How Railroads Are Investing in Transportation's Future
By: SupplyChainBrain June 11, 2014
BNSF will spend $5bn on infrastructure this year, topping its record $4bn investment last year, says Steve Bobb, chief marketing officer. In addition to maintaining and improving service and capacity, BNSF will invest in logistics hubs and other future-focused infrastructure.
The concept of logistics hubs will continue to drive intermodal growth well into the 21st Century, says Bobb. These hubs have rail intermodal facilities as an anchor, surrounded by other logistics and distribution facilities, he explains.
“Logistics hubs create a lot of benefits, including cost reduction,” he says. “They reduce inbound dray, create efficiencies for customers in terms of moving equipment in and out, and the clustering of services allows various resources to be leveraged and shared,” he says.
Surrounding at BNSF hubs typically include trucking and steamship line partners with which the railroad collaborates, Bobb says. “Our model is to do the things we do best, which is to operate long-haul rail and intermodal facilities and let our partners do what they do best, which is to manage the street operations and door to door dray,” he says.
Investing in logistics hubs represents only one aspect of BNSF’s massive capital budget, Bobb says. “Railroads are unique among transportation modes in that they provide their own infrastructure and it is the lifeblood of our network, second only to customers,” he says. On average, 18 to 20 cents of every revenue dollar goes into infrastructure, he notes. Last year BNSF spent $4bn on capital expansion, the most of any U.S. railroad, and this year it will spend $5bn, he says.
About half of that money goes to maintain existing infrastructure and throughput capacity and the other half is spent on everything from locomotives (500 in 2014) and rail cars (5,000 in 2014) to adding capacity and expanding intermodal, railyard and other hub facilities.
“The good thing about providing our own infrastructure is that we get to determine where investments are made and we have the financial ability to make those investments,” says Bobb. “Think of how that compares with the challenge the U.S. government faces in terms of river, highway and airport infrastructure.”