BNSF and UP at loggerheads over Gulf Coast haulage traffic in Texas

WASHINGTON — BNSF Railway and Union Pacific are locked in a dispute over BNSF haulage rights traffic that moves over UP rails along the Texas Gulf Coast.

As part of UP’s acquisition of Southern Pacific in 1996, BNSF gained access to customers along UP between Houston and Brownsville, Texas, which also is a gateway to Mexico via interchange with Kansas City Southern de Mexico.

The traffic has moved in UP trains five to seven days per week ever since, connecting BNSF with the Port of Brownsville via the Brownsville & Rio Grande International Railway, and interchange with KCSM. But UP notified BNSF last month that it intended to cut service back to two days per week because BNSF’s volumes didn’t justify more frequent service.

UP also wants BNSF to shift Houston interchange from UP’s Englewood Yard to BNSF’s Pearland Yard or the UP-BNSF interchange point of Algoa, Texas; pre-block southbound traffic; have its connections pre-block northbound traffic; as well as to provide its own locomotives for separate trains to carry Brownsville and KCS traffic rather than move the cars in UP’s own trains.

BNSF has cried foul and informed the Surface Transportation Board that it is seeking arbitration over the matter.

“Currently, BNSF delivers and receives its Houston interchange and its Houston-Brownsville haulage cars at UP’s Englewood Yard, by longstanding agreement of UP and BNSF local operating personnel. UP hauls BNSF traffic on the line five-to-seven days a week — the same frequency that UP moves its own traffic on the line,” BNSF told the STB last week.

The railroads were unable to resolve their differences, and UP this week implemented some operational changes.

“UP’s unilateral decision to reduce BNSF’s service to two days per week would unfairly disadvantage BNSF’s customers and would flout the Board’s order for UP to provide BNSF with non-discriminatory haulage services on this line,” BNSF told the board. “BNSF estimates that the service reduction will have the potential to disadvantage BNSF’s customers by generally three-to-four days’ delay in transit time in each direction as compared to UP traffic moving over the same line. Moreover, the UP decision will have upstream impacts to the BNSF network because BNSF will be required to hold volumes at distant locations in order to accommodate UP’s arbitrary service plan. BNSF is concerned that UP is imposing one-sided operational changes on BNSF in order to lower the costs of UP’s Houston operations at the expense of the rights to competitive BNSF service that shippers secured from the Board in connection with the UP/SP merger.”

UP, in a response to the STB this week, disagreed with BNSF’s view of the situation. UP says it wants BNSF to require haulage movements to be considered on the basis of trainloads, rather than carloads.

UP also sought to arbitrate whether it could charge BNSF for switching cars that were not properly blocked for haulage movements. And UP also sought to clarify whether it could require BNSF to provide power for haulage trains.

“It is our understanding that the Union Pacific and BNSF operating teams recently agreed that BNSF will provide two blocks of cars to UP for southbound haulage movement,” UP told the board. “We expect BNSF will continue providing these two blocks, as agreed, during the pendency of this arbitration. If BNSF makes any changes to its operations, then Union Pacific will necessarily have to review its own operations and may adjust as appropriate.”