I’ve also heard there’s a pu***o import ethanol by sea to coastal regions.
Did you even read the article? The gist of the article is that future growth in ethanol production facilities must conform to unit train dynamics, both for inbound corn and outbound products. Thus, the “all unit train or nothing” spector.
I am responding to the thesis put forth by the writer. What are you responding to?
Read the article before you pop off unnecessarily. Read my last reply to Murphy. Then respond.
As well as the other large agribusiness companies like Cargill, Lyle & Tate, etc.
There are a lot of smaller Ethanol producers but they are finding it better to market their product through ADM or Cargill as the lack marketing leverage with the major Oil Companies like ExxonMobil.
Still selling E10 here in the NW part of Wisconsin as of a few hours ago,
John Beaulieu
And exactly who forced these people to build the “small” plants?
I would surmise they see a profit in doing so, regardless of who, or how their inbound and outbound products move.
Oh, and Dave, the days of one and two car load railroading by the class 1 roads is gone…been gone for quite a while.
Just like your Montana wheat whining, it will not come back.
Now, a regional or short line might take a chance on it, but none of the Class 1s want, or need single car load business.
Or is this just another one of your threads designed to allow you to bring up your imagined moral obligation of railroads to help the “little guy”…and expound on your theory of railroads being conspirators in a nation wide scheme to control everything and screw over the little folks like yourself?
(of course it is!)
And I love the fact that you are quoting Trains magazine….in one of your other rabid postings, you dismissed the value of Trains magazine when it was quoted by someone who didn’t agree with you…If I remember correctly, you said something along the lines that Trains magazine was a railfan magazine, and that you took nothing published in it seriously, that they (Trains) were nothing but a instrument of and pandered to the railroads, and that the people who wrote for it were simply mouthpieces for the rail industry.
And now, you use the same magazine to back up your nonsense, and manage to alter the writers words just enough in your “almost his exact words” quote to…well, most of us are used to you selectively editing quotes to fit your needs.
Guess switching horses in mid stream is normal for you, huh….isn’t this sort of like sleeping with the enemy?
Besides the Milwaukee, is there any thing a railroad does, or any railroad for that matter, that you like?
Ed
Well Dave, I see BNSF has a train in a siding lined up to run up to Wentworth. It’s the typical size, 12-15 empty tanks, and 12-15 loaded corn hoppers. They run up there once or twice a week.
It appears from the article, that the new ethanol plants built where there is no corn (duh!), probably require unit trains just to compete with the plants that were wisely built in corn country. It would be kind of like building a refinery in S.D.
Well, if you want you can look back through your TRAINS mag
The reality is right now, it is not that way. When I look at a list of cars billed out, I see lots and lots of singles. Out of 215 last night, none were units, none.
It is some customers and marketers who want the units. Right now, there are only three terminals in the U.S. that can handle them; Watson, CA; Sewaren, NJ, and Albany, NY. (yes I know the aricle says four, if you count Pipola, AZ, which ADM has to itself last I looked) Otherwise, you are just parceling up trains at one end then parcelling them out at the destination.
There are a few locations that can take unit trains of DDGs. Pixley, Ca comes to mind as one of them. Otherwise all those cars are singles as well.
Although more large terminals will be in the future, you cannot have them in some small location in Michigan or Ohio where they may use only five tank cars a month. So there will always be singles running. I am thinking of places like Richmond, VA, or Spartensburg, SC in particular.
I will also dispute the gentleman from Iowa I
ADM controls ADM, not the market total. Besides, ADM maybe makes up at this time less than a quarter of the production capacity. Second in capacity is VeraSun followed by Aventine and Hawkeye Renewables.
Too many players. Other marketers are, Aventine, MUREX, Growmark, Ethanol Products, Eco-Energy, Renewable Products Marketing Group, United Bio-Energy, CHS, and a few smaller firms. VeraSun will be marketing their own product after this year.
In 2001 to 2004, their plants were the norm capacity for dry mill facilities. Now a days, 100 mmg/y plants are the norm. Most of these smaller plants were built and owned by Co-ops. Looking at figures from a University of Minnesota paper, they are profitable based on 2003 ethanol price contracts. Today, wow. (BTW that paper also showed that even without subsidy, they can profit if they control expenses.)
I read the article and since I don’t have paranoid delusions that the Class 1 railroads are out to completely eliminate the small shipper, I do not see any directive by the writer that an ethanol producer “must” ship the product in unit trains. The word “imperative” is used but it is pretty clear to me that the writer is speaking of the need to use unit trains if the producer wants the best price and service for rail transport. I don’t see anything that says such use is mandatory to be in the ethanol production business.
The first sentence of the third paragraph reads as follows: “Currently, however, there are only four nationwide DESTINATIONS that can handle unit trains.” (capitals mine)So you tell me. What would be the point of building units trains if the consignee is going to have to dink around getting the cars unloaded.
