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Burlington Northern Limits Some Cargo as Imports Rise

June 26, 2004|From Bloomberg News

Burlington Northern Santa Fe Corp., the largest U.S. railroad by shipments, said Friday that it had set limits on some eastbound international cargo from Los Angeles to prevent congestion as Asian imports rise.

The company started a system June 18 that sets maximum container-cargo volumes for ocean-shipment haulers, spokesman Richard Russack said. He declined to say how much business the Fort Worth-based railroad turned away or identify the customers affected.

L.A. is the busiest U.S. port, and cargo from Asia has risen 4% at that port this year and 14% at Long Beach, the second-busiest port. Canadian Pacific Railway this week also announced limits on container shipments from Vancouver's port, citing a surge in Asian imports.

"This will help Burlington Northern avoid a service crisis," said Morgan Stanley analyst James Valentine, who rates the company's shares "overweight" and doesn't own them.

The action also may help the railroad boost shipments of other cargo that moves by a rail-truck combination and has higher profit margins than international business, he said.

Burlington Northern wants "to keep our network fluid," Russack said.

Burlington Northern's shipments of goods that move by a rail-truck combination rose 11% in this year's first five months. That was more than four times the increase for Union Pacific Corp., the biggest U.S. railroad by sales, a trade group said. Union Pacific last week said it had turned away some shipments because of delays after business unexpectedly surged in late 2003.

Burlington Northern's action is limited to shipments at the Hobart rail terminal southeast of downtown L.A., Russack said. The railroad also loads shipments directly onto its trains at port facilities. No date has been set for ending the allocation system, under which ocean cargo companies get a daily maximum after the railroad receives requests, he said.

"Whatever doesn't get allocated doesn't get handled on that particular day," Russack said.

Shares of Burlington Northern fell 31 cents to $34.59 on the New York Stock Exchange.

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