$200 million per day.

That is the estimated economic cost according to the Union Pacific Railroad after the U.S. Customs and Border Protection Agency closed rail gateway borders in Texas at El Paso and Eagle Pass on Monday, December 18th, 2023, citing the migrant crisis at the border. The Union Pacific Railroad was notified of the closure on Sunday, December 17th, and informed their customers that evening of the impacts to rail shipments. Trains in route were to be staged while others impacted by the closure are being held at origin.

The repercussions to the agricultural industry have been swift. From Mexican customers running out of products, to U.S. origins having to divert cars at discounted prices, the impacts to U.S. producers are, and will be, tangible as companies scramble to manage fallout ahead of an already hectic holiday time period.

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Wes Brummer, a Senior Merchandiser who trades BNSF and UP shuttles for The Scoular Company elaborated on the issue:  

“Origins are having to carry millions of bushels of December corn into January. Dozens of December trains now have nowhere to execute, as domestic rail markets are plugged, while feeders in Mexico are out of grain. Nearby freight values on the BNSF are $500/car softer this week as freight on the U.S. side of the border struggles to find homes. A spot corn train traded yesterday into the domestic market a dime cheaper than January values, as freight and corn basis fight their way into securing a home."

“Trains billed to Mexico are sitting parked at origin, inhibiting the elevator’s ability to load out more grain. There will be a big backlog of Mexican shipments that have to move as soon as this clears up. It is costing the market a significant amount of money and stress.”

Impact to Producers 

The closures create a snowball effect throughout the industry: Loaded cars remain at origin, preventing additional loading, which then backs up inventories at the shuttle facility, which then forces delivery contracts to be rolled forward to the future, resulting in less nearby demand, which negatively impacts the basis price grain buyers are willing to pay for grain.

Additionally, commodities originally intended for export to Mexico now seek out domestic homes for quick shipment, putting additional downward pressure on prices. In theory, the ethanol plant or soy crusher that needed more coverage for January a few days ago was preparing to increase cash bids to help entice producers to sell. Now they know that the country has grain to move and will not be as inclined to raise prices and could even lower bids to producers.

The Union Pacific released the following statements:

Monday, Dec. 18, 2023: 

Union Pacific urges the Eagle Pass and El Paso border crossings be reopened immediately. These locations represent 45% of cross-border Union Pacific business and include goods critical to the U.S. economy. There isn’t enough capacity at our other four gateways to reroute them. With Christmas and the New Year’s holidays just days away, Union Pacific is in close communication with multiple government agencies and our customers, urging that the crossings closed by U.S. Customs and Border Protection be reopened. While the company understands this is a complex humanitarian crisis, most migrants are not crossing the border on trains. Union Pacific uses our own employees, police force, and technology including an x-ray system that uses gamma-ray imaging, to look for people and contraband. Finding contraband before it makes its way into the U.S. is crucial to the safety and security of our railroad, our employees and the communities we serve. Every day that the border is closed, Union Pacific is forced to embargo customers’ goods on more than 60 trains, or nearly 4,500 rail cars, with an equivalent of goods being held in Mexico. Union Pacific is doing everything possible to stage trains and work with customers to prevent congestion at the border. The longer this closure is in effect, the more difficult it will be for cross-border trade to resume.

Wednesday, Dec. 20, 2023

Union Pacific invests billions annually to protect our rail network, including technology and resources to secure U.S. border crossings. Very few migrants cross into the U.S. on trains. In fact, during this massive surge only 5 people have attempted to come into the U.S. on Union Pacific trains in the last 5 weeks. UP Police and our employees work in partnership with U.S. Customs and Border Protection to ensure all trains are screened, using X-ray technology and visual inspections, and unauthorized people or contraband are apprehended.


Border Crossings Reopening & Cross-Border Commerce Restored

Statement: Friday, Dec. 22, 2023

Union Pacific is relieved the border crossings at Eagle Pass and El Paso, Texas, will reopen. These crossings are critical gateways for international commerce, and the closures had real-world impacts for families, businesses and our customers on both sides of the border. We will restore normal operations as quickly as possible as we work through the five-day backlog of shipments holding to cross the border.