Official says crude oil shippers saw a greater impact from last winter’s service crunch on BNSF’s lines than farmers
The largest railroad in the U.S. does not give preferential treatment to crude oil shipments, says Barb Haertling, general director of agricultural products at BNSF.
Haertling told the Western Canadian Wheat Growers Association meeting, which was held in Winnipeg Jan. 8-9, that the petroleum industry actually had worse service during last year’s railway capacity crunch, at least in the United States.
“When you go to crude conferences, they scream bloody murder because they think we’ve got all our resources on ag,” said Haertling.
Read Also
Saskatchewan, Manitoba sign Arctic Gateway deal
Saskatchewan, Manitoba and Arctic Gateway Group have signed an MOU to strengthen trade through the Port of Churchill.
“We’re treating everything as though it’s equal. So crude is suffering the same service issues that ag has suffered in the past.”
Producers in North Dakota and other northern tier states complained last year about poor rail service for grains and oilseeds, similar to what was heard from farmers in Western Canada.
Haertling said the idea that railways would rather ship crude than grain is a misconception.
To demonstrate that to its customers, BNSF conducted internal research to compare its level of service for coal, crude and ag commodities.
“Crude actually has been impacted more severely by the service problems than ag has,” she said.
“I think that’s a big surprise to people.”
Mark Hallman, a Canadian National Railway spokesperson, said the situation is similar in Canada.
“CN rejects any assertion that it favours crude oil over other commodities or products it transports,” he said in an email.
“CN works closely with its customers to make sure all end-market segments receive appropriate service.”
Statistics Canada numbers indicate that railway shipments of petroleum more than tripled in 2009-13. Canadian rail car loadings of fuel oil and crude petroleum by the country’s major railways increased to an average of nearly 9,300 cars per month in 2013 from 2,800 per month in 2009.
Haertling was popular at the WCWGA meeting as farmers gathered around her, asking questions for at least an hour after her presentation.
Cherilyn Nagel, a longtime WCWGA member and a farmer from Mossbank, Sask., said Haertling’s words were a “breath of fresh air.”
“I just about fell off my chair three or four times listening to your comments,” Nagel told Haertling during the question and answer session.
“To hear a railroad talking about market signals and determining what the marketplace really wants and adjusting quickly to that … we just do not have that sort of language happening with CN and CP (Canadian Pacific Railway).”
Haertling said BNSF invested $5.5 billion on infrastructure, locomotives and other upgrades in 2014 and plans to spend $6 billion in 2015, including double tracking lines in North Dakota, to accommodate increased crude volumes from the Bakken oil deposit.
Haertling said BNSF hasn’t determined its spending priorities for 2016, but it’s unlikely the railroad will invest in its Canadian operations to handle more grain from the Prairies.
“The fact of the matter is we need to get our own house in order,” she said.
“We really can’t spend a lot of time focusing on that.”
Charlie Mayer, a former federal agriculture minister, said it’s shocking to hear that BNSF is spending billions on new locomotives while CP has reduced its locomotive fleet.
Haertling did catch her audience off guard when she said farmers don’t benefit from Canada’s railway revenue cap on grain shipments.
“You guys don’t really want to hear this, but I don’t think the rate cap is working in your favour, as far as increasing capacity of the grain industry.”
For example, Canada’s hopper car fleet is aging and in need of replacement, she said.
“You’ve also got a rate cap, and that causes the Canadian railroads to not get all that excited about investing in covered hoppers.”
Nagel said the positives and negatives of the revenue cap are something worth looking at, but western Canadian farmers still rely on the cap.
“That’s not to say that we need to get rid of it any time in the near future because that’s our one mechanism at the moment to maintain cost,” she said.
“But I do think it needs to be on the table and it is something we need to discuss.”
robert.arnason@producer.com
