MGGA urges caution in complaint of 48-car freight incentives
July 23, 2010
GREAT FALLS, MT – The Montana Grain Growers Association (MGGA) commented on a complaint filed July 8, 2010, with the Surface Transportation Board (STB) by Montana Attorney General Steve Bullock. The complaint centers on the STB formula for calculating railroad profitability.
In 2009, BNSF Railway changed their incentive program for 52-car trains to instead apply to 48-car shipments. The State of Montana complaint seeks to force BNSF to return to the 52-car structure, so that the shipments will fall into the least-cost category for litigation purposes. The STB rules place shipments of 50 cars or more in this lowest-cost group.
Lola Raska, MGGA Executive Vice President, explained the issue. “When the STB computer program was written, 52-car trains were the height of rail efficiency, but 110-car shuttles have since taken over that position.” She went on to say, “The 52 and 48 car trains are now gathered from individual elevator locations and put together into longer trains for long hauls.”
MGGA is concerned that all ramifications have not been considered by the attorney general and that this STB filing could lead to BNSF dropping the 48-car incentive from its rate structure. The railroad is not required to offer reduced rate incentives for larger shipments.
“This action could put our smaller grain elevators in jeopardy,” said Kevin Bradley, MGGA President, “and is aimed at the wrong target. Efforts would be better spent on a reform and update of the STB’s costing program, which would better reflect today’s rail economics.”
The farm organization last week expressed their concern in a letter to the attorney general and asked that he withdraw the STB filing. Mr. Bullock’s office has not replied.
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“The freight rate per bushel did not change when BNSF made the change from 52 to 48 cars,” said Gordon Stoner, who serves as elected vice-president of MGGA. “The railroad lost some efficiency, but producers have not noticed any change in operating procedure or freight cost due to this change in designation.”
“This complaint appears to be about eligibility for litigation,” added Raska, “and we believe the potential reward is very small, while the risk to our producers and 48-car elevators is large.”
MGGA has had good success in mediating Montana freight rate and service issues with BNSF Railway as a preferable alternative to lawsuits and formal complaints.