“Praise by name and criticize by category,” Warren Buffett is famed for saying, and it was the rare exception when Buffett called out BNSF Railway for its delivery delays over the past year.
“BNSF disappointed many of its customers,” Buffett wrote in his annual letter to shareholders.
BNSF didn’t just disappoint customers, in some cases it lost them to rivals such as Union Pacific, as record crop numbers put the agricultural needs of Midwest farmers on a collision course with crude producers in the Bakken formation.
It’s no small matter, as last year BNSF moved nearly 1 million carloads of grain and other agricultural products.
With the latest over all year-to-date carload numbers showing a very positive 4.39-percent increase, BNSF has clearly taken Buffett’s marching orders seriously. The railroad’s $5.5 billion in infrastructure investments that it made in 2014 has started to pay off. The improvements included $400 million of track improvements in North Dakota alone.
Improvements By the Numbers
It’s in the grain carloads where there is particularly good news. Year-to-date carloads rose 14.8-percent to 191,060 from 166,425 in the 2nd quarter of 2014.
Last week, the news continues to improve, and there were only 144 outstanding grain carloads from May 9-12 in North Dakota versus 7,200 outstanding grain cars during the same period last year.
“We have substantially better AG shuttle turns per month as compared to last year,” a BNSF official told me at the Berkshire Hathaway annual meeting. “Last year we were below 2 turns per month, and now we are over 2.5 turns per month.”
BNSF is continuing to improve its operations, committing a record $6 billion to its Capital Plan for 2015. The amount is the most ever spent by a railroad in a given year.
© 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.