Kansas Wheat CEO Dusti Fritz is a member of a new BNSF Advisory Council, which was formed to create a dialogue between Burlington Northern Santa Fe Railway and producer groups to discuss rail issues across the United States and to create a more formal venue for producers to bring concerns regarding captive shippers, rail rates and service issues. Earlier this spring, the Advisory Council held its inaugural meeting in Fort Worth, Texas.
"Two very critical issues facing Kansas wheat producers were discussed at this meeting," said Fritz. These issues included Texas Gulf export terminal logistics and the diesel fuel surcharge.
After the 2007 wheat harvest, there was a tremendous and unexpected spike in demand. The daily capacity at Texas Gulf export terminals is approximately 10 shuttle trains per day. In a typical year, BNSF loads about 8,000 cars per month during August through December. In 2007, this demand was up 39 percent. In addition to the increase in demand for grain, there was an increase in the inbound mix of loads being less than shuttle size. This situation resulted in an embargo placed on Gulf shipments on August 7. This "embargo" did not halt grain completely. Instead, BNSF continued to grant orders on a permit-based system that was based on delivery point access.
"This situation affected the ability and wait time for cars during the most critical time for moving Kansas wheat," Fritz said. According to BNSF, car orders were filled by date of submission – oldest order filled first.
In addition to the issue of Texas Gulf logistics, diesel fuel surcharges were also discussed by the Advisory Council.
Diesel fuel surcharges are kept separate from rates. It is the combination of these two prices that make up the total cost of rail freight.
Fuel surcharges are calculated per mile, using the shortest mile concept. There is a 45 day lag time, using highway diesel fuel pricing index published on the Department of Energy website. {http://tonto.eia.doe.gov/oog/info/gdu/gasdiesel.asp} The Gulf and Pacific Northwest export houses are grouped together in one pricing system, so there won’t be differential prices per these two export facility.
The BNSF website can be a useful tool for producers to utilize when marketing grain. Rate, market information, and fuel surcharge information can be accessed there. {http://www.bnsf.com} Additional transportation resources include the USDA/AMS weekly grain transportation report {http://www.ams.usda.gov/tmdtsb/grain} and the Department of Energy Diesel Fuel Prices. {http://tonto.eia.doe.gov/oog/info/gdu/gasdiesel.asp}
The BNSF Advisory Council consists of representatives from producer groups, including the American Soybean Association, the National Corn Growers Association, the National Association of Wheat Growers, the National Grain and Feed Association, National Pulse Growers and producer representatives from Texas, Illinois, Iowa, Oregon, Minnesota, Montana, North Dakota, South Dakota, and Kansas.
The group plans to meet twice a year to discuss rail rates, rail access and service, and infrastructure.
If you are experiencing rail and service issues in your area and would like to submit the issues to the Council, please visit the Kansas Wheat web site. {http://www.KansasWheat.org}