When the Gulf Wins the Bid: Why Soybean Trains Are Rerouting Away from the Pacific Northwest

As of mid-September, China has not bought a single bushel of new-crop U.S. soybeans. In most years, China dominates early sales, pulling heavily through the Pacific Northwest (PNW) and setting the tone for basis levels in the Northern Plains. Without that anchor buyer, the sales profile looks entirely different. The current absence of sales is reminiscent of the 2018–19 trade war, when China similarly delayed early-season purchases. However, at that time, small volumes were still booked before September, and late-season upticks followed trade negotiations. In contrast, 2025 sees completely zero sales from China on the books.  Commitments are scattered across Mexico, the EU, and smaller Asian markets. While those are important outlets, none are capable of replacing China’s scale or its reliance on PNW corridors.

China’s absence has left a hole that the transportation system quickly adjusted to fill. Railroads cut posted tariffs to the Gulf while leaving PNW rates unchanged. The delivered-cost math now favors Gulf loadings. For PNW-oriented origins, elevators face both the loss of their primary export customer and a structural rail disadvantage, forcing basis to weaken further. The lack of Chinese US soybean purchases seems to be the primary driver behind today’s freight shifts, basis pain, and the Gulf’s current dominance.

Figure 1. Total Soybean Commitments (Accumulated Exports + Outstanding Sales) to China in Million Metric Tons

Source: NDSU using data from USDA FAS

In September, BNSF cut posted soybean shuttle tariffs to the Texas Gulf by $1,500 per car (about $0.41 per bushel) and to Mexico by $1,000 per car (USDA AMS, Grain Transportation Report, Sept. 4, 2025, “Weekly Highlights,” p.2). BNSF kept its PNW soybean shuttle tariff rates unchanged. Union Pacific also reduced soybean tariffs; to the U.S. Gulf by $1,500 per car, to Mexico by $1,300 per car, and to the Pacific Northwest by $1,000 per car. These changes favor southbound movements when export demand through the PNW is light.

What changed in the tariffs

Figure 2 shows the BNSF soybean shuttle tariff differential, defined as TX Gulf minus PNW; values were negative throughout 2020–2025 and moved further negative in September 2025 after the tariff reset (USDA AMS, GTR, Sept. 4, 2025). Through most of the sample, the PNW priced below the TX Gulf by about $0.10 to $0.20 per bushel. In recent years the differential had been narrowing, but in September the differential widened significantly, with the TX Gulf, depending on origin, about $0.37 per bushel below the PNW. Origins in the Northern Plains that historically pointed west now see a stronger southbound signal. (Source: USDA AMS, Grain Transportation Report, Table 7.)

Figure 2. BNSF soybean shuttle tariff differential, TX Gulf minus PNW (USD/bu)

Source: NDSU using data from USDA AMS, Grain Transportation Report

Delivered‑cost arithmetic

Tariffs are only part of the equation. Ocean spreads matter too. We summarize the net corridor pressure with what we coined as the Corridor Tilt Wedge (CTW). We define the CTW as the TX Gulf minus PNW rail tariff differential plus the Gulf minus PNW ocean freight differential, all in dollars per bushel. Higher CTW favors the PNW. Lower CTW favors the Gulf.

To show where the September change came from, Figure 3 decomposes CTW into its rail and ocean pieces. Before the tariff reset, CTW averaged about $0.60 per bushel, indicating a sizable rail-plus-ocean delivered-cost advantage for the PNW. By September, CTW was about $0.35 per bushel, a narrowing of roughly $0.25 toward the Gulf. Nearly all of that change came from rail. The Gulf–PNW ocean freight spread was broadly stable over this window and did not drive the September shift (USDA AMS, GTR “Ocean,” week ending Aug. 28, 2025).

Figure 3. CTW change from pre-reset average to September 2025

Note. Rail drove −$0.24/bu, ocean contributed −$0.01/bu, total −$0.25/bu. Alt text: Waterfall bars showing Pre CTW 0.60, Rail change −0.24, Ocean change −0.01, September CTW 0.35.

Sources: NDSU using data from USDA-AMS GTR.

How the secondary market is reacting

For those unaware, the secondary shuttle market is a resale market for unit-train “shuttle” slots. Railroads first allocate shuttle slots in the primary market at a posted tariff. Afterward, shippers buy and sell those slots to each other for specific months and corridors. Trades are quoted as a premium or discount per car versus the tariff, and the buyer’s effective rail cost equals the tariff plus that premium or minus that discount. For example, if the tariff is $3,000 per car and the secondary is −$150, the effective cost is $2,850 per car, which signals slack demand. A +$200 premium would signal tight capacity.

The secondary shuttle market has been soft for much of 2025. For the week ending Aug. 28, average September shuttle bids were $154 below tariff, consistent with ample capacity and a weaker westbound program (USDA AMS, GTR “Snapshots by Sector,” p. 3).

Figure 4. Secondary Shuttle Premiums vs Tariff (USD/car)

Implications for Northern Plains producers

If September’s price structure persists, PNW exposed origins will tend to see weaker basis than under a strong PNW export program. Elevators will favor southbound routes unless PNW basis improves at origin. If China returns later in the marketing year, these differentials can narrow and flows can rebalance, but for now the rail tariffs, ocean spreads, and secondary market point in the same direction.

Not every elevator can pivot south when prices change. Many are tied to a single railroad or a shortline that favors one corridor, and some are not shuttle-qualified. Reaching the Gulf may require interchanges under Rule-11 pricing that add time and cost, and existing contracts and shuttle slots can anchor movements to particular lanes. This is why two nearby elevators can post very different bids on the same day.

The rail tariff shift comes at a particularly challenging time for North Dakota soybean producers. Currently, those producers face weak basis levels approaching -$1.50 per bushel which is weaker than the record lows observed during the previous trade war. Figure 5 shows the geographic concentration of this basis weakness across the Northern Plains. The darkest red zones indicate basis levels below -$1.50 per bushel. These a largely concentrated in North Dakota and neighboring regions and have historically relied on PNW export corridors.

The September tariff reset compounds this existing basis weakness by making PNW-dependent elevators even less competitive. With rail costs to the PNW now $0.37 per bushel higher than Gulf routes, elevators serving these corridors must widen their basis spreads further to maintain margins. This could potentially push already-weak basis levels down yet another 10-15 cents. For North Dakota farmers already dealing with basis levels that represent multi-year lows, even modest additional transportation-driven basis deterioration can meaningfully impact cash flow at harvest.

Figure 5.  Soybean (Forward Basis) in Early September, in cents/bushel

Source: NDSU using data from DTN.

What to watch next

In the weeks ahead, watch whether the TX Gulf versus PNW tariff differentials stay near their September levels once harvest pressure fades; whether Gulf–PNW ocean spreads move enough to offset rail pricing and pull the CTW back toward the PNW; whether secondary shuttle premiums firm in Q4 along favored corridors; and how export inspection shares for August through October evolve by region, which will show how quickly loadings are shifting.

Right now, the Gulf wins the bid. The September reset made southbound rail cheaper relative to the PNW, ocean spreads did not offset that change, and the secondary market looks easy. Until demand re‑activates the PNW program, producers in PNW‑oriented draw areas should plan around a weaker basis than in years when Asia is pulling hard through the Northwest.

Author and Contact Information:

Andrew Keller - andrew.keller.2@ndsu.edu

Shawn Arita - shawn.arita@ndsu.edu