August 29, 2005 Kevin Kaufman Dear Kevin, Thank
you for your quick response to our joint letter of August 18, 2005,
and making the effort to have your letter sent to our respective
offices. Notwithstanding
the promptness of the response, we take issue and respectfully
disagree with your explanation of acceptable grain car availability
and rates offered by the Burlington Northern Santa Fe Railway. Your
letter states that for Aug-Sept-Oct non-shuttle Certificates of
Transportation (COTs) and tariffs “all customers were awarded cars
for the month requested or the following month.” This statement is deceptive and simply fails to address our
base concern that BNSF has shut down the ability of shippers to even
order cars. Some COTs for
August and September delivery were ordered in April, May and early
June, and we expect the shippers will receive those cars.
However, except for 1000 October singles, further ordering in
the COT auction for the busy harvest months of August, September and
October was shut down effective June 20.
In May 2004, BNSF shifted 11,000 cars from the COT ordering
program to the tariff lottery. Then
the tariff lottery was reduced, and now has been suspended for the
last third of August and all of September.
BNSF has simply made it impossible to order cars for placement
during the busiest shipping season. Historically,
North Dakota shippers have struggled with late, or even no delivery of
cars that they had ordered from the BNSF.
Apparently you have decided to resolve that issue by not making
the cars available in the first place.
We urge you to address this situation by continuing to provide
more total cars in your fleet to serve all shippers, as According
to BNSF’s records, the availability of COTs and tariff cars offered
has declined dramatically. The
following numbers are from BNSF’s Fleet Performance Reports and
lottery announcements.
These
numbers do not demonstrate your railroad’s commitment to the majority
of your shippers who seek to utilize the less-than-shuttle size. You
assert that the BNSF does not restrict car supply specifically to
manipulate after-market bidding. However, when the number of cars offered is reduced or
completely suspended and desperate shippers must bid against each other
up to, and over $400 per car over the tariff rate, it is clear that
demand exceeds supply. This
spike in the car auction demonstrates the lack of freight for small and
mid-sized shipments. When
the primary BNSF market has less car supply and receives higher bids,
secondary market prices increase too.
We recognize that this is not an official BNSF market, but the
level of your company’s offerings in its primary market is certainly
the biggest influence on secondary market availability and prices.
Recently, some cars for nearby placement were sold for around
$800 per car over tariff. If
this bid was for a single car from west-central North Dakota to
Minneapolis at a base rate of $3,000 per car (already 88 cents per
bushel), the extra $800 is a 27% rate increase for that shipper (an
additional 24 cents per bushel) for a total of $1.12 per bushel.
These high rates and added extra costs are paid by farmers. Your
letter says: “BNSF
recognizes the importance of 26- and 52-car shippers in North Dakota and
we have not eliminated a customer’s ability to ship these unit
sizes.” But nevertheless,
in June you announced elimination of the 52-car rate, and it has been
restored only for westward movements.
But with suspension of both COT and tariff ordering, there are no
cars available for 52-car shipments. North
Dakota produces upwards of 60 different crops and leads the nation in
the production of twelve. We
recognize the efficiencies of the shuttle trains for moving large
volumes of uniform commodity product to market, but the smaller units
need to be available in order to satisfy the needs of the unique crops
and qualities of crops that are grown in this state.
It is important for BNSF to serve all sectors of the grain
shipping industry, and not focus its best service exclusively on the
largest shippers. Increased
size and scale may lead to greater As
you know, North Dakota farmers and shippers need the railroad, and the
BNSF reaps substantial revenue from agriculture.
This interdependent relationship has proved challenging as the
supply and delivery uncertainty of rail freight takes an even greater
share out of returns for farmers. We
continue to urge you in the strongest possible terms, to enhance your
service to meet market demand for all shipment sizes. We
appreciate your immediate attention to this matter. Sincerely, Governor John
Hoeven
Ag Commissioner Roger Johnson Cc:
Senator Kent Conrad 38:47:56
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