Category Archives: BNSF

BNSF Continues Layoffs Due to Soft Coal and Oil Demand

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BNSF Railway continues to trim its workforce, which continues a process that was particularly heavy in 2016.

In 2016, BNSF furloughed about 4,600 workers.

The most recent to face layoffs were 55 workers at the Glendive diesel shop in Glendive, Montana. The layoffs are classified as permanent, and the shop will continue to employ roughly 60 workers.

A spokesman for BNSF cited lower demand for coal and oil shipments as the reason for the layoffs.

System-wide, BNSF’s 2016 carloads were down significantly from 2015 levels. There were a total of 480,000 fewer unit trains than in the prior year.

Things have been looking up in 2017, with total carloads including intermodal up a robust 7.25% system-wide. However, the freight hauler has been working actively on making itself more efficient, which enables it to do the same work with fewer employees.

© 2017 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.

BNSF Sees Light at End of Tunnel with Higher Shipping Volumes

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Things are turning around at BNSF Railway now that higher carload numbers are continuing to remain strong.

Slumping volumes in 2016 saw the total intermodal and carload volumes down 4.94% from2015 levels, with coal shipments slumping 20.88% from 2015 levels.

This time, coal is leading the way in the recovery, with shipments up a robust 19.11% year-to-date over the same period in 2016.

Also up a solid 4.26% are intermodal shipments.

While petroleum shipments continue to slide, with year-to-date numbers down 10.14%, the combined intermodal and carloads numbers are up 6.15% in the aggregate.

© 2017 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.

BNSF to Build $2.3 million facility in Minnesota

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BNSF Railway has announced that it will build a $2.3 million facility in Dilworth, Minnesota. The new facility will replace its existing facility.

The new facility will enable the company to hold meetings and on-site training, as it will be significantly larger than its current location.

Construction will begin this spring with completion planned by the fall of 2017.

© 2017 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.

BNSF Reaches $1 million Settlement for Pollution of Washington’s Rivers

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Rather than wage a prolonged legal battle that could possibly end with it on the hook for massive damages, BNSF Railways has reached a settlement agreement with seven environmental groups that contend the railroad has polluted Washington’s rivers due to coal dust from its coal shipments.

BNSF has admitted no wrongdoing, but has agreed to pay $1 million in support of environmental clean-up projects in Bellingham, Puget Sound, the Columbia River and Spokane River.

The seven environmental groups, which included the Sierra Club and National Resources Defense Council, first sued BNSF in 2013, alleging that the freight railroad violated the federal Clean Water Act.

The settlement heads off lawsuits that alleged trillions of dollars of damages that came from the dust that blew off open-topped hopper cars.

The railroad has also agreed to study the use of physical covers for coal and petroleum coke trains in order to reduce or eliminate the source of the pollution.

“This puts them on a path to the ultimate solution to stop the discharge of coal into our nation’s waterways,” said Charlie Tebbutt, who is the lead attorney representing the environmental groups.

© 2017 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.

BNSF to Spend $3.4 Billion in 2017

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BNSF Railway is committing $3.4 billion in 2017 to maintain and upgrade its 32,000-mile system.

“Each year we establish a capital plan that reflects the future needs of our customers and the constant need to keep our infrastructure in good working condition. This year’s capital plan ensures we continue to operate a safe and reliable rail network while capturing the new opportunities our customers will present to us,” said Carl Ice, BNSF president and chief executive officer. “Our ongoing investments, along with the outstanding efforts of our employees, resulted in the lowest number of derailments in company history last year. The strength and condition of our railroad today gives us the confidence that we will operate safely in the communities we serve and meet our customers’ expectations of reliable and consistent service.”

The company notes that similar to last year’s $3.9 billion plan, the largest component of the plan will be to replace and maintain BNSF’s core network and related assets.

This year that component is expected to be $2.4 billion. The projects included in this part of the plan will primarily be for replacing and upgrading rail, rail ties and ballast (which are the main components for the tracks on which BNSF trains operate) and maintaining its rolling stock. This year’s maintenance program will include approximately 20,000 miles of track surfacing and/or undercutting work and the replacement of about 600 miles of rail and nearly 3 million rail ties.

