Burlington Northern Santa Fe Railway changed routes rather than pay higher rates
Besides racking up eye-popping balances on his public credit card and spending lavishly to restore a pair of vintage railroad cars, the embattled top administrator of the New Orleans Public Belt Railroad took a big gamble on the agency's future when he slapped a huge series of price hikes on the railroad's biggest customer.
View full sizeOverall train revenue for the New Orleans Public Belt Railroad in 2009 was just $15 million, about three-quarters of the 2007 level.Public Belt general manager Jim Bridger knew at the time that he might lose the Burlington Northern Santa Fe Railway account. But he figured other customers would make up the difference.
So far, the gamble hasn't paid off.
While fees paid by Burlington Northern in 2007 made up nearly half of the Public Belt's $20.8 million income from train operations that year, that amount plummeted 80 percent to just $2 million last year, an in-house analysis shows.
Two other railroads did cover some of the losses by doing more business with the Public Belt, the analysis shows. But overall train revenue in 2009 was just $15 million, about three-quarters of the 2007 level.
Bridger, who could face disciplinary action today when the board that oversees the railroad meets to discuss his opulent spending habits and related agency policies, has said "poor performance" by Burlington Northern forced him in late 2007 to jack up its fees.
Burlington Northern's trains consistently arrived hours late to use the 25 miles of city-owned track that stretches across the Huey P. Long Bridge, through the Port of New Orleans and on to eastern New Orleans, Bridger said. Financed by user fees, the Public Belt receives no tax revenue but operates tax-free.
The frequent delays threw off the schedules of the other five major railroads that use the Public Belt, threatening to drive those customers away, Bridger said.
"When you have six railroads feeding you cars and trains, they've got to be on a schedule," Bridger told The Times-Picayune last month. "It's like running Louis Armstrong airport. You've got to know when each airline is going to be coming in, and if you just have a plane show up, you know, whenever and say, 'I need to land,' that really throws a wringer in the entire transportation plan and being efficient.
"I told the board (of commissioners) what we were doing, that we were pulling away from the BN because of their inconsistency and bringing on the other carriers," he said. "They just weren't telling us what was coming. It was hell."
Bridger's frustration came through loud and clear to Burlington Northern. E-mail messages sent last year by a top Burlington executive show the company walked away from the New Orleans railroad -- opting instead to use another line through the city called the "back belt" -- because of what it saw as exorbitant rates charged by the agency and a flippant attitude by managers who handled the account.
"BNSF was made to clearly understand that NOPB did not particularly want our business, but if we insisted on using NOPB we would have to settle with whatever rates were announced to us ... and would have to conform to priorities set by NOPB," Rollin Brendenberg, the company's vice president for service design and performance, wrote in May 2009 to Jimmy Baldwin, president pro tempore of the Public Belt's board.
The messages from Brendenberg say the company was trying to do better by the Public Belt, with some success. According to the correspondence, Burlington Northern improved its on-time performance to 80 percent by March 2008. That compares with on time-arrival rates ranging from 10 percent and 44 percent in the last four months of 2007, according to a December 2007 letter from Bridger.
The handling of the Burlington account raises questions about Bridger's assertion that, since taking the reins at the Public Belt in late 2001, he has transformed an outmoded, flailing railroad that had been failing to maximize its earning potential.
A former New York railroad executive who earns $350,000 a year, Bridger claims he has remade the Public Belt into a "gold-plated" system poised to provide services key to the region's economy for the next three decades. In addition to providing crews and locomotives to move trains along its tracks, the Public Belt holds a monopoly over traffic at the port, and it can reorder cars from a single train into several new ones based on cargo destination in a process known as "blocking."
According to Brendenberg, Burlington Northern until last year used the Public Belt to move its trains through the city, eschewing the alternative back belt, a Norfolk Southern Railway line running through Metairie and Gentilly that generally is known as cheaper but slower than the Public Belt.
Between 2005 and mid-2008, however, the Public Belt nearly doubled Burlington Northern's rates to $25.02 per car, Brendenberg's messages indicate. While the agency publishes certain fixed tariffs, other fees are "extremely confidential as we negotiate each railroad's rate structure separately," Bridger said in an e-mail message Tuesday. Bridger confirmed the Burlington Northern rate hikes.
Burlington Northern eventually switched to the back belt, which charged just $2.56 per car, according to e-mail correspondence. That's nearly 90 percent less than the Public Belt.
Subsequent e-mail messages among Brendenberg, Bridger and other agency staff show that the Public Belt claimed that its cost to handle Burlington Northern's traffic amounted to $22 per car. That sum, however, did not seem credible to Brendenberg.
"How can your costs possibly amount to $22.00 per car? That is more than twice the per-car mile rate BNSF pays for trackage rights anywhere on the system," he wrote.
Bridger said Tuesday that Burlington Northern's bargain-basement rate at the back belt was negotiated under a 99-year contract with the now-defunct Southern Railway, a Norfolk Southern predecessor. "We can't compete with that," he said.
Even as Brendenberg continued to negotiate for a better deal with the Public Belt, though, he described his company's new set-up on the back belt as a plum. "In actual practice, we now find that we are not only saving 60 percent of the effective June 2008 operating costs but we're moving most of the traffic through the gateway a day faster," he wrote.
Bridger has said that the economic recession took some of the wind out of his strategy to cover lost income from Burlington Northern by increasing service to the Kansas City Southern and Union Pacific railroads. Indeed, while income from those two customers doubled and tripled, respectively, from 2007 to 2009, the additional income didn't cover the huge losses from Burlington Northern, the analysis shows.
Bridger says overall rail traffic is down because of the recession. A monthly inventory of train cars crossing the Huey P. Long Bridge seems to back him up. The count shows that traffic fell by 25 percent in recent years, from about 42,300 cars per month in 2007 to about 32,000 cars per month last year. Because of the location of their tracks, only trains from the Union Pacific, Burlington Northern and the Public Belt use the bridge.
"Had I known there was going to be a world recession that was going to be the worst since the Great Depression, we would have probably tried to hang on (to Burlington Northern) a little longer," he said.
Bridge traffic has rebounded a bit this year, with an average of 36,250 train cars crossing the bridge monthly.
Michelle Krupa can be reached at mkrupa@timespicayune.com or 504.826.3312.