Major U.S. railroads have announced adjustments to their wheat rail tariff rates for the 2025/26 marketing year, reflecting shifting market conditions and competitive pressures in the wheat transportation sector. The changes, which primarily affect hard red winter (HRW) and hard red spring (HRS) wheat shipments, come as the industry anticipates increased wheat production and exports.
According to the U.S. Department of Agriculture's Grain Transportation Report analysis of the annual grain Modal Share Analysis, railroads moved 56 percent of U.S.-grown wheat in 2022, underscoring the importance of rail transportation for the wheat industry. The adjustments in rail tariff rates are expected to impact wheat prices, domestic wheat flows, and exports.
For HRW wheat, the largest wheat class with a 39-percent share in the 2024/25 marketing year, BNSF Railway has implemented broad rate cuts. The tariff rate for a shuttle train from Wichita, Kansas, to Houston, Texas, decreased by $511 to $3,900 per car, marking a 12-percent decline and the largest drop for that rate since at least 2010. Similar cuts were instituted for other major HRW wheat export lanes.
Union Pacific Railroad (UP) also adjusted its wheat tariff rates, with increases for domestic shipments and decreases for exports to the Texas Gulf. However, BNSF's rate cuts have given it a competitive edge in some key export lanes.
For HRS wheat, the second-largest wheat class with a 26-percent share in the 2024/25 marketing year, both BNSF and Canadian Pacific Kansas City (CPKC) have announced rate changes effective August 1. BNSF plans to raise tariff rates for both domestic and export shipments, while CPKC will lower rates for shuttles to Pacific Northwest export terminals but increase rates to Chicago for eastern interchange.
The rail tariff adjustments come as the USDA projects increased wheat production and exports for the 2025/26 marketing year. The agency forecasts a harvest of 782 million bushels of HRW wheat, potentially the highest total since the 2019/20 marketing year. Total U.S. wheat exports are projected to reach 825 million bushels, the highest since the 2020/21 marketing year.
Meanwhile, a case pending before the Surface Transportation Board (STB) could impact rail access to the Texas Gulf for HRS wheat shipments. CPKC is seeking to gain access to the Port of Houston, which could provide single-line service from HRS wheat-producing areas in the Northern Plains to export terminals in the Texas Gulf. UP has contested this claim, arguing that the trackage rights in question apply only to grain originating in the Omaha-Kansas City corridor.
