Grain Rates Contested in Montana
Montana officials and the grain industry continue to contest rates set by BNSF for grain shipment. According to a 2004 legislative report on Montana freight competition, BNSF hauls about 80 percent of the state's export grain and charges a higher rate than it does in states with more competitive shipping alternatives for grain headed to the Northwest. The discrepancy costs Montana growers about $60 million a year, the report said.
In April, BNSF adjusted their rates as part of a temporary change in the fuel surcharge calculation on grain shipments. The rate cuts were expected to result in a savings of 3 to 4 cents per bushel, for a statewide savings of $5 to $6 million per year.
Now however, BNSF has increased shipping rates for grain elevators serving 52-car trains, effective in August. This move leaves Montana officials concerned that 52-car facilities in the state of Montana may be forced out of business and increase costs to farmers. The Associated Press, in a July 28 article, reported that Montana Governor Brian Schweitzer has issued a letter to BNSF urging them to repeal the 52-car rate increase. Sen. Kent Conrad called the rate increase “a serious mistake” that will hurt small elevators. A spokesman for BNSF stated that the company would have to review the letter before responding.
The current rates for 52-car elevators are pennies per bushel higher than the 110-car rates. BNSF is proposing to increase the rates by at least 10 cents per bushel, estimated by one grain elevator manager to be a $125 per car increase.
The Montana Grain Growers Association stated in the article that BNSF is raising rates to route more traffic to its new 110-car loading operations, where the railroad would save money by faster loading times. Richard Owen, executive vice president of the association stated “It would be OK if they wanted to do that in a competitive environment, but when you have a monopoly, we think the ground rules need to be different.”