(BRK.A), (BRK.B)
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.