WSJ: Surge in rail shipments of oil is causing delays for other industries

A major snarl in railroad traffic is rippling through the supply chains of businesses across the U.S., much of it caused by pileups at BNSF Railway (BRK.A, BRK.B) in a critical area where it is shipping crude oil from North Dakota’s Bakken Shale region, WSJ reports.

BNSF already was stretched by the heavy demand for oil transport, but the problem grew when the oil boom led to shortages in locomotives and crew, and a bitter winter forced it to use smaller trains, all of which has caused a ripple effect across the U.S. as shipments have been delayed.

While BNSF isn’t the only railroad with capacity problems, its troubles have been aggravated by a big grain harvest and its surging crude business; the backlogs could wind up costing shippers hundreds of millions of dollars.

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Comments (13)
  • movies555
    , contributor
    Comments (1453) | Send Message
    Is Keystone approved to offload some of the strain caused by the amount of energy being transported by rail? Does that even help - perhaps not. Canada is forcing its rails to transport grain.
    14 Mar 2014, 06:02 PM Reply Like
  • Joe Eifrid
    , contributor
    Comments (356) | Send Message
    I say "bull!" Perhaps early last year or the year before they could make this argument. Look at the most recent rail traffic report for this week. Rail traffic is up a miniscule .5% YTD. Carloads are actually down .4% YTD.
    Petroleum products are up 7%. Last year for the full year they were up 31%, but most of those gains came in the 1st half. Year over year comparisons have been getting tighter since.
    14 Mar 2014, 06:03 PM Reply Like
  • 1980XLS
    , contributor
    Comments (3360) | Send Message
    Shipping Oil by rail would be reduced from Keystone mostly on the North/South routes


    East/West not so much.
    14 Mar 2014, 06:17 PM Reply Like
  • bibol11
    , contributor
    Comments (293) | Send Message
    I am a railroader. The railroads really do not maintain the tracks very well overall. The Chicago to LA makes or made money. I personally worked on that track. One segment of it was and is. Had over 80 personnel working on it. It was not enough even with Mechanization. They reduced the maintence anyway. Just like one of the major routes they ship oil down. Three people to maintain over 100 miles of track. 
    14 Mar 2014, 08:38 PM Reply Like
  • Buddy Canuspare
    , contributor
    Comments (407) | Send Message
    The more maintenance is deferred, the more that can be returned to shareholders. Ideally, no maintenance is done at all.
    14 Mar 2014, 09:46 PM Reply Like
  • 1980XLS
    , contributor
    Comments (3360) | Send Message
    I have been buying FSTR as a play for wear & tear in the tracks.


    KOP as well.
    15 Mar 2014, 11:41 AM Reply Like
  • bibol11
    , contributor
    Comments (293) | Send Message
    If that is true which it is not. It costs more to replace a rail. That they delayed and it derailed on it. I remember when they used the money to buy an oil company. They laid people off to pay for it. The deferred maintenance cost more then if they would of finished planned maintenance. Deferred maintenance cost more to the shareholder. Just look at the derailment in North Dakota. The track used to be a grain route is low maintenance. The grain train derailed the oil train. That is deferred maintenance results
    16 Mar 2014, 03:54 PM Reply Like
  • Kyle Spencer
    , contributor
    Comments (1244) | Send Message
    Agreed. There are no free lunches, even in rail.
    16 Mar 2014, 04:39 PM Reply Like
  • soccerref
    , contributor
    Comments (25) | Send Message
    Without delays the Keystone XL pipeline will take four years to complete and another year to test and certify. That's if Caterpillar can build the pipe laying tractors quickly.
    15 Mar 2014, 01:46 AM Reply Like
  • Blue22
    , contributor
    Comments (449) | Send Message
    Oh what a shame. Mr. "I will never pay dividends" has been kicking his own ass by pushing its traditional customers onto a long waiting list! Maybe they can eat the oil! Either way more people starve and some die from unintended consequences of the narrow-minded.
    15 Mar 2014, 11:16 AM Reply Like
  • Michael Bryant
    , contributor
    Comments (7201) | Send Message
    Yup, I told my friend to buy (ARII) in December. It has been quite a ride. Now if only I follow my recommendations. I usually give more conservative recommendations to others. Don't like the idea of risking other people's money.
    15 Mar 2014, 12:50 PM Reply Like
  • omarbradley
    , contributor
    Comments (966) | Send Message
    which of course is causing a massive glut in oil as "those tanks are all full but are only now going somewhere."


    to the Federal Government's credit it did sell a few million barrels of oil from the SPR to get the fighters, transport aircraft and gunships over to Poland.


    They probably should unload the whole SPR at this point actually as these prices are going nowhere but down. Moving oil via rail is the most ridiculous thing i've ever heard of in my life. British Petroleum will complete it's overhaul of the massive refinery complex in Indiana for processing heavy crude "just in time for them to drop the price of gasoline to drop to ten cents a gallon."


    The gasoline engine is a thing of the past now. All these things are just sitting around up where I live...including brand new one is buying them...nor will they for perhaps the military...although that would only be diesel. Motorcycles, ATV's, Snowmobiles and "personal watercraft" should still be "safe" for the gasoline/ethanol people.
    15 Mar 2014, 06:42 PM Reply Like
  • aeroguy48
    , contributor
    Comments (905) | Send Message
    It looks like the selling from SPR is getting delayed, kind of like obamacare.
    16 Mar 2014, 01:48 AM Reply Like
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