Buffet is retiring. If, probably when, UP-NS is approved, B-H/BNSF may change their minds.
A few years ago the tone of some statements from B-H made me wonder if they were thinking about selling BNSF. I still wonder if a post Buffet B-H will hold onto BNSF, merger or not with another railroad.
Jeff
The problem isnât with Warren at BH when he bought BNSF he thought he was buying this cashback money making machine. Then afterwards they found it requires billions in investment each year to actually make those returns possible. Then BH really got burned by the Kraft Hienz merger when it came out the Kraft overstated the valuation of sone of the assets. So now their scared of making that big investment.
Maybe not too scared. B-H is buying Occidental Petroleumâs chemical division for $9.7 billion.
It might not be a CSX sized buy, but not exactly chump change, either.
Jeff
You seriously think the most successful investor in the history of our country didnât do his homework before buying BNSF?
Berkshire Hathaway bought the BNSF right before the federal government mandated the PTC installation. They closed on their purchase in 2010. The PTC rules were released in 2012. Anyone remember just how much that cost to get going. The class 1s had to pony up around 14 billion dollars.
The Railway Safety Act of 2008, which was enacted on October 16, 2008, required railroads to have plan to the Secretary of Transportation by April 16, 2010 their plans on implementing PTC. There is no way BH did not know about the upcoming expenses.
(https://railroads.dot.gov/elibrary/overview-and-highlights-railway-safety-improvment-act-2008-rsia)
When the bill was passed the railroads understood that the FRA was going to help them with funding for first development and then installation of PTC. Then Congress said in typical fashion to industry YOYO and refused to help at all. Then the FRA kept changing the goalposts of what they wanted. While they knew it was coming down the pipeline. They also expected help only to be told nope youâre paying for all of this and failing to get it operating on time is massive fines. But how many people remember that part.
Since 2008, FRA has provided significant assistance to support railroadsâ PTC implementation. Those efforts include:
I think the time period that I recall ânoiseâ that B-H may have been thinking about cutting BNSF loose was the period between Matt Roseâs retirement and Katie Farmer being brought in. Closer to when Farmer was brought in during the Covid pandemic. Railroads, like others, werenât posting the best numbers. It probably was about the time Buffet made the comment that they may have to look at PSR.
Jeff
Yes, they helped the railroads. Mainly government run passenger operations.
There are those that argue had the PTC mandate not happened, we might have seen more development and deployment of ECP brakes.
Jeff
I somehow doubt it.
Considering ATS/cab signal technology was 100 years old, and i think the railroads were reducing the number of miles with it installed. That being said, I really donât see them reinventing the airbrake system in any widespread capacity on their own. And even if they wanted to, the car owners would have thrown a fit, which means govât intervention would have still been needed. Only this time to a lot more companies than a few RRs.
Considering the trains I have watched go by me, I think there are more private owner cars than there are railroad owned cars any more. The carriers have sold off vast numbers of their fleets to lessors who then live on the car hire payments.
Starting in 1990, the United States National Transportation Safety Board(National Transportation Safety Board - Wikipedia) (NTSB) counted PTC (then known as positive train separation) among its âMost Wanted List of Transportation Safety Improvements.â
BNSF began working on PTC technology well before the Congressional mandate and was instrumental in its development.
Mandate Compliance:
The company successfully completed the installation of all mandated PTC infrastructure on its network, covering a significant portion of its route miles and freight density.
So assuming executives at BNSF and BH actually read the news, they would have known what was coming years before mandated. In fact they had a head start because much of the PTC was unfortunately based on BNSF work. This was discussed in depth on the old forum.
The PTC initiative started in the mid 1980s as the Advanced Train Control System (ATCS). The AAR hosted regular working committee meetings and hired a contractor to write the specs.
BNSF also worked Rockwell to develope.their version of it called ARES.
The ATCS committe finished the specs, but RRs lost interest as mergers sucked all the air (and capital) out if the room in the 90s.
The one piece that got implemented was the radio code-line specâŚthat allowed us railfans to track trains with the âATCSâ computer application.
The FRA kept nudging and the RRs said âtoo expensive- no ROIâ, until it wasnât a nudge, anymore.
The RRs then selected the WABTEC proprietary system because of time constraints.
âŚand then claimed they liked PTC because if automation potential.
You canât make this stuff up.
