IRVING, Texas — Burlington Northern Santa Fe Railway Co. locomotives pull a handful of cars loaded with lumber into Desticon Transportation Texas Inc.’s rail facility in Irving each weekday. The lumber is unloaded by forklift and then reloaded onto trucks or stored for a few days before being taken to lumber yards throughout North Texas, the Dallas Morning News reported.
The Fort Worth-based railroad teamed up a year ago with Desticon, one of the nation’s largest lumber shippers, to develop the four-acre site into a transload facility.
Transload is an increasingly important part of Burlington Northern’s business. With transload, the railroad unloads goods — often raw materials — from a rail car and reloads them onto another form of transportation, such as a truck or ship.
The Irving facility alone is expected to bring in 1,500 rail cars full of Pacific Northwest lumber in the next year. That’s a drop in the bucket for BNSF’s transload business, which services 180,000 rail car loads every year. But it’s an important drop.
“It’s new business,” said Kathleen Regan, vice president of business development.
The Irving facility is an example of the railroad’s new strategy for its transload business. Using lessons learned from its fast-growing intermodal business, Burlington is looking for ways to make its system more efficient as a way to attract new customers away from long-haul trucking companies.
Burlington draws about $400 million in revenue from the 400 transload facilities it operates in. That’s about 20 percent of the revenue the railroad draws from all its industrial products, including intermodal, coal and grain operations.
“I want to double that,” Ms. Regan said. “There’s hundreds of millions of dollars that could be coming to rail that we feel is out there and, without a doubt, suitable for a transload.”
Over the last two decades, Burlington Northern focused on its intermodal business, in which it ships goods in containers or trailers using a combination of rail, ship or truck. Growing an average of 7 percent annually, that business will comprise about a third of the company’s revenue this year.
Revenue from transload operations, however, has stayed relatively flat over the years. Burlington’s intermodal success offered the railroad a glimpse of what customers wanted in long-distance shipping through a transload facility. By creating larger facilities, such as the one in Irving, Burlington hopes to jump-start business.
The Desticon experience may be an early sign of success. In the last year, business from the new facility helped Burlington Northern’s transload operations grow 15 percent in the Dallas-Fort Worth area, well above the 3 percent to 5 percent growth throughout the company’s network. Demand is so high that the company plans to double its capacity next year.
Shipping goods through a transload facility is more complicated than using an intermodal facility. With intermodal shipments, containers or trailers of goods are moved from one mode to another. At a transload facility, goods are unloaded off a rail car and reloaded into another container or onto a truck.
“It’s not as inherently obvious as putting something on a freight car from L.A. to Chicago,” said Anthony Hatch, an independent railroad analyst.
Burlington’s mission to double its $400 million in revenue doesn’t mean the company plans to add 400 more facilities. The railroad has set its sights on fewer but much larger operations.
Because the railroad didn’t aggressively develop transload facilities in the past, the company ended up with a hodgepodge of facilities, mostly operated by small, family-run companies. “The investments were small, so the facilities are incredibly fragmented and limited in the number of cars they can handle,” Ms. Regan said.
The problem with smaller facilities is that they’re not as efficient. Train cargo must be sorted and then carried to individual destinations by other trains or reloaded onto a truck. The larger facilities would create something like a hub-and-spoke system, Mr. Hatch said.
“By reducing handling and expenses for shippers, railroads can do what they do best, long-haul, and leave the local delivery to trucks,” Mr. Hatch said. “Railroads are just beginning to get a taste for what the system can do.”
Burlington operates at 14 transload facilities in the Dallas-Fort Worth area. They range in size from the BPS Warehouse in Dallas, which handles about 640 cars a year, to the Quality Bulk Terminal in Fort Worth, which handles 1,900 cars each year.
But Burlington isn’t planning to build the facilities itself. Like the project with Desticon, the railroad is looking for partners to develop projects in major markets. The company is considering proposals for Southern California and plans to open a transload facility at its new logistics park in Joliet, Ill., sometime next year.
Expansion plans at other facilities, including Quality Bulk Terminal in Fort Worth, also are under way.
The facilities would be much larger than existing ones, which range in size to handle anywhere from three rail cars at a time to 50. Desticon can accommodate about 30 rail cars.