There’s an interview with Matt Rose of BNSF in the November 3 issue of BusinessWeek on his company’s long-term strategy and how the company plans to cope with the current economic downturn. He mentions that deferral of track expansion is high on the list of options. Last month, the troubles in the credit markets prevented the railroad from $300 million in leases for new locomotives and cars. One interesting note is that BNSF now follows troubled companies (e.g. AIG) in the news so that they take steps to avoid potential harm to BNSF. (Don’t forget to look at the slide show.)
There’s also a good interview with CN’s Hunter Harrison, who has concentrated in making the CN the industry’s “precision” operator.
There’s also an article on China’s railroad business in the hard-copy magazine:
“For decades, China has neglected investment in railroads in favor of building highways, With less than 49,000 miles of rails, China has roughly a third of America’s track for an area of similar size. The nation’s rails carry a quarter of global train cargo and passenger traffic on only 6% of the world’s track, making its system the busiest on the planet…Beijing plans to spend $248 billion through 2020 on 75,000 miles of track, for both freight and high-speed passenger lines.”
Hopefully the links are accessible to non-subscribers.
Thanks for the links. Those were interesting articles. The BNSF article raises some interesting points. What was the author trying to say, whan he mentioned “Burlington Northern’s unlikely turnaround”? We’re talking BNSF here, not PC.
I note that the article repeatedly refered to the railroad as the “Burlington”. So much for the usefullness of shortening your corporate name to simply meaningless letters (BNSF).
I’d like to see one of those “9,000 foot, 300 car trains” they mention. [;)]
Why was Burlington (BNSF) trying to borrow $300 million to lease locomotives and cars? Isn’t / wasn’t there a surplus of both?
Side note: The elderly owners of the company I work for, always refered to the railroad as The Burlington, in present tense, and The Great Northern, when talking about days gone by. When one of the old boys (90+ years old) saw a BNSF calender, he asked: “Binsiff, what the hell’s a Binsiff?”
The article mentions that last year they bought 200 engines to their fleet of 6100. Even assuming the new engines are more capable than those at the end of their service life in Class I service, that doesn’t seem to me to be a rate indicating much business expansion. Am I missing something here?
Given that the volume of traffic is off and the relatively short lead time for acquiring locomotives, I doubt that BNSF has to be doing any more than covering their power needs up through about mid-year of 2010. If average useful life of a locomotive is 30.5 years, then 200 new units is right on the mark for maintaining a 6100 unit fleet. I suspect that 30.5 years is a little longer than the the actual prefered life, but if only 200 old units (or the horsepower equivalent of 200 new units) are being retired in 2009, then, at least for now, there isn’t any point of buying a greater number of new units.
Just on the basis of business forecasts now being put out those making public anouncements on the subject, I doubt that the railroad is forecasting a major turn in business until 2010, maybe later. If the turnaround is sooner, they probably have units in storage and options for short term power leases.