BNSF pledges to perform better at harvest time
As the new crop ripens in fields across the area and producers brace for lower prices, rail congestion continues to be a cause for concern.
“I’m hearing a lot of angst,” John Miller, Vice President of Agricultural Products for BNSF Railway said during a recent visit to Aberdeen. “As I’ve been traveling around the area, visiting with customers, I’m hearing there is a lot of grain that needs to be moved.”
With predictions of the 2014 South Dakota harvest yielding 781 million bushels of corn, 196 million bushels of soybeans, 53.8 million bushels of winter wheat and 54.6 million bushels of spring wheat, managers at grain facilities are conferring with rail officials about how to handle the anticipated harvest rush.
Miller said service on the rail line has not been up to the railroad’s or customers’ expectations.
“We will perform better than a year ago at harvest,” Miller said. “We are getting better, we plan to continue to get better. We understand the needs of agriculture for fall harvest. We’re highly aware of the need to move as much as we can as fast as we can. We want to work hard to communicate through podcasts and direct customer meetings what steps are being taken.”
He emphasized, “We want to provide the best in class service, especially for the ag industry.”
Miller said he gets out to the Aberdeen area often and is seeing good-looking grain crops this year. He said that customers tell the company how things are looking for the market through the freight orders they file.
Grain moves from South Dakota on the BNSF rail lines in two ways, Miller said. Ninety percent of the grain moves on 110-car shuttles from the predominantly larger facilities. The customers estimate what they want and give the rail company the dates they want to have the shuttles at their facilities. There are now 34 shuttle facilities on main lines in South Dakota.
With the smaller facilities that handle less than 10 percent of the grain flow, rail cars are purchased on the secondary market.
“We understand that there are storage constraints this year,” Miller said. “We are already moving more grain shuttles and non-shuttles than we did last year. We want to get our turnaround time for shuttles to the northwest to be at 2.5 trips per month system-wide.”
As of July 31, the turnaround time was 2.3 shuttles per week. Miller said he provides a podcast each week on the company’s website to give an update to customers on conditions facing the railroad.
Last week, past due railcars were at 240 for South Dakota, an average of 8 days late. In North Dakota, the past due railcars were at 3,230 with a 24.1 average days late. Minnesota was at 419 with 19 average days late. The total U.S. past dues were at 5,182 with an average of 22.2 days late.
BNSF is spending $5 billion on capital improvements, $1 billion of which is being spent on the northwest corridor to maintain and expand capacity. That’s how ag products connect with the Pacific Rim export market.
“We’ve hired more employees across the system, with 4,000 hired and our goal is to hire 5,000,” Miller said. In the Aberdeen area, the company plans to hire 50; so far 30 have been hired this year,” Miller said.
Locomotive deliveries are on track with 31 additional locomotives delivered for the month of July and 54 additional locomotives expected in August. Through July 25, the company added 274 locomotives to the fleet, closer toward the goal of 500 additional locomotives for the year.
Miller said the rail line is not showing favoritism toward the oil industry as some have claimed. “The company has seen tremendous growth across all four sectors of business: agriculture, intermodal (consumer), energy and industrial products. We want to move more freight efficiently across the system, that’s what we do,” Miller said.
According to the company’s fact sheet, in 2013, BNSF hauled more than 900,000 carloads of agricultural commodities. The company hauls enough fertilizer in one year to fertilize a field the size of Kansas.
“Customers tell us there will be a good harvest coming,” Miller said, but it’s hard to gauge how much will be stored and what will need to be shipped on rail. “We hear that ag producers will not sell any more than they have to because of low prices,” he said. Still, Miller said the company is bullish on ag. With increasing yields across the Midwest, he said, “We still feel there will be a significant pressure to move grain at harvest time.”
“We’re putting everything we can against this,” Miller said. “And we want our customers to know that.”