It was just BN at that point. Their short-lived prototype installation of ARES lasted just a couple years. I believe it ended in about 1989, and a Harvard Business School professor wrote a case study on the decision not to continue development and deployment in 1991. This case study used to be available for free online and I read through it once, but now you have to pay (see [https://www.hbs.edu/faculty/Pages/item.aspx?num=3840](https://www.hbs.edu/faculty/Pages/item.aspx?num=3840 for ordering info).
Steve Dittmeyer, one of the people in charge of the ARES project at BN, later found his way to the FRA. By the 2000âs he was the public face of their efforts to impose PTC on the industry.
ARES would not have qualified as a positive train control system under the current definition, but it was the first (at least in North America) to utilize GPS-based train location info for enforcing track authorities. My impression is that after that, no freight railroad wanted to be the first to commit to this approach, but no one wanted to be the last to implement a new track-circuit-based cab signaling system either.
Actually the demise of ARES happened about 9 years after the Frisco merger and 6 years before the Santa Fe merger. Lack of capital may have been a factor, but more likely due to the fact that the profitability of a deregulated railroad industry was still unproven.
Not exactly. The NTSB kept nudging. The railroads and suppliers kept researching, hoping to find something that would work financially. The NAJPTC effort tried to expand the idea of GPS-based train control to improve train speeds and capacity (versus traditional traffic control systems), but they wound up with a system that didnât work. After that, the railroads turned their attention to trying to make a less ambitious system that would actually work and would be more affordable. If you listened carefully, it was not hard to see that they had two motivations. One, they suspected that these systems were somehow inevitable and didnât want to be left behind. Two, they thought that having authority and speed protection might give them an opening to get rid of the conductor.
By 2008 the only such slimmed-down system that had made it into revenue testing was Wabtecâs ETMS system, on the BNSF Beardstown sub in Illinois.
The FRA was in favor of PTC. However, FRA can only implement regulations that have a positive cost / benefit ratio. By the mid-2000âs, Dittmeyer and company were trying to ascribe all sorts of implausible benefits to positive train control in the hopes of making the numbers work, but the reality was too big to overcome with smoke and mirrors. The costs were huge and the benefits were medium (without also assuming a change in labor agreements for 1-person train crews). Thatâs why it literally took an act of Congress to move the needle. Congress is not required to do any cost / benefit analysis.
Correct, as in ETMS was the only existing GPS-based train control system, so it became the basis for the interoperable PTC standard.
And yes, after being forced to spend billions of $ on buying lemons, the railroads have made lemonade from them wherever they can. For operating railroaders, these feature are pretty nice to have. On BNSF, we FINALLY just implemented a (far-too-limited) version of Form Bâs that donât require 14 hours advance notice. Is that the kind of benefit that justifies billions of dollars of investment, especially when discounted for the 10-15 year lag? No. The investors would rather have just invested in Apple or something.
Dan
Remember -
Anyone will TRY to turn a negative into a positive - when playing political games.
And vice versa.
The FMCSA has tried to rewrite the HOS regulations multiple times in the last 25 years. However the old standard of 70 hours in 8 days maximum on duty and driving combined remains constant. The anti trucking crowd screams it causes fatigue and unsafe behavior in drivers. No it doesnât. When I was running I knew if I pushed hard at the start of the week come later in the week I would be shorter in hours to run. Those days allowed me to get more rest. Nowadays they have a 34 hour reset provision which means after 34 hours of constant off duty time youâre granted a fresh 70 hours to work. So based on that schedule on how I used to run on the west coast with drop and hooks on both ends this would be my new running pattern. 11.5 hours burned totaltime killed 12 as I took my lunch break between 6 yo 8 hours in. Sleep 10 get up run another 11 with the lunch break. Sleep another 10. Repeat until I reach 70 hours. Then take 34 hours off and start it over again. In 5 days Iâll burn 70 hours and do it legal as sin. Then still have enough time to burn about 23 hours out of my next 70.
So on 8 days Iâm working 93 hours instead of 70 hours and itâs 100 percent legal as hell. So tell me how itâs safer than a set of regulations that when you worked harder made you slow down and rest more later in that same peroid.
It was the NTSB pushing for a PTC system, not the STB. The NTSB can make recommendations until the cows come home, but thatâs all they can do. Make recommendations.
Jeff