(The following article by Katherine Yung was posted on the Dallas Morning News website on March 24.)
ALBUQUERQUE, N.M. — The head of Burlington Northern Santa Fe Corp. warned Thursday of a coming crisis in the nation’s ability to move goods because of an aging and increasingly congested transportation system.
“In 10, 15 or 20 years, there is a crisis coming in how we move commerce,” said Matthew Rose, chairman and chief executive of Fort Worth-based BNSF, the nation’s second-largest freight railroad.
“I just don’t see how that’s going to be avoided,” he said.
Mr. Rose and other executives at BNSF on Thursday showed off the railroad’s effort to install a second set of tracks along its main transcontinental route between Los Angeles and Chicago.
After years of suffering from excess capacity, BNSF, like other railroads, is struggling to handle an unprecedented increase in shipments, caused primarily by a surge in imports from China and rising demand for coal produced in Wyoming and Montana.
The railroad is investing $2.4 billion this year, a 10 percent increase over 2005, to maintain its tracks and expand its ability to carry more freight.
In a sign of just how much business is booming, BNSF’s top priority this year is increasing the speed of its trains so it can handle more shipments, Mr. Rose said.
Many of the railroad’s nearly 40,000 employees now have about a third of their incentive compensation tied to whether the company can improve this year’s average train speed by 5 to 10 percent over 2005 levels.
BNSF is also focused on improving its customer service, which has slipped in recent years as it has absorbed huge increases in shipments.
“We fully acknowledge our service isn’t what it ought to be,” Mr. Rose told reporters Thursday during the media tour. “Customers right now are frustrated.”
To improve its performance, BNSF is taking a number of steps, including adding cars and locomotives, re-examining how it can operate more efficiently and adding a third set of tracks along key routes.
With less than 50 miles to go, the railroad already is close to meeting its longtime goal of adding a second set of tracks along its 2,214-mile Los Angeles-Chicago line.
With the flood of imports from China showing no sign of letting up, BNSF and other railroads are under tremendous pressure to expand their capacity.
The industry is backing a proposed 25 percent federal tax credit for rail infrastructure capacity improvements.
Of the $8 billion in capital that U.S. railroads will spend this year, only 20 percent will go toward expansion. The rest will be invested in maintaining rails, ties and other equipment.
But railroads are only one part of the transportation network. Longer term, experts say, the U.S. also must upgrade its highways and waterways, many of which were built during the Eisenhower administration.
However, the chances of finding the money and the political will to undertake this overhaul remain slim during a time of war and competing needs for programs such as Medicare and Social Security.
“Things are going to get worse before they get better,” Mr. Rose said.
He said a crisis would result in higher shipping prices.