Rounding out the plan will be $400 million for expansion projects, $100 million for the implementation of positive train control and $400 million for locomotives, freight cars and other equipment acquisitions.

The states on the BNSF network estimated to receive the largest investments this year include:

· Texas – $255 million
· Illinois – $190 million
· Washington – $175 million
· California – $170 million
· Kansas – $125 million
· Missouri – $120 million
· Montana – $100 million
· Nebraska – $100 million

© 2017 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.

Surface Transportation Board Refuses to Hear Tesoro’s Claim in Swinomish Tribe’s Dispute with BNSF

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The Surface Transportation Board has refused to hear Tesoro’s petition on a rail service dispute between the Swinomish Indian Tribal Community and BNSF Railway.

BNSF Railway’s oil train service to two refineries in the state of Washington could be in jeopardy due to an ongoing Federal lawsuit.

Filed in April 2015, the lawsuit stems from the Swinomish’s assertion that the railroad is violating the terms of a Right-of-Way easement granted to allow the railroad to cross the reservation.

The Swinomish are concerned that trains carrying Bakken crude oil run over bridges spanning the Tribe’s fishing grounds in the Swinomish Channel and Padilla Bay.

The Easement Agreement enables BNSF to bring Bakken crude oil to the Tesoro refinery in Anacortes, Washington by crossing the portion of the Swinomish Indian Reservation located on Fidalgo Island in Skagit County, Washington.

Under the terms of the 1991 Easement Agreement, BNSF is allowed to run one 25-car train per day in each direction. The tribe sued in April 2015 contending that BNSF was running as many as six 100-car “unit trains” per week.

In petitioning to the Surface Transportation Board, Tesoro hoped to get the STB to declare that the dispute fell under its purview through its role in the regulation of the Interstate Commerce Act. However, the STB ruled that Tesoro is not a party to the Swinomish’s dispute with BNSF.

A ruling in favor of Tesoro would have benefitted BNSF, as the refiner claims that as a shipper it has a right to receive rail service.

“Given that the district court has already denied a motion to refer the preemption issue to the board, that courts as well as the board can decide issues involving … preemption in the first instance, and that the court has clearly expressed its preference to decide the preemption issue itself, the board will decline to issue a declaratory order in this matter,” the STB said in its ruling.

Contentious History of Rail

Train travel across the tribe’s land has a long contentious history, with the original track having been laid in the late 1800s without consent from the Swinomish or the U.S government. The tracks cross the northern edge of the reservation, and the Swinomish, as the present day political successor-in-interest to certain of the tribes and bands that signed the 1855 Treaty of Point Elliott, first sued the railroad in 1976, alleging a century of trespassing on tribal land. The resulting settlement led to the 1991 Easement Agreement that allowed only the 25-car train limit without the Tribe’s permission.

The Tribe contend in its lawsuit that “BNSF never notified the Tribe that it intended to exceed the limitation of one train of 25 cars or less, nor did it request permission from the Tribe before it began to do so.”

A Deal is a Deal

“A deal is a deal,” said Swinomish Chairman Brian Cladoosby. “Our signatures were on the agreement with BNSF, so were theirs, and so was the United States. But despite all that, BNSF began running its Bakken oil trains across the Reservation without asking, and without even telling us. This was exactly what they did for decades starting in the 1800s.”

“We told BNSF to stop, again and again,” said Cladoosby. “We also told BNSF: convince us why we should allow these oil trains to cross the Reservation. And we listened for two years, even while the trains kept rolling. But experiences across the country have now shown us all the dangers of Bakken Crude. It’s unacceptable for BNSF to put our people and our way of life at risk without regard to the agreement we established in good faith.”
Under the terms of the Easement Agreement, the Tribe agreed not to “arbitrarily withhold permission” for BNSF’s request to increase the number of trains or cars.

Arbitrary or Not?

