A critical shortage of railroad boxcars has crippled the grain industry in Montana, causing the Interstate Commerce Commission to order all of the nation's railroads to immediately ship Burlington Northern's boxcars to that state.
Burlington Northern, a major mover of grain in the West, has been caught short of cars in recent months because many of the cars they share with other railroads have not been returned yet.
Meanwhile, about 10 million bushels of Montana wheat has piled up, awaiting belated shipment to the West Coast. Most of it is intended for Asian markets.
"If we don't get things moving in a couple of days, the exporters on the West Coast, who expect 10 million bushels by Feb. 28, are going to charge Montana grain companies about $50,000 a day in penalties," said Keith Kelly, agricultural aide to Governor Thomas Judge.
Kelly said the delays, if they continue, "could cost industry in this state up to a million dollars by the end of this month."
He said grain companies have stopped ordering grain from the local farmers because of the growing reserves.
Agriculture is Montana's leading industry, and grain represents more than 50 per cent of that industry.
Responging to a plea from Governor Judge, ICC Chairman Dan O'Neal issued the following statement yesterday:
"These shortages (of boxcars) are preventing the orderly flow of grain to markets both domestic and export, and are causing severe economic loss to producers and shippers of grain dependent on the Burlington Northern for transportation."
Then O'Neal ordered all railroads to return to BN all 40-foot boxcars and large capacity, covered hopper cars.
It is common practice for various railroads to share boxcars with each other on a pay-as-you-use basis regulated by the ICC. This system was established to keep shipping costs down by eliminating movement of empty cars.
Burlington Northern is a major grain shipper, and Montana is the third largest grain-producing state, behind Kansas and North Dakota. According to Kelly, Nebraska and Colorado grain companies have begun to sell their grain to West Cost importers who refuse to wait any longer for Montana's grain.
In a separate development, Eastern and Western railroads have agreed to seek a general 4 percent freight rate increase effective July 1, if they can get Southern lines to go along with them.
The move represents a compromise between the East and West carriers. In January the Eastern carriers proposed a general 6 percent rate rise, effective May 1, but the Western lines hesitated about joining that request.