Category Archives: BNSF

BNSF Carloads Bring Positive News

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Solid carload numbers are continuing to bring good news to BNSF Railway when compared to 2017.

Combined intermodal and carloads numbers are up 4.74 % in the aggregate.

Of particular note are higher grain shipments, which as of the week ending April 7, 2018, are up 7.74 % over the same period last year.

Also, showing strong numbers are sand and gravel shipments, which are up 8.12%, and petroleum is up 1.31 %.

Noteworthy on the downside are coal shipments, which are -1.94% and motor vehicles shipments are down -3.11%.

2017, was a strong year for BNSF, with the combined carloads including intermodal up 5.48%. So far, 2018 is even better.

© 2018 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 Adding Double Track in Washington & Idaho

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BNSF Railway will expand its northern east-west capacity by adding double track between the Spokane Valley in Washington and Hauser, Idaho.

The planned second 4.4-mile track will run parallel to BNSF’s existing line, and is part of BNSF’s efforts to speed up freight moving from Seattle to the Midwest.

Now in the design phase, the proposed work will see a new railroad bridge built that crosses the Spokane River, modifications of at-grade and overpass crossings, realignment of existing tracks, modifications to existing railroad structures and communication infrastructure.

When built, the double track will have a significant impact on reducing bottlenecks, as roughly 58 trains use the BNSF rail line per day.

By 2035, BNSF is projecting that the number of trains will increase to 114 trains daily.

© 2018 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 Loses Again in Swinomish Oil Train Dispute

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A federal judge’s ruling in favor of the Swinomish Indian Tribal Community gives the tribe another victory against BNSF Railway in their dispute over oil trains crossing tribal land.

The Swinomish Indian Tribal Community initially filed their lawsuit in March 2015. In September 2015, a federal judge ruled affirming the Native American tribe’s right to sue the railroad for violating the terms of a Right-of-Way easement granted to allow the railroad to cross the reservation.

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

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

This time, BNSF challenged the tribe’s ownership of land on which the railroad runs, but U.S. District Judge Robert S. Lasnik rejected their argument.

The History of the Dispute

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.

Is it Arbitrary?

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.”

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. They also noted 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.

It is likely that the dispute will go to trial during 2018.

© 2018 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 Benefit from Amtrak Track Improvements in Southwest US

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BNSF Railways will benefit from track improvements aimed at speeding up Amtrak’s Southwest Chief service that runs daily from Chicago to Los Angeles.

A $16 million grant for track upgrades in Colfax County in northeastern New Mexico has been awarded by the U.S. Department of Transportation.

The funding is part of nearly $500 million in discretionary grant funding for road, transit, maritime and rail projects through the Transportation Investment Generating Economic Recovery (TIGER) program.

The Southwest Chief Route Stabilization Project will replace 60-year-old bolted rail, associated turnouts and crossings for a net gain of 42 miles of Class 4 rail in the La Junta subdivision between Hutchinson, Kansas, and Las Animas, Colorado.

© 2018 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’s $135 Million 2018 Capital Program for Montana

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BNSF Railway has announced that its 2018 capital expenditure program in Montana will be approximately $135 million.

This year’s plan in Montana remains focused on maintenance projects to ensure BNSF continues to operate a safe and reliable rail network. The largest component of this year’s capital plan in the state will be for replacing and upgrading rail, rail ties and ballast, which are the main components for the tracks on which BNSF trains operate.

“Maintaining a safe and reliable network is one way BNSF works to keep Montana’s economy moving. Freight rail connects Montana’s farmers and lumber producers with the major U.S. markets, and with exports facilities ready to move their products overseas. Rail is also a vital component of getting the people of Montana the consumer products they need,” said Jon Gabriel, general manager of operations, Montana Division.

Over the past five years, BNSF has invested approximately $850 million to expand and maintain its network in Montana.

