Some shippers, eager to move their products, have opted to use trucks. Any delays transporting Mosaic’s fertilizer to dealers could cause them to defer additional orders, he said. “The primary preoccupation of our sales force, our supply chain and our customers frankly is getting product to them in time for the spring season,” he told the Minneapolis-area company’s investors Wednesday. MOS +0.73%, says that transport problems, including the crunch in railroad capacity, could spell “a slower season.” Larry Stranghoener, chief financial officer of fertilizer maker Mosaic Co. The surge has contributed to a tangle with potentially widespread impact. Shipments of crude by rail from North Dakota rocketed to a peak of 800,000 barrels a day last October from fewer than 100,000 barrels a day in 2010. The business has sharply exceeded its expectations. “It takes a while to unravel,” he said.īNSF, a unit of Warren Buffett’s Berkshire Hathaway Inc., BRKB +1.19% invented the business of carrying crude oil by rail when it launched its first long oil train, essentially a rolling pipeline, in 2009. Lease says traffic should become more “normalized” by April 1, but he concedes that the railroad’s challenges will extend through 2014. It normally wouldn’t have attempted such a project until spring. In mid-February it began building new track on top of frozen snow-covered ground along its main oil-patch route. The railroad is leasing and buying locomotives by the hundreds and hiring new crews. “Our reliability as a trading partner comes into question anytime we can’t provide the most cost-competitive price in a predictable and timely manner,” he said.īNSF is scrambling. His group has been pushing for tougher railroad regulation.Īndrew Walmsley, director of congressional relations for the American Farm Bureau Federation, a trade group for farmers, worries that continued capacity problems could hurt U.S. The backlogs could wind up costing shippers hundreds of millions of dollars, says Steve Sharp, president of Consumers United for Rail Equity, a group representing agriculture companies, manufacturers and utilities. “Now, we are finding we can’t fill all of the demand” as quickly as usual. “We found ourselves behind the curve,” said Bob Lease, vice president, service design and performance, for BNSF. The railroad knew it was in trouble when winter hit. “The railroads tell us they aren’t serving power plants until their inventories are in single-digit days,” he said.īNSF isn’t the only railroad with capacity problems, but its woes have been aggravated by a big grain harvest and its surging crude business. The chief of a major sugar producer said he likes to load 50 railcars a day this time of year, but BNSF sometimes brings more than 50 and sometimes 30.Īn executive close to big utility companies says coal-fired power plant inventories are running much lower than the usual 30 days. Deliveries of empty grain cars to farmers and grain elevators in the Midwest and Great Plains are running about two to three weeks late, the railroad says. That has caused a ripple effect across the country as shipments have been delayed. But its difficulties multiplied when it ran out of locomotives and crew, as a bitter winter forced it to use smaller trains. The railroad, one of the biggest in North America, was already taxed by the heavy demand for oil transport. in a critical northern stretch of the country where it is shipping crude oil from North Dakota’s booming Bakken Shale region. Many of the problems stem from pileups at BNSF Railway Co. APĪ major snarl in railroad traffic is ricocheting through the supply chains of businesses across the U.S., causing delays and losses for shippers of goods ranging from coal to sugar. A major snarl in railroad traffic is ricocheting through the supply chains of businesses across the U.S. Miller, MaA train carrying crude oil heads west through the small town of Shelby, Mont., in November. Surge in Rail Shipments of Oil Sidetracks Other Industries Pileups at BNSF Railway Is Causing Delays for Shippers of Goods Ranging From Coal to Sugar By Betsy Morris, Jacob Bunge and John W.
0 Comments
Leave a Reply. |