While low crude oil prices reduce demand for BNSF Railway’s mobile oil pipeline business that hauls crude from the Bakken formation to west coast refineries, corresponding low fuel prices have had a positive impact on the railroad’s earnings.
BNSF had a boost in third-quarter earnings from $1.04 billion in 2014 to $1.16 billion in third-quarter 2015.
Big Agricultural Boost
Crude oil shipments may be down, but BNSF has seen a 13.93 percent year-to-date boost in agricultural shipments as compared to 2014. The rise in grain shipments has offset the 9.03 percent year-to-date drop in petroleum shipments.
Combined U.S. rail grain shipments hit their highest levels in five years, and the number of days behind schedule has dropped dramatically.
At its low point in June of 2014, the average delay for grain shipping for BNSF was a whopping 32 days. It’s now running only three days behind.
The bottom line is that business is good. BNSF’s total year-to-date carload units, including intermodal units, are up just under one percent with a combined rise of 0.85%.
© 2015 David Mazor
Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.