how to pay bnsf storage?

BNSF President and CEO Katie Farmer on Aug. 4 responded to Surface Transportation Board Chairman Marty Oberman’s July 22 letter to Class I railroad CEOs requesting information on the extent of congestion at key U.S. container terminals and on their railroads’ policies and practices for assessing container demurrage fees. Oberman cited reports of “substantial charges being levied by the railroads for container storage at these terminals.” Following is BNSF’s full response:

I write in response to your letter of July 22, 2021 regarding your concerns about the significant challenges throughout the international intermodal supply chain, including heightened container congestion in rail terminals. I appreciate the opportunity to highlight BNSF’s performance during this period of unprecedented demand, including the efforts we are taking to alleviate congestion and maintain fluidity on our network and in our terminals, which we know are essential to our nation’s continued economic recovery from the COVID-19 pandemic. Also, in response to your specific questions, I am including an overview of BNSF’s storage policies and practices around container shipment storage and of the critical role those policies play in managing terminal throughput for all of our customers and maintaining supply chain integrity during periods of heightened volumes.

When I wrote to you last month, I described the considerable increase in overall volumes moving across our railroad, from the pandemic lows (approximately 150,000 units a week) to a current average run rate of approximately 200,000 units per week. We have continued to take the measures I outlined in my letter to scale up operations to meet the significant increase in demand. More specifically, with respect to intermodal volumes, so far in 2021 we are moving significantly more intermodal containers/trailers than we did in the intermodal industry peak year of 2018. I am extremely proud of the hard work and dedication our employees continue to put forward to support economic recovery and meet the strong demand we are seeing from our customers.

As you know, the complexity of the supply chain relies on the performance of numerous entities operating across ports, roadways, railroads, waterways, and shipper and receiver facilities. The challenges being experienced across the entire supply chain that I raised in early July are now well documented and continuing. As even more freight is being put into the global intermodal pipeline, the shortage of chassis, drivers, and labor to support distribution center unloading is causing shipments to back up into rail facilities. The backlog is not limited to our physical intermodal terminals either—at any given time we have around 30 trains (holding around 7,500 containers) staged for prolonged periods outside our intermodal facilities because there simply is not space in our hub to get those containers unloaded for pickup until the appropriate party coordinates the pickup of the older containers for delivery to processing locations.

We have continued to take the aggressive measures I shared in July to increase capacity, improve rail performance, and get the most out of our assets. However, the measures we take to maximize efficiency in our handling of cars across our network and within our terminals are largely rendered meaningless

if receivers are not ready to pick up those containers from our facility. For example, while we are transporting and unloading volumes this year at a pace exceeding our peak year of 2018, international containers are dwelling in our yard after unloading nearly 30% longer. The reality is that significantly more freight is coming into BNSF facilities than is being picked up and that simply is not sustainable.

As a railroad carrying containers between points where we are not the origination or the final destination of a load, BNSF has relatively few options to maintain the fluidity of our intermodal terminals if containers are not picked up by customers on a timely basis. Unless BNSF can utilize the few tools we have available to incentivize timely pickup—including storage charges when containers are left in our yards beyond free time—rail operations will degrade and ultimately come to a halt.

This Board has recognized the importance of demurrage and storage charges to incentivize the efficient use of rail assets (both equipment and track) by holding rail users accountable when they use those resources beyond a specified period of time. Our collective customers benefit as well when there is accountability across all users for effective management of resource use across the supply chain. The increased demand we face makes it imperative for us and our customers that we implement those reasonable accountability measures to support fluidity and maximum utility of rail capacity.

We do believe that there is enough physical capacity present across the national supply chain to handle the current volumes. The amount of chassis, port and rail terminal capacity, rail equipment, and employee resources is sufficient to handle the current volumes, but only if all parts of the supply chain do their part. Operating 24/7 in all parts of the supply chain, not just rail, would generate substantial capacity immediately.

BNSF strives to ensure that our storage rules are reasonable and designed to incent the behavior needed to support rail terminal fluidity. As we discuss below, we believe our rules are clear and easy to apply, providing transparency around the triggering events for charges and where opportunities exist to avoid charges. It is our practice to ensure that we are only charging a storage fee when the box is actually available for pickup. We have robust processes supported by customer tools and other technologies to provide real-time information about container location and availability for pickup, to manage storage charges and to ensure an opportunity for customer feedback and dispensation depending on individual circumstances. As BNSF has stated numerous times in the past, our strong preference would be to receive no storage revenue at all because our customers are efficiently removing units from our facilities. I will turn now to a more detailed discussion of those rules and practices, and the specific questions contained in your letter.

Overview of BNSF’s Storage Policy: The policies and rules applicable to containers moving on our network are contained in the BNSF Intermodal Rules & Policies Guide (R&PG). Storage rules appear in Item 37: Storage (Dwell) and supplemented with additional information and graphics in Appendix F: Storage at the end of the R&PG. The most current version of our R&PG can be found on our website at www.bnsf.com/bnsf-resources/pdf/ship-with-bnsf/intermodal/intermodal-r-and-pg.pdf.

BNSF instituted a one-day storage credit for any unit out-gated on a holiday that can be applied to offset charges on any current or future unit. More recently, BNSF announced the changes referenced above at LPC. First, LPC is now designated as a Group 1 facility receiving FT of 24 hours starting the day after Notification is given. Second, we implemented a third-tier charge of $500 for units that continue to dwell 5 days or longer after FT has expired. Finally, we implemented a one-day storage credit for any unit out-gated from LPC on weekends (Saturday or Sunday) that can be applied to any pending or future intermodal storage.

All these changes were focused on creating better incentives around timely removal of containers from key peak-volume terminals while also rewarding behavior that helps to smooth the overall supply chain (e.g., credits for holiday and weekend container retrieval). While BNSF will institute changes in response to evolving circumstances, those changes occur within a long-standing practice of advance notification to our customers prior to any change.

• Earlier this year, BNSF initiated an offsite dray program at several of our intermodal facilities including Alliance, Texas, Logistics Park Kansas City, and Memphis, Tennessee. BNSF has taken the step to dray long-dwelling units at BNSF’s expense from our facilities to offsite lots. These units remain in BNSF’s inventory, and thus visible to our customers through our existing customer tools and available for pickup, but mitigate the inefficiency by clearing space in the BNSF facility to support our 24/7 operations on behalf of other customers.

This list is not exhaustive of BNSF efforts or the efforts we are seeing from many of our customers to protect and support the national supply chain. We continue to engage directly with our customers to understand, inform, and support those efforts and to ensure we understand their needs. I appreciate the opportunity to hear your concerns about congestion and the resulting high level of rail container charges. Improved movement of containers to and through our rail terminals will result in lower storage charges, and that is something both BNSF and our customers are working hard to achieve. I hope the information provided here helps the Board understand how BNSF works to maintain a balanced, responsive container storage program tailored to achieve results that benefit all of our customers. We are hopeful that as all the participants in the supply chain make adjustments to support the increased demand, that will be reflected in our customer experience.

Read more railroad responses to the STB: