Big changes are coming for small elevators in Montana and western North Dakota after word traveled down the line that BNSF Railway would be changing the way they service them with small unit trains. An efficiency move on the railroad’s part, the manager of one of those small elevators fears for his business and his customers.
Kevin Kaufman, BNSF’s Group Vice President for Agricultural Products, told Northern Ag Network that they are down to very few facilities in Montana that can load the smaller 50-car or 52-car trains. What happens, because the density is now so small, is that when they load one of those trains, it ends up sitting on the tracks for days waiting for another car to be buddied up to. Matching up the smaller trains is necessary in order to make the desired 100-110 car train.
What's going to be different?
The change, which will go into effect on August 26, will mean that the small elevators need to have a plan for a matching train ahead of time so that service can be more prompt and cars won’t be sitting out on the line for extended periods of time. This, Kaufman says, will improve efficiencies for the small elevators even if they’re having to work with competitors to match up trains. He also adds that BNSF will attempt to help the small elevators identify those match-up opportunities.
That assurance, however, does not have Rondell Beery convinced. Beery, the manager for Nortana Grain in Lambert and Sidney, says they aren’t big enough to load large trains nor will the logistics of working with a competitor as far in advance as they’ll need to work. They order their trains as far out as three months in advance. Under this new system, they’d have to sit down with a competitor, agree on a want date for some time in the future, and sell those two trains to the same buyer. There’s no way, according to Beery, that you’re going to get two competitors to agree on the same want date and sell to the same company, probably at the same price. Beery says “It was set up to fail.”
Kaufman contends that this transition has been in the making since they sat down with members of the grain industry nearly a decade ago and launched a program to expand the shuttle facility system in Montana. While calling the concerns of small elevators legitimate, he adds that they are not original to Montana. North Dakota, according to Kaufman, underwent a similar transformation ten to fifteen years ago. While elevators there were also worried, very few went out of business. Instead, they changed their business models to feed larger shuttle facilities or specialize.
According to Beery, “This tiny little co-op is up against a monster.”
Others elevators facing changes to their unit car service include locations in Miles City, Beach, Glasgow, Wolf Point, Kalispell, Tiber, Havre, Cut Bank, and Meriwether.
© Northern Ag Network 2013