Beyond the unloading capacity issue, I also have to question whether all blending facilities actually have the throughput volumn that would be conducive to receipts in trainload quantities. If I understand the problem correctly, ethanol blends can’t be transported through the petroleum pipeling system and I assume is is blended in to the gasoline just before the truck delivery to retail outlets. I don’t have any idea of the number of delivery terminals nationwide, but it seems to me that they would come in different sizes depending on the gasoline consuption of the market territory served. Would a facility that uses a carload a day actually want to keep an inventory of say 60-100 days of product?
Beside that, suppose the industry evolves to a point that that all the receivers do take trainloads of pretty good size for prompt unloading. I don’t know much about ethanol production, but I would guess that a plant can’t be shut down with just a flip of a switch. If that is the case, it would probably be a pretty good idea to have some tanks for storage of finished product for the day when there are no empty tanks cars in the yard. So if there
For the record I was writing my post and didn’t see RRKen until I refreshed my screen. Nice to see a post from someone who obviously works in the business and can present the facts.[tup][tup]
I think the shortline president likely got misquoted. I am sure that he and the Class I connections would prefer unit trains but it is clear the customers can not handle them today. The railroads can not force a square peg into a round hole. The question should be “What is the future of this business?”
Ethanol is relatively light so IIRC cars will be about 30,000 gallons and 100 tons net. These cars will cost about $70,000 each or $700 per month. Shippers and consignees may use the tank cars as storage but they will be much more expensive than in plant fixed storage tanks. The railroad will quote rates either with mileage payment or without. This makes the railroad indifferent to car cycle time. Whoever supplys the cars will not be indifferent, however.
Taking the figures from the article, I doubt that anyone will want to wait 10 days to accumulate a unit train and switch 10 car cuts to do it. On 100 cars that is 1000 car days or 33.3 car months. At $700 per month someone spent over $21,000 in car cost just sitting around at origin.
I think the railroads will offer block rates on 10, 20, or 25 car blocks and unit trains. Producers, marketers and users will size their facilities as they will and pay the rate for the service they choose. In short, I do not think the railroads are going to force anyone to do anything. They will offer choices and customers will choose.
Take anything in any press with a grain of salt.
Mac
For the record, I am a hogger with UPRR in Mason City, Iowa. Have been following the Ethanol industry since we got our first plant in Glenville, MN (1998). Thousands of TILX covered hopppers later, we now service five plants directly. Watching the branch lines in Iowa being converted from 10 mph all day affairs to 49 mph pipelines has been amazing. Our terminal alone has been working at 85% capacity since 2003, will still continue to grow. Along with it, new jobs, and equipment. Talks with investors, farmers, and people inside the industry has been quite interesting.
An interesting difference of opinion.
[quote]
QUOTE: Originally posted by RRKen
The reality is right now, it is not that way. When I look at a list of cars billed out, I see lots and lots of singles. Out of 215 last night, none were units, none.
It is some customers and marketers who want the units. Right now, there are only three terminals in the U.S. that can handle them; Watson, CA; Sewaren, NJ, and Albany, NY. (yes I know the aricle says four, if you count Pipola, AZ, which ADM has to itself last I looked) Otherwise, you are just parceling up trains at one end then parcelling them out at the destination.
There are a few locations that can take unit trains of DDGs. Pixley, Ca comes to mind as one of them. Otherwise all those cars are singles as well.
Although more large terminals will be in the future, you cannot have them in some small location in Michigan or Ohio where they may use only five tank cars a month. So there will always be singles running. I am thinking of places like Richmond, VA, or Spartensburg, SC in particular.
Not really…
Read what he wrote, not what you imagine.
Ten cars do not make a unit train, nor do they constitute a single car load.
We do switch out a lot of single…as in 1 car…into blocks…but again, you will only see or read what you choose to…
Local yards indeed cut out singles to a customer…but the class 1 roads are not activly looking for that kind of business.
rrken
Thanks for your input on this subject. You not only work for UP but you study the industry you work for and your customers.
I work for an industry which supplies products for railcars, particularly tank cars. Those folks are really excited right now. Tank car manufacturers are looking at big production over the next several years, partially thanks to ethanol.
A customer of mine is lADM. A recent conversation with my contact indicated that:
A. They are building 1billion gallons of manufacturing capacity.
B. They will be purchasing 2500 tank cars in the next 3 years.
Add to that their new CEO is an energy experienced executive and that their stock has soared to enormous gains, and it seems they are positioning themselves for future growth.
rrken…do you know where the new ADM plants are going to be located?
ed
I spoke too soon. An E10 ban did not pass, however the statewide E10 mandate was defeated in the state Senate. In south central Wisconsin, name brand regular has been labeled ‘Up to E10’, but has typically been E5 likely due to the demands of Milwaukee metro, while Mid grade and Premium in the area have not contained Ethanol and that will continue, at least for the time being. The 2 gas docks and one marina I’m familiar with sell Ethanol-free 89 octane midgrade or both midgrade and premium. There’s some additional information at the following state Senator’s site. There was also some on the DNR site, but I am unable to find it.
http://www.widigest.com/html/lazich_042806.htm
Regarding ADM, perha
An interesting turnaround …