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Trains News Wire FLASH: BNSF seeks bids for tank car fleet
When the railroad OWNS the tank cars, THEY have to clean them, and IF and when they sell them, or even SCRAP them the EPA will be involved in cleaning. BNSF is really putting on the heat on this issue, I am surprised some oil company hasn’t been pressured into buying them, or one of the Leasing firms. It will be intere4sting how this plays out. IF the old ones can be cleaned, it might pay to ship WATER to farmers in Northern California that need it…
Mark, this has little to do with the Keystone Pipeline, which will carry oil from the north down to the Cushing, OK, area where it will tie into existing pipelines, I think. BNSF will be transporting Bakken crude destined for refineries on the east and west coasts and probably other locations enroute.
If the car leasing companies will not provide the railcars that are needed then the railroad will.
Paint them orange and black!
Hmm … What does Warren know? Doesn’t bode well for Keystone Pipeline construction.
It has a lot do to with Keystone. Obama won’t approve Keystone so his buddy Warren’s railroad carries a lot more of the oil. BNSF having a tank car fleet means his cars carry oil no matter what the destination.
If the railroads own the cars, they would then benefit from the car hire or lease revenue. Warren usually follows the money.
If Keystone were approved on Monday, it would take at least 10 years to start moving oil. These new cars will be in service in a fraction of that time.
This is very interesting because it says something about BNSF’s cost of capital (i.e., borrowing costs), not just that crude oil traffic is booming which everyone already knows. Traditionally tank car fleets have been the bayliwick of 3rd party owners in part because they could finance and manage the fleets at lower cost and more efficiently than the RRs could. BNSF has evidently concluded that it makes business sense to own and presumably manage a fleet of tank cars themselves. There are probably muliple reasons for this, but I’d bet that one of them is that BNSF has good access to commercial credit at competitive rates.
The new cars should greatly reduce the risk of tank car rupture which is likely to be a major driver for the railroads. There is also talk of adding a surcharge for shipping oil and ethanol in the older car designs which will push traffic to the new fleet. BNSF stands to greatly benefit as the traffic grows with or without the Keystone pipeline. Lots of this added traffic will go to the east and west coasts. I’m sure this is a very calibrated decision. Look for another major carrier to follow suit. It’s got to be great for the tank car builders like Trinity Corp.