Merger markup: BNSF hiked grain train charges as much as 472%, UP says in complaint

BNSF Railway has canceled longstanding reciprocal switching rates for some unit grain train shipments, which has forced Union Pacific customers to pay a higher per-car merchandise train rate, UP said in a complaint filed with federal regulators on Friday.

“This action almost tripled the switching rate for unit train grain shipments bound for Union Pacific,” UP’s complaint states. “Indeed, BNSF (NYSE: BRK-B) informed multiple customers and Union Pacific (NYSE: UNP) that it would refuse to perform reciprocal switching for unit trains of grain shipping to or from customer facilities via Union Pacific.”

BNSF also has increased reciprocal switching rates for other commodities at a few locations, UP said, including a 472% increase for most shipments at Grand Island, Neb.

“These dramatic changes have a common element – they are occurring at locations where Union Pacific has recently won or grown business from customers located on BNSF’s lines to which Union Pacific has reciprocal switching access,” UP told the Surface Transportation Board in a 129-page complaint. “BNSF’s changes to longstanding rates and practices were made with little advance warning or explanation.”

UP said it believes BNSF aims to make UP service noncompetitive “and thus to force shippers to use BNSF service rather than their reciprocal switching access to Union Pacific.”

UP said the BNSF reciprocal switching rate for unit grain train shipments at 90 locations was $105 per car, well below the $295 per car rate applicable to other cars switched at those locations. BNSF has eliminated the unit grain train switching rate at Hastings, Havelock, and Lincoln, Neb., Island Park, Iowa, and Saginaw, Texas.

“The effect of this change would be to increase the switching rate for unit grain shipments shipping via Union Pacific at those locations by 281% (from $105 to $295),” UP said.

BNSF rejected unit train shipments bound for Island Park and Saginaw this month. In both instances, the trains had to be delivered in smaller blocks for interchange with BNSF.

UP has asked the STB to determine that BNSF’s changes are “unreasonable and unlawful.” UP also asked the board to prescribe reciprocal switching agreements at terminal locations.

BNSF spokesman Zak Andersen said UP’s complaint was without merit and called it “a transparent effort to distract attention from years of UP competition-defeating behavior that their attempted merger has put a spotlight on.”

BNSF, Andersen said, adjusted switch rules that were more than a decade old “and no longer reflected how operations at those facilities work in the real world.”