Market Matters Blog

Railroads Respond to STB Requests to Provide Service Outlook

Mary Kennedy
By  Mary Kennedy , DTN Basis Analyst
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Will this be the scene this fall, or will railroads be able to handle the upcoming large corn and soybean harvest? BNSF railroad tracks along the Northern Transcon early September 2014. (DTN photo by Mary Kennedy)

MINNEAPOLIS (DTN) -- Will the nation's railroads be ready for harvest? That's the question transportation regulators, and grain shippers want answered ahead of harvest this fall following last year's lengthy and widespread backlogs.

On July 13, Surface Transportation Board (STB) Chairman Dan Elliot sent a letter to all the Class 1 railroads asking them if they will be ready for the "fall peak" period. He asked that each railroad provide their general outlook and plans for the remainder of 2015 as well as the entire winter season. Each railroad was asked to provide specific answers to different issues, but the main theme was the same for all railroads: "Provide the expectations for any season peaks in traffic and the actions it will take to prepare, with specific references to critical commodities such as grain, coal, propane and automotive traffic." Here is the link to the letter sent to the BNSF: http://goo.gl/…

The BNSF responded to the STB saying, "After an incredibly challenging 2014, BNSF's network is performing well. We, and more importantly our customers, began to see marked improvements in service performance in the fourth quarter of last year as the capacity expansion projects that were part of our $5.5 billion 2014 capital plan were placed in service. We have continued that momentum through this year, and it continues to build as our $6 billion 2015 capital plan is executed across our network."

"We won't realize the full capability of the network while we are constructing these expansion projects and undertaking this year's significant maintenance program. Our customers will see additional velocity improvement as the expansion projects and annual maintenance are concluded for the year, in addition to realizing the benefit of the additional capacity through the fall and into the winter," added the BNSF.

"We are well-positioned to address anticipated fall and winter volumes with additional resources available. Current economic conditions have required us to store over 750 locomotives and, unfortunately, furlough over 1,700 people. While we are doing everything we can now to bring our employees back to work, we will be able to move quickly to deploy people and locomotives if volumes increase more rapidly than expected." http://goo.gl/…

In their weekly update as of Aug. 28, the BNSF website reported: "The operation experienced mostly steady performance and good fluidity across the network this week. Minor service interruptions associated with ongoing maintenance and capital expansion as well as the wildfire situation in the Pacific Northwest contributed to a small spike in total trains held. We also moved the highest weekly volume of 2015 to date at 207,908 units, exceeding the 200,000 level for the fifth week in a row and the 14th week this year."

On Aug. 27, the BNSF reported that there was a track outage in their Hi-line subdivision at Essex, Montana, due to the wildfires. Train traffic was suspended and crews applied approximately 18,000 gallons of water and about 80 gallons of foam to a one mile span along the tracks to slow down the fire's advance and mitigate any damage to property.

The BNSF stated that, "If conditions improve, several trains are staged and ready to take advantage of any opportunity to operate through the area safely. We will also continue to re-route traffic to minimize any service disruption caused by this situation. Fire conditions could worsen Saturday with strong winds in the forecast; however, a changing weather pattern will increase the chances for rain and bring much cooler temperatures to the area as we move into next week."

WHAT A DIFFERENCE ONE YEAR MAKES

One year ago on Sept. 4, 2014, the STB held a nine-hour hearing in Fargo, North Dakota, to address industry concerns over rail backlogs that had persisted for over 10 months. State leaders, shippers and farmers were all concerned the rail backlog would cost the U.S. export business if purchasing countries became concerned they would not receive grain shipments on time. As the 2014 harvest was fast approaching, some elevators at the time of the hearing were waiting for cars ordered for the spring of 2014. A shipper in South Dakota told DTN last fall that he would be unable to dump new-crop soybeans because his elevator was full and he was waiting for past-due orders.

At the time of the hearing, the Class 1 railroads were still struggling to catch up, but as the fall and winter progressed, there was less grain shipped due to lower cash prices and a more mild winter than the previous year, which certainly made a difference for railroads in placing empties and moving loaded cars.

Probably the biggest help to alleviating congestion was the slowdown in oil car shipments due to the collapse of crude oil prices. Fewer oil cars crowded the railroads as oil production slowed due to the cheap prices. Many shippers and agriculture organizations believed that the oil cars were likely the biggest culprit in preventing timely placement and movement of grain cars.

Bob Zelenka, executive director of the Minnesota Grain and Feed Association, told the STB at the Sept. 4, 2014, hearing that railroads did not adjust quickly enough to the unprecedented oil traffic. "It just added substantial congestion to the whole BNSF and CP network," Zelenka said, "and neither was well prepared with the infrastructure to handle that increase in volume."

The difference in service from one year ago can be seen in the comparisons by the BNSF for the week ending Aug. 25, 2015. Total trains held for the week were at an average of 69.4, down by 70.3% versus the same week last year. Locomotive velocity, measured in miles per day (MPD), was 278.0, versus 249.2 for the week ending Aug. 19, 2014, with car velocity at 214.0 MPD versus 176.7. Train velocity was at 18.3 miles per hour (MPH) versus 14.6 MPH, up by 25.3% versus one year ago. Total volume was at a year-to-date high of 207,908 units moved in Week 33 versus 198,959 units at the same time last year, and terminal dwell was at 25.0 hours, down by 11.3% from one year ago.

One item stuck out in the latest service update by the BNSF more than the others: past-due car orders. The BNSF reported that for the week of Aug. 22, past-due car orders system wide, were at 425 cars and days late was at 3.2. One year ago, for the week ending Aug. 19, past due orders were at 2,609, at an average of 12.9 days late.

Yes indeed, what a difference one year makes.

Here is the link to all Class 1 Railroads fall service plans to the STB: http://www.stb.dot.gov/…

Mary Kennedy can be reached at mary.kennedy@dtn.com

Follow Mary Kennedy on Twitter @MaryCKenn

(AG/BAS)

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