BNSF to spend billions to ease rail gridlock

NEW YORK — BNSF Railway Co., the railroad owned by Warren Buffett’s Berkshire Hathaway Inc., plans to spend a record $6 billion next year to help speed trains and improve service crimped by surging grain and oil shipments.

Almost $1.5 billion will go for expansion projects, BNSF said Thursday, with a third of that for the northern U.S. region where the carrier collects oil from North Dakota’s Bakken shale formation and grain. BNSF said this year’s capital budget will be $5.5 billion, up from $5 billion announced in February.

The spending plan shows regulators and customers that BNSF is committed to remedying delays that have left grain farmers and coal shippers without rail cars, said David Vernon, an analyst at Sanford C. Bernstein &Co. in New York. The U.S. Surface Transportation Board has convened hearings on rail service and ordered BNSF to report delays on a weekly basis.

“If you have service problems, you need to throw capital at the problem to make it go away,” Vernon said. “You’ve probably got another build season before you can address some of those remaining capacity bottlenecks.”

Service for Fort Worth, Texas-based BNSF and other major U.S. railroads, including Union Pacific Corp. and CSX Corp., deteriorated after a harsh winter slowed trains just as freight volumes rose more than expected.

Railroads hauled 12 million carloads in the third quarter, the most since at least 2006, according to Association of American Railroads data compiled by Bloomberg. This year through mid-November, shipments rose 14 percent for grain and 13 percent for petroleum products, which are mostly crude oil, the data show.

Train speeds have fallen to about 22 miles per hour in November, slower by 2 mph from a year earlier and 4 mph from 2012. The time that shipments sit in terminals awaiting continued movement rose to 23 hours in mid-November from 20 hours a year earlier.

The capacity constraints have been caused by changes such as greater-than-expected increases in intermodal cargo and the sudden growth of rail shipments of crude oil, said Ed Hamberger, chief executive officer of the industry trade group. Expanding a rail network to meet increased demand takes time and capital, he said.

“It is true that in 2013 and 2014 here we have not been giving the level of service to which our customers have become accustomed,” Hamberger said in an interview Thursday at the RailTrends conference in New York. “It’s an adjustment to the market.”

BNSF has boosted spending to build double tracks and sidings, mostly in the northern region, and to increase terminal capacity.

“We have made great progress in expanding the segments of our railroad that have been most constrained by rapidly increasing demand,” CEO Carl Ice said in a statement. The new program will give BNSF the ability to “manage the periodic demand surges,” he said.

BNSF also plans to buy 330 new locomotives in 2015. The carrier said earlier this year that it intended to acquire about 500 new engines in 2014 after harsh winter weather began gumming up its network.

Berkshire, based in Omaha, Nebraska, acquired BNSF in 2010. The railroad competes with Union Pacific in the western United States.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Business

Black Press Media operates Sound Publishing, the largest community news organization in Washington State with dailies and community news outlets in Alaska.
Black Press Media concludes transition of ownership

Black Press Media, which operates Sound Publishing, completed its sale Monday (March 25), following the formerly announced corporate restructuring.

Maygen Hetherington, executive director of the Historic Downtown Snohomish Association, laughs during an interview in her office on Thursday, Feb. 15, 2024, in Snohomish, Washington. (Ryan Berry / The Herald)
Maygen Hetherington: tireless advocate for the city of Snohomish

Historic Downtown Snohomish Association receives the Opportunity Lives Here award from Economic Alliance.

FILE - Washington Secretary of State Steve Hobbs poses in front of photos of the 15 people who previously held the office on Nov. 22, 2021, after he was sworn in at the Capitol in Olympia, Wash. Hobbs faces several challengers as he runs for election to the office he was appointed to last fall. (AP Photo/Ted S. Warren, File)
Secretary of State Steve Hobbs: ‘I wanted to serve my country’

Hobbs, a former Lake Stevens senator, is the recipient of the Henry M. Jackson Award from Economic Alliance Snohomish County.

Mark Duffy poses for a photo in his office at the Mountain Pacific Bank headquarters on Wednesday, Feb. 14, 2024 in Everett, Washington. (Annie Barker / The Herald)
Mark Duffy: Building a hometown bank; giving kids an opportunity

Mountain Pacific Bank’s founder is the recipient of the Fluke Award from Economic Alliance Snohomish County.

Barb Tolbert poses for a photo at Silver Scoop Ice Cream on Thursday, Feb. 29, 2024 in Arlington, Washington. (Annie Barker / The Herald)
Barb Tolbert: Former mayor piloted Arlington out of economic brink

Tolbert won the Elson S. Floyd Award, honoring a leader who has “created lasting opportunities” for the underserved.

Photo provided by 
Economic Alliance
Economic Alliance presented one of the Washington Rising Stem Awards to Katie Larios, a senior at Mountlake Terrace High School.
Mountlake Terrace High School senior wins state STEM award

Katie Larios was honored at an Economic Alliance gathering: “A champion for other young women of color in STEM.”

The Westwood Rainier is one of the seven ships in the Westwood line. The ships serve ports in the Pacific Northwest and Northeast Asia. (Photo provided by Swire Shipping)
Westwood Shipping Lines, an Everett mainstay, has new name

The four green-hulled Westwood vessels will keep their names, but the ships will display the Swire Shipping flag.

A Keyport ship docked at Lake Union in Seattle in June 2018. The ship spends most of the year in Alaska harvesting Golden King crab in the Bering Sea. During the summer it ties up for maintenance and repairs at Lake Union. (Keyport LLC)
In crabbers’ turbulent moment, Edmonds seafood processor ‘saved our season’

When a processing plant in Alaska closed, Edmonds-based business Keyport stepped up to solve a “no-win situation.”

Angela Harris, Executive Director of the Port of Edmonds, stands at the port’s marina on Wednesday, Jan. 24, 2024, in Edmonds, Washington. (Ryan Berry / The Herald)
Leadership, love for the Port of Edmonds got exec the job

Shoring up an aging seawall is the first order of business for Angela Harris, the first woman to lead the Edmonds port.

The Cascade Warbirds fly over Naval Station Everett. (Sue Misao / The Herald file)
Bothell High School senior awarded $2,500 to keep on flying

Cascade Warbirds scholarship helps students 16-21 continue flight training and earn a private pilot’s certificate.

Rachel Gardner, the owner of Musicology Co., a new music boutique record store on Thursday, Jan. 18, 2024 in Edmonds, Washington. Musicology Co. will open in February, selling used and new vinyl, CDs and other music-related merchandise. (Olivia Vanni / The Herald)
New Edmonds record shop intends to be a ‘destination for every musician’

Rachel Gardner opened Musicology Co. this month, filling a record store gap in Edmonds.

MyMyToyStore.com owner Tom Harrison at his brick and mortar storefront on Tuesday, Sept. 6, 2022 in Everett, Washington. (Olivia Vanni / The Herald)
Burst pipe permanently closes downtown Everett toy store

After a pipe flooded the store, MyMyToystore in downtown Everett closed. Owner Tom Harrison is already on to his next venture.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.