GRAIN DEALERS COMMENT ON BNSF CAR ORDERING CHANGES     5-6-04

“It’s 'show me' time for the BNSF.” This was the initial reaction of North Dakota Grain Dealers Association to the Burlington Northern Santa Fe’s new car ordering plans and appointment of an ombudsman to deal with service complaints from grain shippers in the Dakotas and Montana

"We will work with the ombudsman, if he will work with us, but problems of poor and inequitable rail service must be resolved, not just talked about by someone else,” said Association Executive Vice President Steve Strege. "Farmers and grain elevators need more reliable service, not less guaranteed service as appears to be the case with BNSF’s new car ordering plans."  Strege is referring to a May 4 BNSF announcement of a shift in rail car capacity from so-called guaranteed supply programs to the tariff car lottery. 

“Grain shippers did not ask for more grain cars in the tariff lottery, as BNSF contends.  We want reliability, especially in the so-called guaranteed service programs," says Association President Mike McNamee of Beulah, ND. "This shift takes us in the opposite direction from what BNSF recently told us shippers, which was to plan ahead and order equipment early to help the railroad plan ahead.  Now they take thousands of cars out of programs where shippers could order several months in advance and put them in an ordering program that extends out only one month, and lacks a nonperformance penalty on the railroad."

A May 4 press release from BNSF touts a reduction in certain charges. But according to a pricing update on its web site, BNSF is actually increasing penalties on shippers and decreasing penalties on itself. Effective June 1, the per car cancellation penalty for a tariff car order goes from $50 to $100. At the same time, the late penalty BNSF would have to credit the shipper on a late car ordered through the Certificate of Transportation (COT) program drops from $400 to $200.

Another controversial feature of BNSF’s new plan is cancellation of tariff car orders over 30 days late. "Grain elevators order cars because they need them on time,” says Association First Vice President Clyde Krebs of Glen Ullin, ND. “Now BNSF will unilaterally cancel the order if it gets behind, and pay no penalty for doing that.  BNSF will simply write off the books anything more than 30 days old, creating the appearance of staying somewhat current on its car orders.”  At the present time Krebs is waiting for cars several weeks behind.

McNamee says BNSF has lately focused its best service on 110-car shuttle trains, a size loaded by only 15 elevators in the state on the BNSF and its Red River Valley and Western regional railroad affiliate.  The other 94 percent of elevators on BNSF and RRVW load 52- or 26-car trains, or smaller blocks of cars, and were left up to 50 days behind on even the pre-booked and partially pre-paid service, says McNamee. “This is not only unfair to the vast majority of elevators,” says the Grain Dealers leader, “it also means we can’t access those important markets that want the moderate size and smaller shipments, and that often pay the best price.  In summary, we need a greater commitment by the BNSF towards timely service for all its customers.”

Grain Dealers say that the ombudsman has to be given sufficient authority by the BNSF to really solve some of these problems.  “We’ll wait and see, and hope,” says Association Director Paul Coppin, manager of Reynolds United Co-op at Reynolds, N.D. Coppin was at a meeting in Fargo on January 9 when BNSF President Matt Rose promised an ombudsman within 60 days.  The appointment was announced after more than 100 days. 

Since last fall the Grain Dealers and several North Dakota elected officials have been encouraging BNSF to improve its service and not withhold service from some shippers while giving it to others.  The railroad's rate hikes during this period of delay have also been criticized by North Dakota ag interests.