This year, the maintenance program in Montana includes approximately 820 miles of track surfacing and/or undercutting work as well as the replacement of nearly 60 miles of rail and about 200,000 ties. Multiple projects are scheduled on our Kootenai River Subdivision, which runs between Sandpoint, Idaho and Whitefish.

BNSF will signalize various sidings on the subdivision between Sandpoint and Whitefish to enable Centralized Traffic Control (CTC) and make improvements to the Flathead Tunnel, the 7-mile long railroad tunnel in northwest Montana.

The 2018 planned capital investments in the state are part of BNSF’s $3.3 billion network-wide capital expenditure program announced last month.

The investments include $2.4 billion to replace and maintain core network and related assets, approximately $500 million on expansion and efficiency projects and $100 million for continued implementation of Positive Train Control (PTC).

BNSF is the only Class I freight railroad to have completed the installation of PTC on all its federally mandated subdivisions and is currently running hundreds of trains daily with PTC as it tests revenue service across its mandated territory.

Another element of its capital plan will be $300 million for freight cars and other equipment acquisitions.

© 2018 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 Joins the Blockchain in Transport Alliance

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BNSF Railway Company has became the first Class I railroad to join the Blockchain in Transport Alliance (BiTA).

BiTA is comprised of more than 200 freight transportation companies working to develop blockchain standards for the logistics industry and the supply chain as a whole.

“Blockchain technology has the potential to change several aspects of the transportation industry and it is important that the industry comes together to align around a set of standards,” said Muru Murugappan, BNSF vice president of technology services and chief information officer. “We are excited to help drive those standards forward as a member of BiTA.”

BNSF along with the other members of BiTA will work to define what data goes into the freight transportation blockchain, how that data is formatted, how the data is structured and in what cases blockchain would be used.

Blockchain functions as a distributed ledger, wherein all members of a particular blockchain have access to all the data within it. By housing information with each member, altering the information within a blockchain is difficult – requiring 51 percent of the blockchain’s participants to approve the change.

“BNSF is one of the most important members of the North American transportation network, providing the backbone of American commerce. Their embracement of technology standards for the future of the industry will have a profound impact on the future of customer supply chains,” said Craig Fuller, chief executive officer, BiTA.

© 2018 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 Plans $3.3 Billion Capital Investment in 2018

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BNSF Railway Company has announced its 2018 capital investment plan of $3.3 billion. This year’s capital plan reflects BNSF’s continued focus on maintaining its network as well as expansion projects aimed at meeting customer demands.

“Every year we work to ensure our capital investment plan enables us to continue to operate a safe and reliable rail network as well as anticipates the needs of our customers,” said Carl Ice, BNSF president and chief executive officer. “Our attention to safety and service, along with our investments in our network, provide a solid foundation for our ability to grow with our customers today and in the future.”

Since 2000 BNSF has invested more than $60 billion in its network all while remaining focused on its commitment to safety, maximizing efficiency and continuing to meet customers’ expectations. Like last year’s $3.3 billion capital program, the largest component of the plan will be to replace and maintain BNSF’s core network and related assets. Keeping the railroad well maintained ensures trains can run safely and helps limit the need for unscheduled service outages that can slow down the rail network and reduce capacity.

This year’s maintenance component is projected 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. It will include approximately 13,000 miles of track surfacing and/or undercutting work and the replacement of more than 500 miles of rail and nearly 3 million rail ties.

“Our infrastructure is strong and robust. Our efforts to normalize our maintenance investment have positioned us to replace the right assets at the right locations at the right time,” Ice said. “This allows our maintenance investment to be at similar levels year-to-year.”

Approximately $500 million of this year’s capital plan is for expansion and efficiency projects. The majority of those projects are focused on key growth areas along BNSF’s Southern and Northern Transcon routes, connecting Southern California with Chicago and the Pacific Northwest to Upper Midwest respectively.

The company has also allocated $100 million for positive train control as it moves toward meeting the Dec. 31, 2018 implementation deadline. BNSF is the only Class I freight railroad to have completed the installation of PTC on all its federally mandated subdivisions and is currently running hundreds of trains daily with PTC as it tests revenue service across its mandated territory.

