The U.S. grain transportation sector experienced robust demand in the first quarter of 2025, driven primarily by strong corn exports, according to the latest Grain Transportation Report from the Agricultural Marketing Service. Despite facing winter weather challenges and market uncertainties, the industry demonstrated resilience across various modes of transportation.
Corn exports reached a record high of 17.6 million metric tons from December 2024 through February 2025, with Pacific Northwest terminals showing particularly strong performance. This surge in exports propelled transportation demand, especially for barge and rail services.
Barge shipments through the Mississippi River System saw a 5% increase compared to the previous year, with corn shipments for export rising 18% above the three-year average. However, soybean and wheat barged volumes fell below average. The Illinois River experienced a significant 32% increase in downbound grain shipments, while the Ohio River saw a 12% decrease.
Winter storms and high water levels posed challenges throughout the river system, causing delays and disruptions. These weather-related issues, combined with strong export demand, led to above-average spot rates for barge transportation. The average barge rate at St. Louis, Missouri, reached $16.80 per ton, 36% higher than the previous year and 10% above the three-year average.
Rail transportation faced its own set of challenges, with grain carloads slightly below average at the national level. Severe weather in February particularly affected BNSF Railway's Northern Transcon line, causing significant delays and service disruptions. However, rail service improved by March, with some railroads even setting new records for grain carloads.
Ocean freight rates for bulk grain shipments experienced a seasonal dip in the first quarter, influenced by ample vessel supply and low demand during global holiday periods. Rates from the U.S. Gulf to Japan averaged $46.19 per metric ton, down 21% from the four-year average. Similarly, rates from the Pacific Northwest averaged $26.89 per metric ton, 16% below the four-year average.
The ocean freight market faced additional uncertainty due to proposed fees on Chinese operators and Chinese-built vessels by the Office of the United States Trade Representative. However, recent modifications to the proposal, including a grace period and waivers for certain vessels, have somewhat eased concerns.
Diesel prices for trucking rose in the first quarter of 2025, averaging $3.63 per gallon. This represents a 10-cent increase from the previous quarter but remains 34 cents below the first quarter of 2024. The Energy Information Administration projects volatility in crude oil prices due to shifting trade policies, with diesel prices expected to average $3.44 per gallon in 2025.
Looking ahead, the U.S. Department of Agriculture forecasts continued strong exports for the three major grains in the 2024/25 marketing year. Year-to-date exports are up 18% from the previous year, indicating sustained transportation demand. Mexico remains a key buyer, accounting for 32% of total unshipped exports.
As the grain transportation sector navigates these dynamic market conditions, industry stakeholders will need to remain adaptable to weather-related challenges, policy changes, and fluctuating global demand to ensure efficient and cost-effective movement of U.S. grain to domestic and international markets.
