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Grain Analyst Criticizes Allocation of Railcars by Scott A. Yates, Washington State Staff Writer Capital Press, September 2, 2005

SPOKANE ’Äì It's possible that 26- and 52-car loading facilities that have dominated Northwest grain movement the past 20-plus years may be going the way of the pull-behind combine.

Shuttle train loading facilities with the ability to load 110 cars in less than 12 hours appear to be the preferred method of moving grain. In North Dakota, that propensity led 11 agricultural groups along with a number of elected officials to chide BNSF for decreasing railcar supply to the vast majority of country grain elevators.

In Washington, Glen Squires, analyst with the Washington Wheat Commission, said it's not that shuttle train loading facilities are bad. They do create efficiencies, which are passed onto producers.

"But at the same time, you've got a lot of shippers who are not 110-car shippers," he said. "The problem is all the other shippers. They are the ones feeling the fallout of a reduced number of available cars."

Actually, the number of cars in BNSF's ag fleet has increased by 200 from 2004 to 2005, said Gus Melonas, spokesman for the company.

But Squires said the point is how the cars are being allocated.

"I get the impression that cars have been taken out of the tariff pool and put over into the shuttle program," he said, explaining how that not only causes a shortage of cars for smaller shippers, but the cars they get are much higher priced.

Until recently, Certificates of Transportation (COTs) have been the most reliable way for elevators to obtain cars. Shippers bid against each other for a limited supply, pushing up the price, until recently, each car was going for more than $300 above tariff. Shippers not only couldn't get cars, the cars they were promised were coming more than a month late.

According to the North Dakota Wheat Commission, BNSF recently suspended its COT program, mothballing it from August to October. At the same time, the company eliminated its rate for 52-car trains while increasing rates for single cars and 26-car trains.

Although there were plenty of skeptics when Ritzville Warehouse put in a shuttle car loading facility just outside of the farming community in 2002, it has affected the movement of railcars and trucks around the region.

"The railroad wants the business to be shipped at their most efficient loading sites," said Keith Bailey, manager of Union Odessa Warehouse and Reardan Grain Growers. "They're forcing the grain onto the shuttle."

Bailey isn't bad-mouthing the shuttle, only pointing out the reality. At Odessa, most grain is now heading toward the river and a ride on the barge system. Further away, at Reardan, much of the grain is being trucked to Ritzville. (bluefish: finds it interesting to look at this situation on a map).

"You can get cars if you pay enough, but who can afford to pay enough? The railroad is dictating where the grain is going to be shipped and forcing it to larger locations or the river," he said, adding that his companies' loading facilities are being used so rarely, he's not certifying the scales or repairing broken ties.

Kevin Whitehall, manager of Central Washington Grains Growers, said you could never get BNSF to admit its goal is to ultimately move everything by shuttle.

"We all feel that is their objective, but they would never admit to it," he said.

BNSF's Melonas disagreed. He said the railroad has no intention to do away with singles and 26-car units.

"The non-shuttle fleet is as large as it was one year ago, and rates are lower now than compared to 1997-1998," he said. "Our current cars are somewhat tight as demand exceeds supply with old-crop corn moving at the same time as new-crop wheat harvest."

Terry Whiteside, a transportation consultant who has contracts with Northwest wheat commissions and many others with an interest in rail transportation, said BNSF is in the process of reviewing its "one bra fits all" approach because of complaints.

"I'm not sure they knew how much volume the 52 and 26s are moving. I'm not sure the railroad thought this all the way through." Whiteside said the answer is to let the marketplace decide how best to utilize car units, rather than an edict from BNSF.

"What you are seeing is an industry in transition, but you're not seeing a level playing field. The BNSF is trying to force the economics onto the shuttles, when in reality it may not make economic sense. There has to be a mix when we're all finished," he said.