The Tribe contends that its refusal to grant permission is not arbitrary and is “Based on the demonstrated hazards of shipping Bakken Crude by rail, paired with the proximity of the Right-of-Way to the Tribe’s critical economic and environmental resources and facilities — and the substantial numbers of people who use those resources and facilities on a daily basis — the Tribe is justifiably and gravely concerned with BNSF’s shipment of Bakken Crude across the Right-of-Way in a manner and in quantities at odds with the explicit terms of the Easement Agreement.”

In addition to Swinomish’s concerns to possible environmental impacts on the Tribe’s fishing grounds, hey also note that the track runs across the “heart of the Tribe’s economic development enterprises,” which includes the Tribe’s Swinomish Casino and Lodge, a Chevron station and convenience store, and an RV Park, as well as a Tribal waste treatment plant.

The Tribe noted that these enterprises are the “primary financial source for funding of the Tribe’s essential governmental functions and programs.”

The 1991 Easement Agreement granted the Right-of-Way for an initial 40-year term, along with two 20-year option periods. The current agreement will expire no later than 2071.

The tribe is seeking a “permanent injunction prohibiting BNSF from (1) running more than one train of twenty-five cars or less in each direction over the Right-of-Way per day and (2) shipping Bakken Crude across the Reservation.”

The Swinomish are also seeking monetary damages for the prior trespasses and breach of contract in an amount to be determined at trial.

© 2016 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.

Illinois Sugar Storage Facility a Sweet Opportunity for BNSF

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American Crystal Sugar’s new bulk-sugar storage facility will mean plenty of business for BNSF Railway.

The $40 million facility in Montgomery, Illinois features a 26,000-square-foot storage dome and a 17,000 square-foot transfer facility.

Key to the facility is 5,500 feet of track space for BNSF trains hauling sugar to and from the facility.

The new facility enables American Crystal Sugar to store product closer to its customers in the Midwest, and according to BNSF, has the capacity to store 60,000 metric tons of sugar, and nearly twice that much will be transferred to customers each year.

© 2016 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.

BNSF Launching New Intermodal Service Between Pacific Northwest and Texas

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Beginning Monday, Sept. 12, BNSF Railway (BNSF) will offer intermodal customers a new service option to move freight between the Pacific Northwest and Texas.

Shippers who move commodities and a wide range of consumer goods between Portland, Oregon, or Seattle and Dallas/Fort Worth (AllianceTexas) will now be able to reduce their transit times by up to two days when compared to rail transit time options currently in the marketplace.

The new BNSF service will be comparable in speed to single-driver, over-the-road options.

“We regularly work with our customers to identify and offer new and better transportation solutions to make their supply chains more effective. So we are constantly looking for opportunities to help meet consumer demands and this new service checks all the right boxes for adding efficiency to the marketplace,” said Katie Farmer, group vice president, Consumer Products. “With an economy as dynamic as ours, BNSF is focused on delivering options that strengthen the competitive advantage of U.S. companies through our country’s supply chain.”

This new service option, the first of other new routes that will be announced and rolled out over the next year, comes online just in time for the fall fruit harvest in the Pacific Northwest and will help local businesses get their products to market more efficiently. Faster, more direct routing means agriculture producers can move apples and other produce to southern markets at the peak of freshness.

By leveraging underutilized capacity in the central section of BNSF’s network, this new service option means that BNSF will offer expedited service for customers who wish to have their shipments arrive in Dallas/Fort Worth on the morning of the fifth transit day. From BNSF’s intermodal facility located just north of Fort Worth, customers can reach any of the major Texas or Oklahoma markets with a short-haul trucking option to move containers and trailers for dry or refrigerated goods. Northbound service will also be faster operating with both expedited service arriving on the sixth morning and standard service reaching its destination on the sixth day.

Traffic along the route will run Monday through Friday, in both directions. This route includes a refueling option along the way for refrigerated equipment that carry temperature-sensitive equipment.

© 2016 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.

