BNSF Solves Grain Issues

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For the past three years, BNSF Railway has been pilloried by grain producers for its extended shipping delays. The good news is that those delays are mostly behind them these days and grain shipments are running on time.

Back in June of 2014, the average delay for grain shipping was a whopping 32 days. In October 2014, the delay was running a solid two weeks. However, with some reduction in the number of oil trains running from the Bakken Formation, and improved track and signaling on the Great Northern Corridor, the shipments are now averaging only three days behind schedule.

As of October 17, 2015, BNSF’s grain shipments system-wide are up 22.69% for the 4th quarter to date, and are up 13.51% for the year to date; both over 2014 figures. Conversely, Petroleum shipments are down 7.97% for the year to date, as compared to 2014.

The improvements have grain producers and BNSF officials in a much happier mood.

“We have substantially better Ag shuttle turns per month as compared to last year,” a BNSF official said in May. “Last year we were below 2 turns per month, and now we are over 2.5 turns per month.”

2014’s Winter of Discontent

Back in the winter of 2014, grain shipments were running weeks late with the shipping time from the Midwest grain belt to the Pacific Northwest running a whopping 22 days. The delays added substantial costs to grain producers, as they paid ocean-going freighters some $30,000-$50,000 per day to sit in port waiting for the delayed grain.

Huge Rise in Traffic

With the boom in crude oil transport by rail, BNSF has seen a 69% increase since 2009 in traffic going out of the region, and the traffic running into the region has also increased by 31% over the same time period.

Key Improvements on the Great Northern Corridor

The Great Northern Corridor, which links Chicago with the Pacific Northwest, moves grain for export from the Midwest to ports in Washington and Oregon. BNSF has been working to increase the number of sidings and improve existing sidings, as most of the Corridor is single track, so the sidings are necessary to allow trains to pass each other. In total, BNSF has added 72 miles of double track in the Corridor, nine new sidings, and 9 siding extensions. The railroad also made improvements to its centralized traffic control (CTC) signaling.

Since 2013, BNSF has spent $1 billion on improvements in North Dakota alone.

© 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.