The Port of Tacoma’s chief executive officer , John Wolfe, Wednesday was on a pilgrimage to Burlington Northern Santa Fe LLC’s Fort Worth, Texas, headquarters with a critical mission to accomplish.
His objective is to remind BNSF — the major rail connection between Pacific Northwest ports, the markets of the Midwest and the wheat fields of the Dakotas, Montana and Eastern Washington — not to give the region’s ports short shrift in the railroad’s efforts to cater to new-found energy business customers.
Wolfe and a high-ranking executive from the Port of Seattle originally had been scheduled to meet with Matt Rose, BNSF’s chairman and chief executive officer. But an emergency issue required Rose to cancel the meeting.
The Tacoma port chief instead was meeting with upper echelon BNSF executives to discuss the port’s concerns about problems that could develop in the crucial connection between Puget Sound ports and customers across the country. When Rose canceled, the Port of Seattle decided to opt out of the trip.
Port of Tacoma commission members said keeping a quick and efficient rail connection to Chicago and eastern cities is a critical element in Pacific Northwest ports’ efforts to compete to retainmarket share in the import and export business.
That rail connection reportedly has been a topic of conversation between commissioners from the ports of Tacoma and Seattle as they discuss how to retain the shipping volumes they now have and to compete for new business.
The two commissions are meeting privately under a grant of anti-trust immunity from the Federal Maritime Commission to draft a cooperative business strategy.
Port of Tacoma Commission President Clare Petrich said maintaining and enhancing good rail connections is essential to Puget Sound ports. Those ports, principally Seattle and Tacoma, unlike the rival ports in Southern California, don’t have a huge local market to stoke demand. Instead Puget Soundports rely heavily import traffic bound for other cities to create business.
Likewise, grain growers in the Great Plains use grain elevators along the Columbia River and in Seattle and Tacoma to load grain aboard ships to transport the crops to Asia and the Pacific.
In recent months those grain merchants have complained that BNSF is weeks overdue to providing capacity to ship their grain to the Northwest for export. When those trains are delayed, shipping companies charge as much as $50,000 a day waiting fees while their ships are anchored in the bay waiting for the grain trains to arrive.
Last winter, severe weather complicated the railroad’s job of moving goods across the Northern Tier between ports and consumers.
But while there is little railroads can do to change the weather, port commission members say they fear the growing influx of oil and coal trains will clog the BNSF mainline across Washington, Idaho, Montana and North Dakota and slow down delivery of consumer goods and industrial parts to Midwest destinations.
The rail oil traffic alone nationwide grew from 10,000 carloads in 2008 to more than 400,000 carloads last year, estimated the Association of American Railroads.
“We have to maintain reliable delivery schedules and reasonable rail prices,” said one Tacoma port commissioner who didn’t want to be identified.
Much of that traffic is destined for refineries in the Pacific Northwest. Those refineries used to depend on Alaska for the crude oil to feed their facilities. Now that crude increasingly is coming from the Baaken formation in North Dakota. Pipelines don’t connect that region with the Puget Sound, sorail transport is necessary.
BNSF spokesman Gus Melonas said on average two to three 100-car crude oil unit trains a day now arrive in the Pacific Northwest daily. That number, say researchers, is likely to increase geometrically as more rail crude-oil terminals are built here.
In Tacoma, U.S. Oil and Refining Co. has more than doubled its capacity to handle rail crude shipments. Likewise Targa Sound Terminal has bolstered its capacity to receive crude and alternate energy products such as ethanol from the Midwest.
BNSF is spending big money to cope with the increasing traffic, said Melonas. The railroad is spending a record $5 billion this year on capital projects. Some $235 million of that money is being spent on new track and maintenance in Washington alone, he said.
The railroad is building 17 miles of new track in Eastern Washington to ease congestion. It is creating facilities at Pasco to spray a protective coating on coal destined for Northwest ports. It is hiring between 550 and 600 new employees in the Evergreen State this year.
The railway is buying 500 new locomotives in 2014 to ensure that there’s power available to move the new volume of traffic, Melonas said.
“It’s a significant surge in several segments of our business,” he said, “happening at the same time.”
“We’re working hard to cope with it. We’re taking steps to serve all of our customers well including the ports,” he asserted.