BNSF invests billions to better service grain shippers

Farm Forum

SAN DIEGO – BNSF, Berkshire Hathaway’s privately held railroad company, will continue to invest billions of dollars in added capacity and new rail cars to resolve service problems that plagued the grain industry in 2014, according to Greg Guthrie, director of ag products.

During a workshop at the American Farm Bureau Federation’s 96th Annual Convention and IDEAg Trade Show, Guthrie updated attendees on a $5 billion capital investment plan the company announced at the beginning of 2014, which ended up being closer to $5.5 billion by the end of the year.

While the grain shipping industry isn’t one of BNSF’s largest customers, representing only 9 to 10 percent of total business, Guthrie called it one of BNSF’s oldest and most valued.

“From a railroad perspective, grain has been an inherent and significant part of our DNA,” said Guthrie. “Do you really think we don’t want to haul grain? We keep hearing ‘you want to haul oil, not grain.’ We want to haul everything and we’re going do whatever we can to handle that growth because in business if you’re not growing, you’re dying.”

In the last 14 years, BNSF added more than 150 origin locations nationwide. There were 77 BNSF origin destinations in 2000, and in 2014 that number rose to 233. Each station costs $25 million to $30 million to build.

“Our growth [last year] was double the GDP and we woke up one day and realized that we took on 50 percent of all the railroad growth in the United States in one year,” Guthrie said.

An unintended result of this growth was a dramatic spike in the cost to reserve rail cars. Guthrie said BNSF is adding more grain hopper cars to the pipeline, which will allow the market to decide a fair price for cars.

“I’ve spent a lot of time over the last six months explaining why [these prices] are not the new normal and we won’t allow this to continue. Our commitment is to adding capacity and giving you the service you deserve.”

In closing, Guthrie asked grain shippers to work closely with railroad companies to resolve operating issues.