Fort Worth-based BNSF Railway plans to add 500 locomotives and hire 5,000 workers this year to handle increasing demands on its sprawling network, the company’s president and CEO said Tuesday.
In an interview with CNBC, Carl Ice said that the new jobs will be spread across the railroad’s network but that the most new hires will work on train crews being added to serve its growing business.
Ice’s public comments followed a report in Friday’s Wall Street Journal that growing oil volumes, a big grain harvest and bad winter weather have left the railroad without enough capacity, creating delays in its network.
Ice said increasing crude-by-rail shipments are not to blame for delayed shipments of other commodities, saying oil represents only 4 percent of BNSF’s business. Shipments of grain, coal and other goods surged in the fourth quarter, he said, and then winter storms caused a slowdown.
“All of our customers are important to us,” he said. “We’re investing to handle increased volumes.”
In all, BNSF plans to spend $5 billion in capital investment this year, $1 billion more than last year and a record for the railroad.
The hiring will include about 2,000 new jobs, with the rest replacing people who are retiring, spokesman Steven Forsberg said. BNSF has more than 41,000 employees, about 3,500 in the Fort Worth area, including its headquarters off Western Center Boulevard and a large intermodal shipping facility at Alliance. The company did not say how many jobs will be added locally.
BNSF has been steadily growing in recent years, spurred by the improving economy and a burgeoning business moving crude oil by rail from domestic fields such as the Bakken Shale in North Dakota. Last month, the company announced that it will buy a fleet of 5,000 next-generation tank cars with enhanced safety features to transport crude oil, following a string of derailments that resulted in massive explosions.
But its other businesses are still far larger than oil and account for more volume growth. Consumer products, moving through its intermodal terminals that connect with trucks, make up the largest segment on BNSF’s network, accounting for about half its traffic, Forsberg said.
In all, Ice said, the industry added 800,000 freight units last year, and BNSF handled half of the additional load.
Other railroads are also dealing with shipping backups. Union Pacific has deployed as many as 250 stored locomotives to boost its capacity and Norfolk Southern has pulled out more than 100, according to Bloomberg News.
Jason Seidl, an analyst with Cowen & Co., said the congestion at BNSF started with equipment shortages and increasing cargo, then worsened with snowstorms.
“A lot of business came their way and they sort of got behind the eight ball,” he told Bloomberg News. “Then the weather hit and the rest is history as they say.”
Forsberg said northern distribution centers like Chicago have seen record snowfall this winter that has disrupted freight movements for long periods of time. In response, BNSF has staffed 24-hour command centers to coordinate train flows and redeploy manpower and equipment to hard-hit areas.
“We recognize the severe impact this has had on both freight customers and passenger service on the Northern Corridor and we are committed to restoring service levels as quickly as possible,” Forsberg said.
Ice, 57, took over the CEO post from Matt Rose on Jan. 1. Rose, 54, who led the company as CEO since 2000, now serves as executive chairman of BNSF, which is owned by Warren Buffett’s Berkshire Hathaway.
In 2013, net income surged nearly 15 percent to $4.27 billion as revenues grew by 5.2 percent to $21.55 billion, according to a filing made with the Securities and Exchange Commission earlier this month.
Ice said the U.S. economy is showing broad-based growth and that BNSF wouldn’t argue with economists who estimate that GDP is growing at a rate of 2.5 percent a year or more.