Railroad companies have updated freight rates for hard red winter wheat shipments as farmers prepare to harvest what’s projected to be the smallest crop since 1957, according to the latest Grain Transportation Report.
Both BNSF Railway and Union Pacific Railroad recently announced tariff adjustments for marketing year 2026/27, with fuel surcharges rising sharply due to increased diesel costs while tariff rates show modest changes compared to last year’s significant reductions.
Fuel surcharges jump dramatically
The most significant cost increase comes from fuel surcharges, which will rise substantially in June. BNSF’s fuel surcharge will increase to $0.46 per mile, up from $0.08 in June 2025. Union Pacific’s surcharge will jump to $0.69 per mile from $0.30 last year.
For shipments from Wichita, Kansas, to Houston, Texas, the fuel surcharge increases translate to a $251 per car rise for Union Pacific and $387 per car increase for BNSF.
BNSF cuts some tariff rates
BNSF will reduce shuttle tariff rates from several origins to Gulf Coast ports. Rates from Clovis, New Mexico, and Lariat, Texas, will drop $400 per car, while Texas Panhandle stations see $300 reductions and Oklahoma origins receive $200 cuts.
The railroad also narrowed rate spreads between shipment types, reducing single car rates to maintain a $500 per car difference with Domestic Efficiency Trains and $1,000 spread with shuttle trains.
BNSF significantly reduced rates to the U.S.-Mexico border, cutting the premium over Gulf Coast rates from $300 to $100 per car across all origins.
Union Pacific maintains most rates
Union Pacific made minimal tariff adjustments, maintaining most export rates while raising eastbound domestic movements to Kansas City, Chicago, St. Louis and Memphis by $100 per car in most lanes.
The railroad’s May rate announcement canceled a previously announced $275 increase for all wheat movements.
BNSF gains competitive advantage
From major Kansas terminals where both railroads compete, BNSF now holds the price advantage in nearly all lanes except Wichita-Houston. The railroads remain most competitive on Salina-Houston and Wichita-Houston routes, differing by less than $100 per car.
For Mexico exports, BNSF’s rate reductions provide advantages exceeding $250 per car from Hutchinson and Salina, and $128 per car from Wichita.
Drought devastates wheat production
The rate changes come as farmers face a severely reduced harvest. Hard red winter wheat production is forecast at 515 million bushels, down 36% from last year due to late-season freeze and widespread drought across the Southern Plains.
Kansas production is expected to drop 78.1 million bushels, while Oklahoma, Colorado, Texas and Nebraska also face significant declines. Despite reduced production, transportation demand will benefit from large carryover stocks totaling 453 million bushels.