Another element of its capital plan will be $300 million for freight cars and other equipment acquisitions.

© 2018 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 Finishes the Year Up Solidly From 2016

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Higher carload numbers brought good news to BNSF Railway when compared to its 2016 numbers.

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

In 2017, rebounding coal carloads led the way in the recovery, with shipments up a solid 6.49%, as compared to 2016.

Also up a solid 6.23% were intermodal shipments.

Petroleum shipments continued to slide, with final numbers down 13.39%.

In summary, it was strong year for BNSF, with the combined carloads including intermodal up 5.48%.

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.

© 2018 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.

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BNSF Trims Capital Expenses, Has Increase in Consumer Products Volume

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BNSF Railway has trimmed its capital expenses by $100 million, reducing it slightly from its planned $3.3 billion for 2017.

The railroad cites cost savings, noting that it “completed certain projects at a lower cost, delayed the timing of certain projects, and made modifications to equipment acquisitions.”

2017 revenues continue to show solid growth over 2016 levels.

Third quarter and first nine months of 2017 operating income were $2.0 billion and $5.3 billion, respectively, an increase of $73 million (4 percent) and $462 million (9 percent), respectively, compared to the same periods in 2016.

Total revenues for the third quarter and first nine months of 2017 were up 3 percent and 8 percent, respectively, compared with the same periods in 2016. This is a result of increases in unit volume for the third quarter and first nine months of 2017 of 3 percent and 6 percent, respectively, and higher average revenue per car/unit in the first nine months of 2017.

The increase in average revenue per car/unit in the first nine months of 2017 was primarily due to higher fuel surcharges and increased rates per car/unit.

Among the highlights were increased volumes in Consumer Products.

Consumer Products volumes were up 7 percent and 6 percent for the third quarter and the first nine months of 2017, respectively, compared with the same periods in 2016, due to higher domestic intermodal, international intermodal and automotive volumes.

The increases were primarily due to improving economic conditions, normalizing of retail inventories, new services, and higher market share.

While petroleum shipments continue to slide, with year-to-date numbers down -15.59%, the combined intermodal and carloads numbers are up 5.59% 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 Benefit From $11 Million Oakland Rail Spur

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A refrigerated gateway to Asia for U.S. meat exports has cleared its last big hurdle in Oakland, California.

The access will benefit Union Pacific Railroad and BNSF Railway.

Port of Oakland Commissioners last week approved an $11 million rail spur to Cool Port Oakland. It’s the final piece of an ambitious plan to make this city a vital link in the food chain.

The spur will connect Union Pacific tracks with Cool Port, a 280,000-square-foot distribution center now under construction on 25 acres of Port property.

BNSF will also have rail access to the rail spur at no cost.

When the project is completed, in mid-2018 an estimated 27,000 20-foot containers of meat could ship from Oakland annually. The final destination will be export markets across Asia.

“The concept is to bring vast quantities of chilled or frozen beef and pork to Oakland via the rails,” explained Port of Oakland Maritime Director John Driscoll. “At Cool Port, the product would be transferred in a temperature-controlled setting from rail cars to shipping containers, then whisked across the street to outbound vessels.”

International logistics specialists Lineage Logistics and local operator Dreisbach Enterprises are building Cool Port under a lease agreement with the Port. The Port has agreed to oversee construction of the 2-mile-long rail spur. The Port will share rail costs with the developers. A $5 million grant will offset part of the cost. Union Pacific will construct a portion of the spur on its property.

Oakland is already a leading U.S. gateway to Asia for agricultural products including meat. Port officials say Cool Port could significantly increase shipments of beef and pork from the Midwest. The products would be exported overseas to satisfy growing Asian demand for U.S. premium meat. Proximity to the docks means cargo could be quickly transferred from rail to ship with minimal cost.

© 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.