Large grain supplies, strong export demand and rising fuel prices are driving transportation markets. Rail volumes have eached record levels, barge traffic has rebounded after winter disruptions, and export activity remains strong through the Gulf and Pacific Northwest. At the same time, higher diesel and bunker fuel costs are raising freight expenses across every major transportation mode.
Grain continues moving at a rapid pace, but at a much higher cost than a year ago. For grain companies already managing labor costs, storage pressure and tight margins, transportation has become one of the industry’s biggest operational challenges heading into the second half of the year.
Large Grain Supplies Drive Movement
Transportation demand was heavily influenced by the size of the 2025 harvest. USDA reported grain stocks reached a record 483.1 million metric tons at the end of 2025, driven largely by corn inventories that were well above average. Much of the increase was concentrated in the western Corn Belt, where Kansas, Nebraska, South Dakota, Minnesota, Iowa and North Dakota all posted substantial gains over historical averages.
Those inventories quickly translated into stronger grain movement. First quarter exports of corn, soybeans and wheat totaled 40.7 million metric tons, up 12 percent from a year earlier. Corn exports led the increase, while wheat exports also improved.
Corn remained the main driver of rail and export activity, with export commitments through late April running 28 percent ahead of last year. Wheat exports also stayed ahead of last year’s pace.
Soybean exports were more mixed as competition from South America and Brazil’s large harvest continued pressuring shipments, though movement remained active enough to support freight demand.
Regional grain supplies also shaped movement patterns, with larger western Corn Belt inventories supporting western rail demand while tighter eastern supplies strengthened basis levels in some markets.
Fuel Prices Reshape Transportation Costs
While strong grain demand has supported transportation activity, fuel prices have become one of the biggest drivers of freight costs.
The increase began after conflict in the Middle East disrupted oil production and commercial shipping through the Strait of Hormuz, one of the world’s most important oil transit routes. The disruption quickly affected crude oil and refined fuel markets, driving sharp increases in diesel and bunker fuel prices.
According to USDA transportation data, Brent crude oil averaged $103 per barrel in March, its highest level since mid-2022. Diesel prices rose even more sharply. Between mid-January and early April, the national diesel average climbed more than $2 per gallon, reaching $5.64 per gallon.
The largest increase came during the first week after the conflict escalated, when diesel prices posted their biggest weekly jump since the Energy Information Administration began tracking the data in 1994. Although prices briefly eased later in April, diesel markets remained volatile entering May.
Fuel prices affect every major segment of grain transportation. Trucks, locomotives and towboats rely heavily on diesel fuel, while ocean carriers use heavy fuel oil to operate dry bulk vessels. Rising fuel costs quickly pushed higher rail fuel surcharges, barge operating costs and ocean freight rates.
The impact has been especially noticeable for rail shippers. Most Class I railroads calculate fuel surcharges using diesel prices from two months earlier, meaning March fuel spikes translated directly into higher rail costs in May. USDA reported the weighted average rail fuel surcharge rose to 41 cents per car mile in May, the largest month-to-month increase in the agency’s historical series.
Rail Volumes Reach Record Highs
Rail transportation has remained one of the strongest segments of grain movement this year. USDA reported grain rail carloads through mid-April reached an all-time high for the period, up 19 percent from a year earlier.
The Association of American Railroads reported first quarter grain volumes reached their highest level for any first quarter since 1993. Much of the growth occurred on western and central railroads serving major grain-producing regions. BNSF Railway and Union Pacific Railroad both posted year-to-date increases of about 26 percent, while Canadian Pacific Kansas City and Canadian National recorded even larger gains.
Eastern railroads did not see the same growth. Norfolk Southern Railway and CSX Transportation handled weaker year-to-date grain volumes because eastern grain supplies were smaller than those in the western Corn Belt.
Despite record traffic, rail service metrics remained relatively stable through much of the spring. Average train speeds held steady across several major carriers, though loaded grain car delays increased in some regions. USDA data also showed elevated unfilled grain car orders in several western states, reflecting continued demand pressure on rail systems serving export and feed markets.
Secondary railcar markets also reflected strong demand. Shippers paid significant premiums for guaranteed shuttle train placements during April and May, particularly on western railroads. Some BNSF shuttle bids climbed more than $1,000 per car above tariff levels, well above normal seasonal averages.
Strong export demand, large western grain supplies and rising fuel surcharges created one of the tightest rail freight markets in recent years, pushing costs well above 2024 and early 2025 levels.
Barge Traffic RecoversAfter Winter Disruptions
Winter storms, low water and heavy ice accumulation disrupted movement on portions of the Mississippi River System during January and February, slowing barge traffic and creating operational challenges throughout the river network. The U.S. Coast Guard implemented draft restrictions and tow size limitations in several areas, while some fleeting operations were temporarily suspended because of difficult river conditions.
The impact on grain movement was significant. Grain movement through Lock and Dam 27 near St. Louis fell to its lowest weekly level since September 2023 during the final week of January. First quarter downbound grain shipments through the Mississippi River System dropped 20 percent from the prior year and reached their weakest first quarter total since 2013.
Conditions gradually improved by late February as weather stabilized and river conditions recovered. Grain movement rebounded quickly during March and April, with downbound barge traffic running above average levels through much of spring.
Even as movement improved, however, rates remained elevated. Spot barge rates out of St. Louis averaged well above both last year and the three-year average during the first quarter. Tight barge availability, strong export demand and higher diesel costs all contributed to the stronger freight market.
The river system also handled unusually high fertilizer movement this spring. USDA reported record urea fertilizer imports contributed to the highest April upbound fertilizer barge movement since at least 2018. Increased fertilizer movement added additional traffic pressure to portions of the river network already dealing with active grain demand.
Ocean Freight Rates Keep Rising
Ocean freight markets have remained elevated this year. Freight rates from the Gulf to Japan climbed sharply from a year earlier, while Pacific Northwest export routes also posted sizable increases.
Several factors supported stronger vessel markets. Global demand for dry bulk shipping remained active early in the year because of grain movement from both North and South America, along with continued demand for commodities such as iron ore and bauxite. Rising bunker fuel prices added further pressure after fuel markets tightened in late February and March.
Export loading activity in the Gulf also remained strong. USDA reported an average of 31 oceangoing grain vessels loaded per week so far this year, compared to 28 vessels during the same period in 2025. Gulf export terminals reached their highest weekly vessel loading total since October 2021 during March.
Shipping routes became more complicated as congestion and shifting global trade patterns slowed vessel movement through the Panama Canal, increasing wait times for some grain shipments to Asia.
Looking Ahead
Transportation indicators across truck, rail, barge and ocean sectors remain above year-ago levels, reflecting strong grain demand and higher operating costs. Railroads are handling record grain carloads, export facilities continue loading vessels at an active pace and barge traffic has recovered after winter disruptions slowed movement earlier in the year.
Transportation costs have become increasingly difficult for grain companies to manage. Fuel prices remain volatile, rail fuel surcharges continue climbing and freight premiums in secondary transportation markets remain elevated.
While capacity remained available across rail, barge and export channels, moving grain cost significantly more than a year earlier.
Source:
USDA Grain Transportation Report, May 7, 2026