Last year, grain handlers like Roger Krueger had no kind words for Warren Buffett's BNSF Railway Co. After record U.S. harvests, crops piled up all across the Midwest, with few rail cars available to get them to buyers because they were being used to ship more oil and coal.
It's different now. While farmers are harvesting almost as much this year, the logjams are long gone, said Krueger, a vice president at the South Dakota Wheat Growers Association, a cooperative with 20 loading depots served by BNSF that are used to market all sorts of crops including corn and soybeans. U.S. rail shipments of grain are the highest in five years, and costs are down from 2014, when delays could last more than two months and compounded the slumping value of crops that had nowhere to go, he said.
Part of the improvement came after the railroad, acquired in 2010 by Buffett's Berkshire Hathaway Inc., spent more than $1.1 billion over two years to expand capacity. The other reason was fewer energy shipments. Plunging oil prices slowed drilling in the once booming Bakken region of the Dakotas, eroding demand for equipment, sand and pipes, as well as outgoing crude shipments. At the same time, the volume of coal, once a pillar of U.S. rail traffic, is slumping as utilities burn cheaper and cleaner natural gas.
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