Record Grain Shipments Mean Good News for BNSF

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This has been a year to forget for BNSF Railway, with low oil prices and slack coal demand hitting the nation‘s top freight railway hard. Fortunately, there is finally some good news, as record grain production is boosting BNSF’s grain shipments.

Bin-buster

U.S. wheat and corn farmers are calling this year’s record crops a “bin-buster.” The crop yields will likely set a new all-time high as compared to the final yield in 2015. Grain production has been so good that silos in some areas are already reaching capacity, even before the September 1 start of the harvesting of the fall wheat crop.

Near Hutchinson, Kansas, an old runway is even being used to pile up wheat due to a lack of grain elevator storage space.

Even before the fall harvest, BNSF’s grain shipments are already up a dramatic 25.95 % so far in the 3rd quarter, and are up a very solid 7.91 % year-to-date.

A key factor for BNSF in its increased capacity for grain shipping come from its investment in Great Northern Corridor track upgrades made in 2013-2015.

Back in June of 2014, the average delay for grain shipping was running at 32 days. The improved track and signaling on the Great Northern Corridor, coupled with oil trains running at a level that is half what it was just a year ago, have enabled BNSF to move the grain without significant delays.

BNSF’s grain shuttle trains have hit record numbers, with 130 shuttle trains shipped or scheduled to be shipped during July and August

An additional 137 of BNSF’s 110-car unit trains are scheduled to transport the fall harvest of corn, soybeans and other late season crops.

© 2016 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.

Judge’s Ruling Puts Future of BNSF’s Port Project in Long Beach’s Hands

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Will BNSF be able to build its proposed facility at the Port of Los Angeles? The answer could be in the hands of the City of Long Beach.

A new ruling by California superior court judge Barry P. Goode in favor of Long Beach and the other litigants, and against BNSF Railways, found that the environmental impact report prepared by BNSF needed to be “a more robust and accurate analysis.”

The ruling puts the $500 million rail-yard project at the Port of Los Angeles in jeopardy unless BNSF can quickly work out its differences with environmental groups and the City.

Dubbed the Southern California International Gateway (SCIG), the project would create an intermodal rail facility near the ports of Los Angeles and Long Beach. The ports are located approximately 25 miles south of downtown Los Angeles. The port complex is composed of approximately 80 miles of waterfront, and 7,500 acres of land and water, with approximately 500 commercial berths.

In April, judge Goode put a halt to BNSF’s planned 153-acre intermodal rail facility, siding with citizens’ groups suing over environmental concerns.

The Natural Resources Defense Council, which is the lead plaintiff in the lawsuit, filed the lawsuit in June 2015 in Los Angeles Superior Court on behalf of Harbor residents living near the proposed development that would be built on Port of Los Angeles property.

The Plaintiffs contend the proposed Southern California International Gateway rail yard project violates the California Environmental Quality Act and the state and federal Civil Rights Acts.

Specifically, they assert that the facility will increase cancer rates, chances of children developing asthma, and add to chronic air pollution plaguing the region.

The SCIG is subject to the California Environmental Quality Act, a statute that requires state and local agencies to identify the significant environmental impacts of their actions and to avoid or mitigate those impacts, if feasible.

BNSF has 60 days from Judge Goode’s most recent ruling to appeal, and it’s unclear whether the SCIG is salvageable.

A Call to Work Things Out

The Long Beach Press Telegram has called for all sides to resolve the issues, in order to not lose the jobs and other benefits the project would bring.

In an editorial published on July 13, the paper stated that, “The editorial board repeats its position that all sides should sit down and try to work out a solution to this issue.”

The paper went on to state: “We have said there are many positives to the project for the entire region. It will provide hundreds of jobs and help relieve congestion near the ports, and make them more competitive with rival ports.

But we’ve also said this economic development should not come at the expense of the health of students and 30,000 residents who live east of the proposed project.”

The mayor of Long Beach, Robert Garcia, noted the impact of the most recent ruling, stating in The Long Beach Press Telegram that “It certainly strengthens our hand, definitely.” Garcia added that “The city is now in a position where we have a court standing on our side.”

© 2016 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.