Alan Reed | Williston Herald The Burlington Northern Sante Fe Corporation is poising for a new owner as Warren Buffett's Berkshire Hathaway Corporation is paying $34 billion for the carrier that moves much of North Dakota's ag products to market.
The railroad is the biggest hauler of food products and coal in the United States. The Associated Press reported the $34 billion Berkshire Hathaway Inc. agreed to pay for the railroad because of the growth that is expected in a recovering economy.
Locally, Horizon Resources Grain Manager Brian Fadness said in general terms, he doesn't think the acquisition is going to change anything from a grain shipping perspective.
"I'm fairly satisfied with how service has been," Fadness said. "Perhaps we can see some more long-term focus on what the railroad wants to do."
Berkshire Hathaway Inc. already owns about 22 percent of the railroad and is to pay $100 a share in cash and stock for the rest of the corporation, the AP reports. North Dakota Grain Growers executive director Dan Wogsland is one of many who was totally surprised by Tuesday's news. He immediately contacted BNSF Railway officials, who told Wogsland no changes are planned.
"There were some fears there would be some refocus of the railroad," Wogsland said. "But the BNSF officials tell me it is business as usual."
Buffett's investment capitalizes the railroad, not that it needed it, Wogsland said.
"That may in fact speak well for maintenance programs and service and we may even see better service and maintenance programs," he said.
North Dakota is an export state, Wogsland said, as 50 percent of its wheat goes overseas. The state wants to make sure it can access those markets through the services BNSF provides.
"We need to know the cars are there. We need to know the power is there to get the cars there," he said of accessing foreign markets.
Wogsland said BNSF now has an ombudsman program to deal with situations that arise with railroad service. John Long is the BNSF representative based in Fargo and Wogsland said Long is readily accessible.
"That has been tremendously successful," Wogsland said of the BNSF ombudsman program. "Now we have the ability to reach right into the management of BNSF."
He said this year's service to North Dakota wheat producers has been very good.
"Actually, what you got is a situation where there wasn't the export demand in wheat for awhile and in other commodities," he said. "So they actually have a surplus of cars."
Wogsland added BNSF's turnaround time also is much improved, which enhances overall service.
"A key ingredient to that is communication. The ability to talk to folks in the upper management levels in BNSF and having the troubleshooting program here in North Dakota has been very successful," he said. "It has provided us an avenue we certainly are happy about and we just want to continue that communication."
Gene Griffin of the Upper Great Plains Transportation Institute at North Dakota State University said Buffett doesn't make too many bad bets, so Tuesday's announcement must mean he is bullish on railroads.
"I would say it is probably good news from the perspective that he believes, if he is correct, this particular company, which is important to North Dakota, has a very good future," Griffin said.
Meanwhile, Jim Peterson of the North Dakota Wheat Commission also was digesting Tuesday's surprising developments.
"I would say it is still probably too early to tell," Peterson said of what impacts the sale may have on the railroad's operations.
He said Buffett must look at Burlington Northern as a fairly strong company, but it's not possible to gauge what his personal interest or strategic plans are long term.
"It doesn't look like the management, the daily operations, would change a whole lot," Peterson said.
If there are signs the railroad is moving toward more service for energy or nonag commodities, then there may be concerns, he said.
"Our priorities will still be working to ensure we have the lowest, equitable rates with other parts of the country and other commodities, and good service," Peterson said.
North Dakota is very dependent on Burlington Northern to handle a lot of our ag products.
"Having low rates and good service are vital for getting the best price for our producers," he said. "We would encourage (Buffett) to continue to place emphasis on prioritizing not only rail cars, but power and manpower to ensure that our products can move to the export market in a timely manner, along with shipping to domestic markets."
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