Part one of this two-part column looks at the performance of Class 1 rail carriers during 2016 and the challenges they faced throughout the year.
The year started out slow for the railroads due to low grain prices and a slowdown in coal and oil shipments. In March 2016, Matthew Rose, chairman of BNSF Railway, spoke during the Montana Energy conference in Billings, Montana, and reported that about 4,600 railroad employees were furloughed nationwide.
Rose told conference attendees that the furloughs amounted to about 10% of the railroad's workforce, about the same level of furloughs it had in 2007 and 2008, the beginning of the recession.
News reports stated that as of mid-May, the BNSF also "parked" more than 1,500 locomotives at rail hubs across the BNSF system. Shippers in North Dakota reported that some shuttle trains were taken out of service due to inactivity.
The Union Pacific placed about 2,700 hourly workers on trains, engines and yards on temporary layoff at the end of 2015 and placed about 1,000 locomotives in storage. The Canadian Pacific (CP) was reported to have cut over 1,000 jobs in 2016 and noted in June 2016 that the railroad had "thousands" of unused covered hopper cars and hundreds of locomotives sitting parked.
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However, the railroads moved more grain in June, July and August as shippers got ready for the 2016 harvest. A source knowledgeable with BNSF told DTN that the number of furloughed employees was at about 2,000 in mid-August and that reduced coal and oil traffic has resulted in a significant amount of rail capacity that agriculture could use.
The USDA weekly Grain Transportation report noted that, beginning in mid-June, car loadings rose significantly higher than recent years. "Grain car loadings were well-above the prior three-year average for the remainder of 2016. Car loadings hit a record high during the week ending Nov. 5 at 28,655 carloads, higher than they had been in almost a decade. These high volumes were associated with some increases in outstanding orders (backlogs) and higher auction market prices compared to 2015. However, the levels were much lower than the significant service problems and secondary market price spikes seen in 2013 and 2014."
According to STB service metrics, backlogged car orders for the months of October and November in 2016 were higher than the same months in 2015, averaging a weekly total of 3,369 cars in 2016 compared to 2,450 cars in 2015.
"2016 ended up being a year of relative high demand for grain rail service," noted USDA. "At the same time, declines in total rail traffic, due primarily to declines in coal shipments, meant that the grain rail supply was capable of handling the high demand without significant issue."
As the end of the year approached, weather dealt a harsh blow to rail service in the Northern Plains starting at the end of November. Below-zero temperatures and heavy snow in many locations across the Northwest, Montana, Powder River and Twin Cities Divisions negatively affected normal service performance involving track and equipment. This resulted in some train delays for BNSF. A 40-mile portion of the Mobridge Subdivision near the North Dakota-South Dakota border was out of service in early December as crews had to clear snow drifts as high as 8 feet, some of which had buried engines sitting on the track. In a Dec. 9, 2016, service advisory, BNSF said, "We will continue to take all necessary actions, including deployment of additional heating equipment and plows, to address impacted areas."
In a Dec. 29, 2016, podcast, John Miller, group vice president for BNSF ag products, said, "BNSF faced service challenges from frequent, severe winter storms impacting the Northern Corridor. High winds and snow negatively affected normal service performance involving track and equipment which contributed to an elevated number of trains holding and delays." Miller mentioned that train crews were having trouble getting to trains because of poor road conditions. "We are also prepared to implement procedures, including the re-routing of some traffic, to minimize disruption as much as possible," added Miller.
In their weekly service report to the STB, BNSF reported that for the week ending Dec. 31, 2016, the total number of loaded and empty grain cars that had not moved in 120 hours stood at 536 (loaded) and 773 (empty). There were 2,832 empty and 2,106 loaded cars that had sat for greater than 48 hours, but less than or equal to 120 hours. However, outstanding car orders in North Dakota stood at 164 and were, on average, 6.3 days late. Shuttle trips per month were at 2.1 versus 2.3 the prior week.
The CP noted in its weekly update to the STB that for the week ending Dec. 31, the total number of loaded and empty grain cars (U.S.) that had not moved in 120 hours stood at 209 (loaded) and 38 (empty). There were was 51 empty and 150 loaded cars that had sat for greater than 48 hours, but less than or equal to 120 hours. However, outstanding car orders in North Dakota stood at 957 and were, on average, 1.31 weeks late, with Minnesota at 917 outstanding orders, 1.49 weeks late.
Heading in to the first week of 2017, weather conditions didn't improve much. Bitter cold blanketed the Northern Plains, and the National Weather Service in Bismarck reported that for the week of Jan. 8, more snow will fall throughout North Dakota, with dangerous wind chills expected Tuesday through Friday. While the BNSF has activated round-the-clock command centers and winter action plans to monitor conditions and manage response to any service interruptions, Mother Nature is the one calling the shots.
Editor's Note: Part two of this column next week will cover barge transportation for 2016 and the challenges faced along the U.S. waterways.
Mary Kennedy can be reached at firstname.lastname@example.org
Follow Mary Kennedy on Twitter @MaryCKenn
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