Industry News

BNSF Confronts Agriculture Capacity Issues

Railroad updates Surface Transportation Board on its plans for harvest season.

Excerpt from American Shipper |  By Jon Ross | September 05, 2014

BNSF officials expect a grain volume increase of between 10 percent and 15 percent during this year’s agriculture peak season, but said it is “offering more capacity for the movement of grain than ever before and will run the highest number of shuttles ever during the peak season of October through March.”

The railroad’s published comments were released in advance of a Surface Transportation Board hearing Thursday regarding rail service levels during the agriculture peak season.

BNSF also said it is spending $390 million in infrastructure growth in North Dakota to make sure things run smoothly this fall. According to BNSF, it has moved a record amount of grain out of North Dakota this year, and traffic going to and from North Dakota has increased by 144 percent in the past five years. The railroad has spent close to $1 billion in North Dakota since 2009.

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The railroad also reported that it has brought its past-due car orders in North Dakota from a March high of 8,164 to less than 1,000.

During the hearing, American Soybean Association Director Lance Peterson told board members that poor capacity investment will hurt farmers this fall. He added that, talking as a producer, “inadequate rail service through delays and increased freight costs” would likely cost him more than $100,000. He mentioned a University of Minnesota report that puts Minnesota farm income down $100 million from March to May.

“The rail problems of the last year have grain shippers trying to figure out how to navigate through this year.  In many cases, shippers have spent millions of dollars in premiums on initial rail car auctions to access rail cars for the coming year,” Peterson said. “Based on expected car movement, this amounts to an approximate $700/car premium just to access the cars.  If grain movement is not adequate, shippers will be forced to look to the secondary market to acquire additional cars. The asking price for October/November shipments is currently more than $4,000/car.  It is imperative that rail movement is adequate and timely.”