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BNSF Railway
Changes to Transportation and
Barbara Haertling
Distribution
November 12, 2008
0
We’ve come a long way…
NOWNOWHopper FleetIncreased UnitizationVelocity = Capacity
THENWagons and roadsWagons and roadsBoxcars and mixed freight
1
http://www.lewiston-ut.org/lewistonhistory/images/GrainWagonHarris.jpg
Trends in Ag Rail Transportation
Deregulation COTs
Standardized Grain Unit Sizes
Fertilizer Unit TrainNetwork
Unit TrainsCorn Syrup
Eth lDeregulation COTs EthanolDDG’sMeals
Traffic Analysis
High-Capacity Cars
GrainShuttleNetwork
1980s 1990s
Network
2000 & B d
2
Beyond
Trends in Ag Rail Transportation
DeregulationTariff-Based
Rates
Standardized Grain Unit Sizes
Fertilizer Unit TrainNetwork
Unit TrainsCorn Syrup
Eth lDeregulation Rates EthanolDDG’sMeals
BN Traffic Analysis
COTs High-Capacity Cars
GrainShuttleNetwork
1980s 1990s
Network
2000 & B d
3
Beyond
Grain Shuttle Program
1 or 2 year term Dedicated Power
Customer Commitment BNSF Commitment
110 Straight Line / LoopApprox. 7400 feet
15 Hour Load at Origin
Dedicated Hopper CarsMinimum 2.5 turns per monthLiquidity and Flexibilityg
15 Hour Unload at DestinationCertified Scales/WeightsEl t i C
q y yRewards Risk
Electronic Commerce
4
Grain Shuttle Facility
5
BNSF Grain Shuttle Network
2002 2008
Origins (80) Origins (160)U.S. Destinations (27)Under Construction (14)10 Mexican Shuttle Destinations
Destinations (66)Under Construction (15)29 Mexican Shuttle Destinations
6
Merchandise Network Move
Bowdle, SD to Houston, TX
12
23 45
106
18:0024:00
15 d l d d h l3
100
23:00
15 day loaded haul6 trains3 low UPT locals
4
96
23:00
10:00Cumulative
Terminal Visits
6 terminal stops
5
6
88
30
10:00
27:00
x:xx
Terminal Visits
Units per Train
Hours in Terminal
7
x:xx Terminal
Shuttle Move
Bowdle, SD to Houston, TX
6 d l d d h l
110
6 day loaded haul1 trainMaximized UPT0 terminal stops
Cumulative Terminal Visits
x:xx
Terminal Visits
Units per Train
Hours in Terminal
8
x:xx Terminal
Grain Capacity Has Increased
40 000 46 500
Whole grains
35,000
40,000
41 500
44,000
46,500
30,000
Ca
rs
36,500
39,000
41,500
oa
din
gs
25,000
31,500
34,000
,
Lo
20,0001996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
29,000
Average Fleet Size Average Monthly Loadings
9
Average Fleet Size Average Monthly Loadings
Shuttle Program Success
Customers have invested a billion dollars in shuttle facilityCustomers have invested a billion dollars in shuttle facility upgrades or new facilities on the BNSF
S i h i d d ti llService has improved dramaticallyShuttles turn 2.5 times per month vs one time for singlesCapacity has been created to handle increasedCapacity has been created to handle increased agricultural production
Effi i i lt i t i l di t lEfficiency gains result in cost savings, leading to lower shuttle rates when compared to single carloads
10
Evolution to Fertilizer Unit Trains
Product Focus:Phosphates
Service Guidelines:Unit Train Programp
UreaPotashUAN
g65 car train minimum 24 hour origin load 15 hour destinationUAN
Sulphur15 hour destination unload
11
2002 Fertilizer Unit Train Network
Urea OriginTotal #
2
Phosphate Origin
Potash Origin
Sulphur Origin
1
2
1
Dry N/P Shuttle Destinations
Liquid UAN Origin
UAN
0
4
UAN Destinations
0
12
2008 Fertilizer Unit Train Network
2008 - 4.5 million unit train tons.
Urea OriginTotal #
4
Phosphate Origin
Potash Origin
Sulphur Origin
3
2
1
Dry N/P Shuttle Destinations
Liquid UAN Origin
UAN
1
34
UAN Destinations
10
13
West Con Milbank, SD Terminal
14
Lange-Stegmann St. Louis Urea Center
15
Fertilizer Unit Trains are Increasing
120 000Carloads
100,000
120,000
60,000
80,000Singles
20,000
40,000
Unit Train20% 22%25%
37%38%
36%
02002 2003 2004 2005 2006 2007
Unit Train
16
Fertilizer Program Success
Service and equipment utilization have improved dramaticallyq p p yUnits turn twice as fast as singlesIncreased capacity
Efficiency gains result in cost savings, leading to lower freight rates when compared to single carloads
Enhanced fertilizer product positioning and purchasing flexibility
Market penetration increased
17
What Does the Future Hold?
AASHTO forecasts U.S. domestic freight ton-mileage to grow at 2.05% compound annual growth rate from 2005-2020
Truck 2.32% CAGR = 60% increase in 2020Rail 1 94% CAGR = 55% increase in 2020
18
Rail 1.94% CAGR = 55% increase in 2020Water .68% CAGR = 30% increase in 2020
Majority of Current Rail Routes are Operating Below Capacity Levels
Current Rail Corridor Volumes Compared to Current Corridor Capacity
19Source: National Rail Freight Infrastructure Capacity and Investment Study September 2007
Without capacity improvements, congestion would affect nearly every region of the country
Future Rail Corridor Volumes Compared to Current Corridor Capacity 2035 Without Improvements
20Source: National Rail Freight Infrastructure Capacity and Investment Study September 2007
Railroad Capacity: AAR/Cambridge Study
Assessed long-term capacity needs of primary rail freight
Class 1 capital investments needed to meet 2035 volume demand
needs of primary rail freight corridors $135 B
Shortfall$39 BAssumed no shift in modal tonnage shares among rail, truck and water beyond those Productivity
Shortfall
$26 B
$39 B
projected by U.S. DOT
$39 billion shortfall will occurGrowth$70 B
$39 billion shortfall will occur without a stimulus to bring investments up sooner in their cycle
21
cycle Total Needed Sources of Capital
Source: National Rail Freight Infrastructure Capacity and Investment Study September 2007
Focus on the Future
Continued efficiency gains are critically important to meet capacity needs of the future
Collaborate with customers with existing facilities to i i i ffi i d f t it lmaximize service, efficiency and future capital
investment
C t t iti f it t i bCreate new opportunities for unit train moves by building origin and destination operating capacities
Focus on reducing bottlenecks and increasing speedFocus on reducing bottlenecks and increasing speed and efficiency
22
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