 BROADCAST BULLETIN – August 15, 2005 BNSF ACTIONS CHOKING OFF SHIPPERS AND MARKETS
The COT auction is suspended for Aug-Sep-Oct,
except for 1000 Oct singles. The tariff lottery was 4860 cars in
Aug 2004, only 600 cars for Aug 2005, and now suspended for Sep 2005. In May of 2004 the BNSF moved 11,000 cars from COT to tariff.
Now it shuts down both programs.
This jerks the rug out from under shippers and markets.
Its legality can be questioned. We
have told BNSF it needs to restore adequate cars to these ordering
programs for nearby and future months, and commit the power and other
resources to give timely service. Excuses
of having over-committed elsewhere don’t cut it.
A few words about
shipment sizes: The ND
Grain Dealers Association has supported reasonable and consistent rate
differentials between shipment sizes.
Rail customers who invest to make themselves and the railroad
more efficient should receive a return on those investments, all of
them, whatever size. By
law, not to mention the principle of not cutting off your customers’
and markets’ lifeline, all sizes of shipments are entitled to
reasonable service. Doesn’t
matter whether those are shuttle trains coming from shuttle facilities
or other shipment sizes coming from shuttle or nonshuttle facilities.
The current situation is not a shuttle loader vs. everybody else
matter. Shuttle loaders
need other shipment sizes for important markets that need our grain.
These markets often pay premium prices that get back to farmers. Bidding frenzy:
On Aug 3 BNSF auctioned five 26-car COT trains for November at
$400+ per car over the tariff rate, an extra 12 cents per bushel.
On Aug 4 there were 858 bids for the 75 October single car COTs
offered and the "winners" paid close to $400 per car over
tariff rate. That same day
there were 668 bids for 45 November singles and the "winner"
paid $419 over tariff. BNSF
reduces car supply and then reaps more and more profit as its desperate
shippers bid up and up to book transportation.
In addition, this signals BNSF that even higher rates might
fly. This
is not a market; it is a monopoly, and should be governed as such.
The secondary market is in the $400 and up range, with a couple
reports of nearby freight trading up to $800 per car over tariff.
The secondary market in shuttles is also at high levels.
The secondary market is not BNSF’s, but BNSF car supply
reductions create this bidding frenzy in it. The 52-car wheat rate was first eliminated and then partially restored, but only westbound. It will be at a wider spread to shuttles and narrower than traditional to 26s. BNSF’s actions indicate it wants to eliminate 52-car shipping, not long ago that railroad’s optimum size. BNSF’s mileage-based
fuel surcharge program announced on Aug 9, effective Jan 1, is a
step in the right direction. Wheat appears to receive significant
benefit, which should be expected because wheat rates are higher than
other commodities. Preliminary
analysis indicates substantially more relief could have been given to
bring surcharges more in line with actual increased cost of fuel.
One member told NDGDA his surcharge will increase on corn and
soybean shuttles going west. One
of BNSF's stated goals with this new mileage-based program is to collect
as much total fuel surcharge as from the present rate-based program.
So minuses must be offset by pluses. Wheat is not
the enemy of corn. The
problem is surcharges exceeding actual increased cost of fuel.
This corn and soybean shuttle shipper was being overcharged
before, is now, and will be with the new program. Your Association has been in contact with BNSF,
the Surface Transportation Board, Congressional delegation, Governor and
PSC regarding these matters.
For those of you who want to make direct contacts, the following
info will be useful: BNSF Ag Products VP:
Kevin.Kaufman@BNSF.com STB Chmn Nober and
other Commissioners can be contacted by fax 202-565-9013.
Emails are:Roger.Nober@stb.dot.gov
Douglas.Buttrey@stb.dot.gov
Francis.Mulvey@stb.dot.gov The STB should be pushed
to do something meaningful, especially about the shutdown of ordering
cars. The law says shippers
are entitled to service upon reasonable request.
Why isn’t STB enforcing that?
The RR prohibiting requests is not a valid excuse. Our DC delegation,
Governor and PSC are on our side, but should be kept informed by copy or
directly. ND Congressional
delegation contacts: Conrad: Shawn_Ferguson@conrad.senate.gov
Jim_Miller@budget.senate.gov Governor John Hoeven,
(attn Lance Gaebe): lgaebe@state.nd.us
ND PSC: tclark@state.nd.us swefald@state.nd.us
kcramer@state.nd.us If you want to go to the
Bush Administration, here’s contact info. Norman
Y. Mineta, Secretary of Transportation Mike Sommers, Special Assistant to the President
for Food, Agriculture & Trade, Chuck Conner, Deputy Secretary of Agriculture
Chuck.Conner@usda.gov
|