Farmer: BNSF’s continual ‘bias for growth’ drives business-generation goals
1/25/2021
By Jeff Stagl, Managing Editor
While Katie Farmer has risen through the ranks during her nearly 30-year career at the Burlington Northern Railroad and BNSF Railway Co. — to the point of reaching the top post on Jan. 1 — there was one thing that remained constant. The Class I has always had “a bias for growth,” said Farmer on Jan. 20 at the Midwest Association of Rail Shippers virtual winter meeting.
BNSF’s president and chief executive officer characterized that bias as being flexible enough, and positioned well enough, to capture growth opportunities when they present themselves.
“We are a reflection of what goes on in the industrial and consumer economies. And we all know what happens in those economies: Volumes fluctuate, opportunities present themselves and opportunities go away,” said Farmer. “And so what that means for us is that we always have to be nimble enough and see growth opportunities in advance, and prepare ourselves to be able to say, ‘Yes.’”
Part of that preparation means ensuring the railroad maintains safe and efficient operations. BNSF hasn’t suffered a fatality in nearly two and a half years, said Farmer. Recording zero fatalities and zero injuries in a given year is both “aspirational and attainable,” she believes.
Positive train control (PTC) is being counted on to help reach that safety objective. Last year, BNSF finished implementing it in 99 subdivisions, eight of which didn’t require the technology under the federal mandate. The railroad plans to continue implementing PTC in non-mandated subdivisions, said Farmer.
“Why will we do that? We believe that every train that operates with PTC is a safer train,” she said.
In addition, BNSF in late 2019 formed a cross functional team with employees from the transportation, mechanical, engineering, signals and technology departments to analyze data collected from wayside detection systems and service interruptions. The team then tries to identify trends and common service-disruption problems, and recommend ways to prevent train delays.
That effort helped BNSF register a 30% reduction in train delays and record its fewest-ever number of derailments in 2020, Farmer said.
In terms of traffic generation, BNSF’s weekly volume usually reaches 200,000 or more units many times in a given year. But the railroad only hit that mark eight times in 2020 — all in the fourth quarter — mostly because of the pandemic. The good news is that the Class I has attained that level in each of 2021’s first three weeks, said Farmer.
— Katie Farmer
Domestic intermodal business, which rebounded last June, since has been a primary driver. Volume in the sector rose 5% in 2020 on a year-over-year basis, propelled by a surge in online shopping and retailers’ inventory restocking efforts, said Farmer.
Agricultural products traffic picked up in 2020’s latter half and remains strong, but industrial products volume continues to be a mixed bag. Core industrial products business has recovered, but energy-related commodities are challenged, said Farmer.
The outlook for traffic generation in 2021? It’s unclear, including if positive intermodal trends will persist, she said.
“What will happen with the vaccines? Will there be more economic stimulus packages?” Farmer queried.
When there are big swings in weekly volumes — from 150,000 to 200,000 units — it becomes difficult to manage resources. Equipment gets stored, but then needs to come back online if volume ramps up. BNSF has managed to flex its resources well and attain favorable service metrics, such as a 15% boost in velocity and 5% drop in dwell time last year versus 2019 levels, said Farmer.
The keys: avoiding service disruptions, performing maintenance work on planned schedules, focusing on first- and last-mile movements, and providing more transparency in shipper applications and tools.
Farmer also reviewed BNSF’s capital spending plan for 2021, which is set at $2.99 billion compared with the 2020 capex budget of nearly $3.1 billion. The bulk of this year’s budget — $2.4 billion — targets infrastructure maintenance, but $400 million takes aim at expansion opportunities on the railroad, she said.
The Class I expects to continue a multi-year bridge project across Lake Pend Oreille near Sandpoint, Idaho, to increase capacity. Slated for completion in 2024, the new bridge will help funnel traffic that flows through the area, said Farmer.
On its Southern Transcon route between the West Coast and Midwest, BNSF plans to continue a multi-year effort to add several segments of double track in eastern Kansas. The Class I will gain three mainlines in Kansas and 50 miles of additional main track to support traffic growth, said Farmer.
“It will provide redundancy for our premium network,” she said.
