Iron Horse in a Digital Age
By Sherry Robinson
Intermodal traffic (trailers and containers) have become the bread and butter of Burlington Northern Santa Fe Corp.
And most of it travels over the Transcontinental Line through New Mexico.
Liberated from the office, a handful of railroad executives watch new steel rail unrolling toward an amber sunset gilding High Plains real estate. The stadium seating in the back of a Burlington Northern Santa Fe business car faces a picture window that frames the receding rail.
They watch for hours. In fact, Dave Dealy, transportation vice president, doesn't take his eyes from the rails.
"To a railroader, the sweetest sight in the world is good track," says company spokesman Patrick Hiatt.
BNSF has thousands of miles of such sweet sights, having spent $330 million during the past four years -- most of that in New Mexico -- to upgrade its Transcontinental Line.
Welded rail has taken away the clackety-clack. And that's the least of the changes. The railroad, a creature of the 19th century, has all the hallmarks of a 21st-century business:
In a shift from the old you-want-it-when? culture, BNSF wants to exceed shippers' expectations.
Want to order cars, track your cargo, price a shipment? You can do that and more online.
NAFTA. Who's cashing in on north-south trade? BNSF, with its four gateways to Mexico and working arrangements with Mexican railroads.
It's light-years from the 1980s and 1990s when railroads, including the venerable Santa Fe Railway, were struggling to stay alive in brutal competition with trucking. In the mid-1990s, New Mexico saw the Santa Fe and the even more destitute Southern Pacific swallowed in mergers with larger partners.
The combined Burlington Northern and Santa Fe emerged in 1995 stronger and more competitive. The reinvigorated railroad had the financial muscle to invest in track and equipment. And a strong economy and the blessings of more open trade have assured it can recover its substantial investment. Intermodal
Understanding BNSF and its willingness to shower money on New Mexico means understanding intermodal traffic.
Years ago, the Santa Fe made its version of a pact with the devil and agreed to carry truck trailers and containers. That traffic was not only a lifeline, it continued to grow; BNSF is now the nation's biggest intermodal carrier, and the business accounts for 33 percent of revenues.
"Intermodal is our largest growth segment," says Carl Ice, senior vice president of operations, "and most of it travels on the Transcon. We expect it to continue to grow."
BNSF is proud of its Transcon route, at 2,200 miles the shortest and fastest rail route between Chicago and Los Angeles. Traffic through New Mexico totals 90 to 100 trains a day, or about 1 every 15 minutes.
"You've got one of the premium rail routes through the middle of your state," says Steve Forsberg, director of public affairs.
BNSF has spent $330 million during the past four years double-tracking what had been mostly single track, and most of the money was spent in New Mexico.
"It's a staggering investment, but it was necessary for BNSF to maintain its best 51-hour, 30-minute Chicago-to-L.A. schedule it advertises to intermodal customers, who provide business to the tune of some 80 stack and piggyback trains each day," says Forsberg.
Improvements include adding 216 miles of track, and building 110 new bridges and culverts between Belen and Clovis.
"This was a long segment with single track," says Ice. "We effectively had a one-lane street. The places we could add capacity by adding track or changing the signaling system, we did."
After improvements, the route has just three remaining sections of single track -- Abo and Scholle Canyons in the Manzano Mountains, the Vaughan flyover and the Pecos River bridge at Fort Sumner. In the two canyons, the line snakes through twisting cuts for 4.7 miles. In Vaughan, BNSF passes over the Union Pacific line on a concrete span 1,500 feet long and 68 feet high. It would cost BNSF $15 million to build another one for double tracking.
The railroad is getting by despite these three bottlenecks, but at some point it may eliminate at least one -- probably the canyons.
The Transcon improvements were just part of the picture.
Since 1996, BNSF has invested more than $11 billion in its rail network, building 496 miles of double and triple track on the busiest routes; increasing the number of locomotives by 30 percent; resurfacing its entire network; and rebuilding five rail yards to handle more cars. It also gained access to some 3,900 miles of Union Pacific track.
