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5/7/2019



Rail News: BNSF Railway

BNSF posts higher revenue, income in Q1; Buffett warms to PSR, report says


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BNSF Railway Co. reported its first-quarter 2019 operating income rose 2 percent to $1.8 billion, total revenue climbed 2 percent to $5.76 billion and net income jumped 9 percent to $1.25 billion compared with the same period a year ago.

The Class I attributed its growth in total revenue to higher rates per car, a favorable outcome of an arbitration hearing and higher fuel surcharges, according to a quarterly financial summary posted on bnsf.com.

The revenue increase was partially offset by 5 percent decline in unit volume as a result of severe winter weather and flooding on parts of BNSF's network, as well as the following individual business unit drivers:
• Coal volumes plummeted 10 percent due to the challenging weather;
• Agricultural product volumes fell 7 percent due to the challenging winter weather;
• Consumer product volumes fell 6 percent primarily due to lower intermodal volumes; and
• Industrial product volumes increased 1 percent due to strength in the energy and industrial sectors.

BNSF reported a 3 percent increase operating expenses during the quarter versus a year ago due to a combination of factors, including higher costs related to the severe weather and flooding.

The Class I's Q1 2019 operating ratio ticked up to 68.1 percent from 67.9 percent in Q1 2018.

BNSF is owned by Berkshire Hathaway Inc. Last week, Berkshire Hathaway Chairman and Chief Executive Officer Warren Buffett said at the company's annual shareholder meeting that he would be willing to consider some form of precision scheduled railroading (PSR) for the Class I, according to a report by FreightWaves.com.

"We are not above copying anything that is successful, and I think there's been a good deal that's been learned by watching these four railroads," Buffett said, referring to CN, Canadian Pacific, CSX and Union Pacific Railroad.

BNSF is the only North American Class I that has not adopted some form of PSR.

"If we think we can serve our customers well and get more efficient in the process, we will adopt whatever we observe," said Buffett, according to the article. "But we don't have to do it today or tomorrow, but we do have to find something that gives at least equal satisfaction to our customers and makes our railroad more efficient."



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