(The Associated Press circulated the following article on April 17.)
FARGO, N.D. — North Dakota grain elevators will save about $5.5 million under BNSF Railway’s plan to temporarily lower shipping rates for wheat, industry officials said.
Texas-based BNSF is lowering its transportation rates to give wheat shippers from North Dakota, Montana, South Dakota and Minneapolis relief from high fuel surcharges, BNSF spokesman Richard Russack said.
The reduction, which takes effect May 1, will be applied to wheat shipments headed west for domestic sale or export, Russack said.
Steve Strege, executive vice president of the Fargo-based North Dakota Grain Dealers Association, called the announcement, “a step in the right direction.”
Russack said transportation rates for wheat shipments should decline by $115 to $150 per car.
The rate reduction equates to nearly 4 cents a bushel, a savings that will flow to farmers, Strege said.
North Dakota ships about 225 million bushels of wheat annually to domestic and export markets on the West Coast, he said.
The reduction in shipping rates will end Jan. 1, when BNSF will adopt a new fuel surcharge formula that’s expected to reflect about the same savings.
Shippers now pay a fuel surcharge equal to 8 percent of their freight transportation bills. Beginning in January, BNSF will base its fuel surcharges on miles traveled, Russack said.
North Dakota shippers are paying excessively high fuel surcharges because they’re based on high freight transportation rates, North Dakota Public Service Commissioner Tony Clark said.
BNSF charges more to ship grains from North Dakota than it does in states where it faces more competition, Clark said.
The state’s grain elevators and farmers are “captive shippers” who overpay BNSF millions of dollars in shipping charges, Clark said.
About 70 percent of the grain shipped out of North Dakota is loaded on BNSF trains.
BNSF’s high rail rates have created an “exponential effect” on grain dealers’ fuel surcharges, Clark said.
“It’s kind of like pouring salt in a very sore and very open wound,” he said.
BNSF charges grain elevators in western North Dakota about $4,200 to ship a carload of wheat to the West Coast. Shipping a carload of soybeans from southwestern Minnesota to the West Coast costs about $900 less, Strege said.
“Changing the fuel surcharge should lower costs, but we still have a problem with the high transportation rates,” he said.
BNSF has come under increasing pressure in some Upper Midwest states to lower its rates.
The North Dakota Legislature is expected to increase the Public Service Commission’s budget to pay for a rail rate complaint before the Surface Transportation Safety Board.
The original proposal called using $900,000 in general funds, but some lawmakers have proposed budgeting as much as $1.2 million from several funding sources, including farm groups.
In Montana, lawmakers have proposed increasing BNSF’s property taxes to offset what they believe are shipping overcharges.