Shippers have their doubts about consolidation in the rail industry and rained criticism on BNSF's proposed merger with Canadian National Railway (derailed by a moratorium from the Surface Transportation Board), but BNSF argues that service has improved. On-time performance in 1999 averaged 91 percent, up from 82 percent in 1998 and 79 percent in 1997. And freight rates are 22 percent lower, adjusted for inflation. BNSF has also combined dispatching over shared routes to improve efficiency.
In the old railroad culture, you got your shipment on the railroad's timetable, not yours, and even then it was late 20 percent of the time.
The new railroad has honed in on customer service. Results locally are mixed.
"We're trying to be easier for the customer to do business with," says Kathleen Regan, vice president of e-business development. "The railroads have an image as operating companies" that are difficult for their customers. She called it an "awakening that's gone on at BNSF a long time."
Operations people are now talking about more than just running on time. It's now about service, consistency and reliability, Regan says.
"Our marketing managers have been dying for this revolution," Regan says. "The people here the longest are the most excited because they see the potential. For the operating side, it's about changing the message to the 40,000 people who run the railroad."
Previously, the message was simpler: Survive. That meant cutting costs. "Today the drive for cost improvement continues, but what has fundamentally changed is we have to have service," Regan says. "We can't do cost savings that hurt service. It's a whole new message being communicated throughout the organization."
How do you get that message to 40,000 employees?
"Follow the money," says Matt Rose, president and chief operating officer. "With management and locomotive engineers, we have incentives for completing goals, and 15 percent is service. That gets people's attention."
To reach everyone else? "We do that one person at a time," he says. Rose himself and his division supervisors get out to work with people.
Says a BNSF promotional brochure, "We've come a long way from the old business model where getting from Point A to Point B was all that mattered."
But it still has a way to go.
"I can't say we've seen an improvement," says David Emanuel, vice president of marketing, sales and distribution for American Gypsum. "We've had some real service issues the last few months."
For American Gypsum, service means getting cars to the Albuquerque wallboard plant when they're needed, and then seeing timely pickup and delivery to customers.
"It's a constant struggle to get cars delivered," Emanuel says. "We have crews of people to load and no cars."
Emanuel says the railroad is working on its problems, with mixed results.
"It gets fixed for a while and then it kind of goes back," he says. "The railroad is more focused on service on the intermodal routes -- the big coal producers, the big automotive customers, UPS. The carload business leaves a lot to be desired."
Roses Southwest Papers Inc. has seen some improvement, says Roberto Espat, president and CEO. In the past, the stated 10-day shipment of raw materials could stretch to 20 or 25 days, causing real production headaches for the Albuquerque maker of napkins, tissue and paper bags.
Now shipments are a consistent 14 to 17 days. "We can work with that," Espat says. But the railroad still fails to notify Roses when a shipment arrives, sparking delays and extra charges.
BNSF's biggest Albuquerque customer is happy, though.
"They have improved greatly in the last four years that we've been shipping with them," says Lydia Plant, international traffic supervisor for Rio Grande Portland Cement. "On a local level, they really help us out when we need it, especially when our shipments increase overnight and we don't give them notice.
"They bring our cars in on time. They're doing the switches we request."
For railroads, the Internet has bridged centuries and cultures. And BNSF was one of the first railroads to jump in.
"BNSF has focused on using e-commerce as a tool for us to be easier to do business with," says Regan.
On BNSF's Web site, the railroad can post its available equipment and offer reservations. Customers can check transit schedules, send shipping instructions and monitor shipments online. With ePay, they can check their billing and settle any problems online.
Soon customers will have easy access to rail prices. When railprices.com is live online, customers will enter any origin and destination, and the site will provide a price. "It sounds simple, but it's not," says Regan.
Previously rail customers had to call or write about rates, and it took days to respond. The Internet forced railroads to simplify their pricing schedules so they could be communicated on the Web.
This year the industry collaborated to launch Steelroads.com, which allows customers to decide the most efficient route for their shipments, specify the equipment and determine availability. And they can trace their shipments from origin to destination, and choose from more than 300 rail carriers.
"We need to work a lot more as an industry to convert truck traffic to rail," says Regan.