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3/13/2008



Rail News: Rail Industry Trends

Railroads are keeping up with escalating ethanol demand, AAR says


Railroads are working effectively with ethanol producers to keep up with skyrocketing biofuel demand, according to comments recently made by the head of the Renewable Fuels Association (RFA) that the Association of American Railroads (AAR) released yesterday. Between 1995 and 2006, rail ethanol volume increased from about 32,000 carloads to more than 145,000 carloads.
 
"As the demand for fuel ethanol grows, the infrastructure available to transport, store and blend ethanol into gasoline has expanded as well," said RFA President and Chief Executive Officer Bob Dinneen during his testimony last month before the Senate Energy and Natural Resources Committee. "Railroad companies are working with our industry to develop infrastructure to meet future demand."
 
Railroads also increasingly are using unit trains (up to 95 cars long) to move ethanol, he said.

"We will continue to grow the necessary infrastructure to make sure that, in any market we need to ship ethanol, there is rail access at gasoline terminals and that those terminals are able to take unit trains," Dinneen said.

An announcement today by U.S. Development Group L.L.C. (USDG) supports the unit-train ideal. The company said its Dallas Fort Worth Rail Terminal L.L.C. (DFWRT) has launched operations and is receiving and offloading ethanol rail cars and unit trains.

Served by Union Pacific Railroad, the new rail terminal will facilitate and expedite the distribution of fuel-grade ethanol to the Dallas-Fort Worth area, USDG said. The terminal features storage capacity for 130,000 barrels and a high-speed offloading facility for 84 rail cars.

The need for continued ethanol-related investments by railroads underscores the importance of the Freight Rail Infrastructure Capacity Expansion Act (S. 1125/H.R. 2116), said AAR President and CEO Edward Hamberger. The legislation would provide a 25 percent tax credit to any business investing in rail infrastructure improvements or expansions, including ethanol producers or gasoline refiners in terminals that can accommodate unit trains.

"The fact that we have been able to handle the four-fold increase in ethanol traffic without difficulty demonstrates the commitment we have to meeting the needs of all our customers," said Hamberger.


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