After many years of customer complaints and delays, and some derailments that were very high profile, Berkshire Hathaway, parent company of Burlington Northern Santa Fe Railway, chose to invest billions of dollars into upgrading company operations last year, and the dividends have paid off quite handsomely. According to a Reuters report, congestion is down at the Railway and traffic is moving much faster this year.
The Burlington Northern Santa Fe Railway Improvements
Throughout the last year and a little while longer, BNSF has hired more than 7000 new employees and spent 5 ½ billion dollars to improve its 32,500 mile railway network, and has even recently used the strategy of taking cars off of the tracks.
Analysts have taken note and recognize that their plan has paid off in a big way, since on-track congestion is down and the railway traffic is moving a lot faster, we learn according to a study from Reuters last week. They analyzed the data that railroad firms must supply to the Department of Transportation.
At this time last year, railcars were delayed at terminals for an average of 35 hours, but are back on track as of today in less than 24 hours. Also of note, the DOT data shows that trains are moving 15% quicker than they did last winter, reducing the times for product travel.
A Statement Made by Warren Buffett
“BNSF disappointed many of its customers,” noted the CEO of Berkshire Hathaway, Warren Buffett, in the letter to shareholders released in February. Buffet continued to say that: “However, our outsized expenditures are beginning to show results.”
Cutting the Railcar Numbers
The performance at Burlington Northern Santa Fe Railways has improved dramatically this winter, directly as a result of increased investments, less congestion on the tracks and a weaker demand from the AG and O&G industries. Burlington Northern has reduced their railcars by 9% over the last five months to just below 237,000, but the rest of the industry is up by 0.4% more.
The owner of the New York-based transportation consultancy ABH Consulting, Anthony Hatch, made a comment saying that rail operators often find it difficult to strike a balance between the number of cars on the tracks and the estimated or current future freight volumes. He also pointed out that Burlington Northern Santa Fe is the only major railroad in the US to reduce its number of railcars in the past two years.