entering Texas by rail is sourced from the corn belt with Kansas being the largest source followed by Nebraska and Oklahoma.

These shipments were destined for the High Plains, the North Central and the Lower Valley regions. These locations harbor large livestock’s feedlots (including beef, poultry and dairy populations).

These facilities are the largest consumers of grain throughout the State.

As a grain producer, about 11 percent of rail shipments originate and terminate in Texas.

The balance of the rail deliveries (after local consumption) is destined to export via the Gulf ports of Galveston, Houston, Corpus Christi and Beaumont (see figure 2).

Furthermore, a large quantity of rail-transported grain shipments from the Corn Belt is destined for Mexico via the border crossing points of El Paso, Presidio, Eagle Pass, Laredo and Brownsville.

Looking at the 3-year average by commodities, the top rail deliveries to destinations in Texas were 7.4 million metric tons (mmt) for corn, 6.3 mmt for wheat, 4.7 mmt for sorghum and 1 mmt for soybeans. (see table 1).

According to the Port Import and Export Reporting Service, in 2017, 2.86 mmt of grain was exported—either by bulk or container—through the Port of Corpus Christi, representing about 89 percent of the total agricultural product going through the port.

The Port of Houston saw 2.9 mmt of grain, or 62 percent of total agricultural products going through its port.

Bulk grains and grain products accounted for 0.478 mmt or over 99 percent of agricultural exports through the Port of Galveston, in 2017.

The top destination countries for grain exports from these three Texas ports were: China, Mexico, and Indonesia.

Bulk grains of 0.558 mmt accounted for 79 percent of all agricultural exports through the Port of Beaumont in 2017.

The top destination markets were Mexico, Curacao and the Dominican Republic.

Conclusion

As U.S. farmers must compete in the global marketplace, an understanding of Texas grain transportation logistics and its contribution to facilitating U.S. access to foreign markets is important.

With its strategic geographical location, Texas plays a major role for grain exports to foreign destinations, where ports on the Texas Gulf coast are primary export points, especially for wheat and sorghum.

Significant railroad movements are used for export grain to Mexico, which a major U.S. grain consumer (see March 22, 2018 Grain Transportation Report).

Texas also plays a major role in grain transportation destined to the local market, such as feedlots, where truck use is important