Shippers Complain To Regulators Of Poor Service From Buffett’s BNSF

Major port renovation projects in the cities of Seattle and Tacoma are being delayed due to lack of rail capacity, according to industry analysts and regulators.

A recent Bloomberg article highlights that the two ports on Washington’s Puget Sound have agreed to consolidate many operations after a century of competition, and are laying plans to leverage growth from the consolidation. But the 40-fold growth in shipments of crude from the Bakken oil fields over the last few years is overtaxing the region’s main railroad company, BNSF Railway Co., resulting in inbound and outbound delays that are causing shipping traffic to move to less congested harbors in Canada. Up to 150 grain cars piled up in nearby rail yards during September, noted Dale Frazier, manager of Seattle Bulk Shipping Inc.

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BNSF gradually upgrading

In response to the ongoing criticism, BNSF said that customers “are experiencing gradual improvements” and “have our continued commitment that we will add the resources necessary to handle all of our customers’ business,” in an October 30th email Courtney Wallace. The railroad firm is planning a record $5 billion in capital expenditures in 2014, and $1 billion of it is earmarked to improve lines between the Northwest and Chicago, Wallace noted. Projects include two additional staging tracks near Everett, Washington, and upgrading a rail yard on the south end of Seattle.

Tony Hatch, a New York-based transportation analyst at ABH Consulting, pointed out that BNSF’s investments are likely to ease the bottlenecks for the ports. “As much as they’re griping about it, everybody assumes that by next spring they’ll be back to normal,” he said.

Ports of Seattle and Tacoma teaming up

Back on October 7th, the ports of Seattle and Tacoma announced they will start joint planning, operations and marketing of their cargo terminals. Combined, the ports would have been in fifth place behind Los Angeles, Houston, Newark and Long Beach last year, with around $77 billion in total vessel trade. The goal of the plan is to stop the reduction in port calls by international shippers that’s been hammering the Port of Seattle, leading to a 26% slump in total container volume from 2010 to 2013.

Of note, although containerized cargo volumes moving through North American West Coast ports are up by 100% since the turn of the century, the Puget Sound’s ports total market share has dropped to 9% from 15%, according to statistics complied by the Port of Tacoma.