(BRK.A), (BRK.B)
With coal and petroleum carloads plunging, BNSF Railway continues to adjust to the new market reality of lower shipping volumes.
The numbers are grim. Coal carloads are down 36.39% year-to-date, and petroleum carloads are down 26.29%.
Total carloads, which includes intermodal has slumped 8.59% this year, as well.
BNSF has responded to the shipping downturn by idling hundreds of locomotives, selective employee buyouts, and laying off 4,600 employees, which represent 10% of the workforce.
Those layoffs now include 62 management positions that come as a result of a realignment that has the Class 1 freight railroad consolidating its operations organization from three regions down to two.
In a statement, BNSF noted that,“Realigning the operations organization responds to the changing business environment and helps us better align resources with our customers’ demand for freight service.”
While the future for crude oil volumes is cloudy at best, BNSF is already making plans for a post-coal world.
“We are seeing a fundamental, structural shift in the coal industry, with double-digit volume declines in the first quarter of 2016 alone and no expectation for a return to previous levels.”
© 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.