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Published July 31, 2014, 03:20 PM

BNSF invests in ag shipping, prepares for harvest

John Miller, BNSF group vice president for agriculture, spoke at a meeting of the North Dakota Agricultural Rail Business Council in Mandan, N.D., July 31. The group is made up of about 40 ag-related entities. “We know we’re not doing as well as we should; we know the market wants more,” Miller said. “But we are shipping record amounts.”

By: Mikkel Pates, Agweek

MANDAN, N.D. — Burlington Northern Santa Fe Railway, the region’s largest railroad, expects to be in position to manage the 2014 harvest in September, a top official said.

John Miller, BNSF group vice president for agriculture, spoke at a meeting of the North Dakota Agricultural Rail Business Council in Mandan, N.D., July 31. The group is made up of about 40 ag-related entities.

“We know we’re not doing as well as we should; we know the market wants more,” Miller said. “But we are shipping record amounts.”

He said the company’s shuttle train cycles, or turns, to the Pacific Northwest ports will go to 2.5 per month by fall, a rate elevators say they can live with.

Farmers in the Northern Plains are concerned about whether the railroad will be able to handle the 2014 crop, and how future rail growth will be balanced between agriculture and the fast-expanding oil industry.

BNSF is preparing for a 14-billion-bushel U.S. corn crop, Miller said, and needs to hear from farmers and elevators about how and when farmers will market their crops.

Neal Fisher, executive director of the North Dakota Wheat Commission, noted that this year’s large spring wheat crop in North Dakota is likely to be late, so some of the harvest will shift into September, which could compress the harvest schedule.

Fewer single cars

Miller reported that the number of late cars on the single car market is declining. In North Dakota, the figure dropped 1,000 cars on the week, to about 2,399. But he also said the company is in the process of rebalancing the fleet of grain toward shuttle-loaders, which removes cars available for the late-car category.

Shuttles are 110- or 120-car unit trains that have special rate schedules. Initiated in 1996, the shuttle-loading program involves 223 shippers on BNSF or short line railroads that feed to the BNSF.

Miller had several pieces of good news for the council:

•BNSF had moved about 1 percent more ag cars out of North Dakota than any previous year for the same period, Miller said.

•The company this summer has instituted an early discount program for moving fertilizer, amounting to a roughly $6-per-ton decrease from June to September.

•Elevator operators are ordering a significant amount of freight earlier than they did last year, which is bound to help in planning.

•BNSF has hired 4,000 of a target goal of 5,000 new employees for the year, much in the northern areas including North Dakota.

Farmers bear cost

All that is fine, said Mark Watne, president of the North Dakota Farmers Union, but farmers are still bearing the brunt of rail delays. He reminded Miller that studies show farmers had lost $65 million from increased basis discounts and delayed marketing.

Dan Wogsland, a council member and executive director of the North Dakota Grain Growers Association, said he still has concerns about how rail capacity is allocated between grain and energy industry shippers.

“Is agriculture getting its fair share of capacity? I think the jury is still out on that,” Wogsland said. He told Miller that North Dakota farmers and elevators have already invested heavily in grain storage and facilities.

As farmers, elevators and the railroad have stepped up investments, Wogsland said end users — elevators including the North Dakota Mill and Elevator in Grand Forks — need to take responsibility to “come into the 21st Century” and invest in shuttle train capacity.

Traffic is threatened because a month ago, Washington State stopped providing police protection for Federal Grain Inspection Service personnel who must cross the picket lines in a strike that has lasted almost two years. Miller said the PNW ports are reported to have increased capacity 25 percent in the past five years, but the stoppages undermine that.

Wogsland said farmers need to contact the Washington State governor or contact congressional members and the U.S. Department of Agriculture to make sure inspectors can get to their jobs.

Larry White, international agribusiness manager for the North Dakota Trade Office, told council members that with projections of Bakken oil volume doubling, farmers should become more active in pushing for pipeline development, to move at least some of that oil off the rails.

Driven by marketplace

Miller said BNSF prefers changes be driven by the marketplace and not by regulations from the Surface Transportation Board, which has gotten more involved and has mandated weekly reporting from the BNSF and the Canadian Pacific Railroad.

Earlier in the week, STB Chairman Daniel R. Elliott told Sen. John Hoeven, R-N.D., that BNSF was making progress in cutting the backlog. The railroad had 3,359 past-due non-shuttle train cars in North Dakota, and an average of 23.6 days late. On July 18, the railroad had 3,908 cars past-due and BNSF had committed to spot 450 cars per day to reduce the backlog.

Similarly, Canadian Pacific Railroad has reported to the STB that it has cumulative open requests for 22,811 cars — inclusive of both shuttle and single cars. It is unclear in the CP report whether the “open requests” are past-due.

Ed Greenberg, a spokesman for CP told Agweek in late July that the age of the request doesn’t necessarily indicate the amount of grain outstanding, as customers “can put in as many requests as they want.”

He said the ordering system the company had in place then does not allow for a true picture of the demand backlog, “as by design, it allows customers to enter as much demand as they choose. In aggregate demand is often double what is historically loaded on any given week. CP is looking at a revised order system that will provide a more efficient framework for customers and the railroad.”

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