Buffett’s BNSF Railways Sees Major Improvements In Service

Buffett’s BNSF Railways Sees Major Improvements In Service

After years of delays customer complaints,  and some high profile derailments, Berkshire Hathaway’s BNSF Railways decided to invest billions in upgrading its operations last year, and it has paid off handsomely. According to a report from Reuters, congestion is down and railway traffic is moving notably faster this year.

More on BNSF Railways improvements

Over the last year and change, BNSF Railways hired over 7,000 new employees and spent $5.5 billion improving its 32,500-mile network, and has recently even used the strategy of pulling cars off the tracks.

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Analysts note the plan is paying off big time so far, as congestion on the tracks is down and traffic is moving faster, according to a Reuters study of weekly data railroad firms provide to the Department of Transportation.

Rail cars that were delayed at terminals for an average of 35 hours this time last year are back on the tracks in less than 24 hours today. Of note, the DOT data shows trains are moving 15% faster than they did last last winter, reducing product travel times.

Statement from Warren Buffett

“BNSF disappointed many of its customers,” Berkshire Hathaway CEO Warren Buffett noted in a February letter to shareholders regarding one of North America’s largest railroad companies. Buffet continued to point out: “However, our outsized expenditures are beginning to show results.”

Actually cutting the number of rail cars

BNSF Railways performance has improved dramatically this winter, a result of increased investments, less congestion and notably weaker demand from the O&G and ag industries. Over the last five months, BNSF has reduced the number of cars by 9% to just under 237,000, whereas the rest of the industry is up by 0.4%.

Anthony Hatch, the owner of New York-based transportation consultancy ABH Consulting, commented that rail operators often have difficulty striking a balance between the number of cars on the tracks and current or estimated future freight volumes. He pointed out, however, that BNSF is the only major U.S. railroad to reduce the number of rail cars in the last two years.

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