Western Coal Traffic League takes another shot at the BNSF Railway

The Western Coal Traffic League said in Feb. 25 comments filed at the U.S. Surface Transportation Board that the BNSF Railway dragged down the results from a key rail operating statistic in 2013.

In response to a Feb. 13 board decision, the Western Coal Traffic League (WCTL) submitted comments concerning the board’s proposed calculation of productivity for 2013 for use in the Rail Cost Adjustment Factor productivity adjustment. WCTL concurs in the board’s calculation of the input index value of 1.018 for 2013. WCTL notes that the input index value utilizes publicly-available information and that the calculation is thus transparent. WCTL said it is not aware of any information that undermines the accuracy of the board’s calculation of the output index value of 1.022 for 2013.

WCTL notes, however that the board uses the costed waybill sample to calculate the output index and that the costed waybill sample is generally not available to shippers. WCTL is thus not in a position to replicate or verify the board’s calculations. WCTL notes that total Class I revenue ton-miles increased by 1.64% in 2013. WCTL said it believes that at least BNSF could have moved additional volumes in 2013, and also achieved a higher level of productivity, had it made appropriate investments on a timely basis and otherwise been better prepared to meet its service commitments.

WCTL filed a complaint last fall at the board about BNSF’s coal delivery issues, with even the BNSF admitting that its service had lagged due to factors like high volumes lately of all kinds of traffic. There have been indications recently that the BNSF, which serves all of the coal mines in the Powder River Basin, is catching up on its deliveries.

BNSF accounts for a substantial portion of the railroad throughput, approximately 38.8% of total Class I revenue ton-miles in 2013, WCTL noted in the Feb. 25 comments. It follows that if BNSF had been more productive in 2013, the industry would have achieved a higher overall level of productivity. WCTL further believes that BNSF and the other Class I railroads could have also moved additional traffic volumes in 2013 if the railroads had been willing to offer lower, albeit still profitable, rates.

“The paltry productivity growth (0.4%) achieved by the railroad industry in 2013 is not an apt estimate of the growth that might have been achieved by a least-cost, most-efficient carrier or by a more competitive industry,” said the WCTL. “BNSF, [the Union Pacific], CSX [Transportation], and [Norfolk Southern] all achieved record profits in 2013. It should be apparent that the primary driver of their success was not their increases in productivity (0.4% overall increase, as compared to a 1% geometric average for 2008-2012) or output (2.2% increase in 2013, as offset by a 1.8% increase in input). Instead, the primary source for the increase in profits could have only been increases in their rates. The railroads achieved their success through price increases that exceeded the increase in their costs. Such price increases in excess of cost increases are inconsistent with the operation of a competitive market.”

WCTL is a voluntary association, whose regular membership consists entirely of shippers of coal mined west of the Mississippi River that is transported by rail. WCTL members currently ship and receive in excess of 140 million tons of coal by rail each year. WCTL’s members include: Ameren Missouri, Arizona Electric Power Cooperative, CLECO Corp., Austin Energy, CPS Energy, Entergy Services and Kansas City Power & Light.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.