Railroads see lower volumes; BNSF furloughs hundreds in North Dakota, union says

The news this week that BNSF Railway had parked about 45 locomotives in its Fargo trainyard provided another sign of continued slowdown in the freight rail industry.

The news this week that BNSF Railway had parked about 45 locomotives in its Fargo trainyard provided another sign of continued slowdown in the freight rail industry.

Industry observers blame lower coal shipments as a major reason for the shipment decline. BNSF, the largest railroad in North Dakota, reported its national volumes were down 6 percent in the first quarter of this year compared to last year, and coal shipments alone were down 33 percent. Its first quarter profits dropped 25 percent.

But BNSF isn't the only railroad experiencing a downturn.

U.S. carload traffic dropped 16.1 percent in April compared to the same month in 2015, according to the Association of American Railroads. But excluding coal, carloads were down just 2.8 percent from April 2015.

John Gray, the senior vice president of policy and economics at the AAR, said in a statement low natural gas prices and high coal stockpiles at power plants are hurting coal traffic. Coal represented roughly 21 percent of freight ending in North Dakota in 2012, according to the AAR.


"On the U.S. side, (coal) has been regulated and competed into a big hole," said Anthony Hatch, a New York City-based railroad analyst.

Meanwhile, exports of crude oil by rail out of the Williston Basin, which includes North Dakota, has dropped from more than 800,000 barrels per day in late 2014 to roughly 500,000 barrels per day in February, according to the estimates from the North Dakota Pipeline Authority. Crude oil was the second-largest rail commodity originating in North Dakota, according to the AAR's 2012 data, with farm products coming out on top.

Canadian Pacific, the other major railroad in North Dakota, reported a 15 percent drop in its U.S. grain carloads in the first quarter of this year, contributing to an overall decline of 4 percent. BNSF's volumes of agriculture products were up 1 percent in the first quarter of this year.

Workforce down

Those diminishing shipment numbers mean BNSF has furloughed 4,500 transportation employees nationwide. While a spokeswoman didn't have specific numbers for North Dakota, a union official said furloughs peaked around 400 just a few months ago but have since come down slightly.

"Our workforce needs are driven by our customers' freight transportation needs," BNSF spokeswoman Amy McBeth wrote in an email.

BNSF has offered buyouts "in an effort to put more furloughed employees to work" and has allowed furloughed employees to transfer to other available jobs on the railroad, she said.


John Risch, the national legislative director for the SMART Transportation Division, the country's largest rail union, said BNSF made "tremendous" investments in improving its North Dakota system in recent years. But it also "over-hired" to alleviate congestion issues.

"They overreact by over-hiring, and then they overreact by laying off more than they should," Risch said.

McBeth pushed back against that argument.

"To meet our customers' expectations, we said we would invest significantly in our railroad--in our infrastructure, equipment and hiring--and we did," she said in an email. "Just two years later, volumes have declined, and so, unfortunately, we had to match our workforce to what is needed to move that lower volume."

Employment at the country's largest railroads was down 10.7 percent in March compared to March 2015, declining from 172,195 to 153,723, according to AAR spokesman Ed Greenberg.

But Hatch said railroads are also benefiting from higher productivity thanks to improvements in its network over the past few years.

"The good news is our freight rail system is in the best shape it has ever been in, in terms of infrastructure," Risch said.

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