I think it's mainly because they are goind with the cheaper alternative at the moment. I mean finding cheaper options is normally bad........ but yeah "normally"
Does anyone know who the signatories to the 1980 agreement were and if they are still alive?
Ed Burns
Murphy Siding Ulrich Murphy Siding Ulrich Murphy Siding Ulrich Possibly a pre-emptive purchase by BNSF. The last thing BNSF would want is a sale of MRL to CN or CP. I thought MRL was connected to BNSF at both ends and most of their traffic came from BNSF. That seems like it would be an unlikley purchase by any other railroad. Unlikely.. but what if BNSF wasn't interested? Then it becomes more likely.. I dunno. If BNSF wasn't interested and they were the main traffic source, why would anybody else be interested? A profitable bridgeline operation with connections and on line growth potential was good enough for Denis Washington all these years and would be good enough for me as well. Likely MRL could have found another buyer were BNSF not interested.. Unless I'm seeing it wrong, BNSF controls how much traffic goes over the line and thus, how profitable the line is or isn't. If you're a competing Class 1, are you still interested?
Ulrich Murphy Siding Ulrich Murphy Siding Ulrich Possibly a pre-emptive purchase by BNSF. The last thing BNSF would want is a sale of MRL to CN or CP. I thought MRL was connected to BNSF at both ends and most of their traffic came from BNSF. That seems like it would be an unlikley purchase by any other railroad. Unlikely.. but what if BNSF wasn't interested? Then it becomes more likely.. I dunno. If BNSF wasn't interested and they were the main traffic source, why would anybody else be interested? A profitable bridgeline operation with connections and on line growth potential was good enough for Denis Washington all these years and would be good enough for me as well. Likely MRL could have found another buyer were BNSF not interested..
Murphy Siding Ulrich Murphy Siding Ulrich Possibly a pre-emptive purchase by BNSF. The last thing BNSF would want is a sale of MRL to CN or CP. I thought MRL was connected to BNSF at both ends and most of their traffic came from BNSF. That seems like it would be an unlikley purchase by any other railroad. Unlikely.. but what if BNSF wasn't interested? Then it becomes more likely.. I dunno. If BNSF wasn't interested and they were the main traffic source, why would anybody else be interested?
Ulrich Murphy Siding Ulrich Possibly a pre-emptive purchase by BNSF. The last thing BNSF would want is a sale of MRL to CN or CP. I thought MRL was connected to BNSF at both ends and most of their traffic came from BNSF. That seems like it would be an unlikley purchase by any other railroad. Unlikely.. but what if BNSF wasn't interested? Then it becomes more likely..
Murphy Siding Ulrich Possibly a pre-emptive purchase by BNSF. The last thing BNSF would want is a sale of MRL to CN or CP. I thought MRL was connected to BNSF at both ends and most of their traffic came from BNSF. That seems like it would be an unlikley purchase by any other railroad.
Ulrich Possibly a pre-emptive purchase by BNSF. The last thing BNSF would want is a sale of MRL to CN or CP.
Possibly a pre-emptive purchase by BNSF. The last thing BNSF would want is a sale of MRL to CN or CP.
I thought MRL was connected to BNSF at both ends and most of their traffic came from BNSF. That seems like it would be an unlikley purchase by any other railroad.
Unlikely.. but what if BNSF wasn't interested? Then it becomes more likely..
I dunno. If BNSF wasn't interested and they were the main traffic source, why would anybody else be interested?
A profitable bridgeline operation with connections and on line growth potential was good enough for Denis Washington all these years and would be good enough for me as well. Likely MRL could have found another buyer were BNSF not interested..
Unless I'm seeing it wrong, BNSF controls how much traffic goes over the line and thus, how profitable the line is or isn't. If you're a competing Class 1, are you still interested?
MRL was guaranteed a certain level of traffic. I've read elsewhere that when Krebs' wanted it back they tried rerouting trains away from MRL. Tried to "starve" them out. Because of the guarantee, they ended up paying MRL the difference.
Jeff
Regarding bridge traffic then and now: No author had better access to, deeper ties with, or better knowledge of MRL in its early years than Billings-based Kyle Brehm. In his superb two-part story in the March and April 1990 issues of Railfan & Railroad, Brehm noted that, in addition to locals, MRL operated one through freight both directions between Spokane and Missoula, and between Missoula and Laurel. He then said, "Where the Link in Montana Rail Link really comes into play is the forwarding of BN traffic through southern Montana. Amounting to about ten trains each way a day, most of BN's traffic between the Pacific Northwest and the Gulf States that had been using the line before MRL still travels that way, except now it's an MRL crew from Spokane to Laurel."
Do note also that MRL's traffic base when it took over in the 80s is not the same as it's traffic base now. It didn't used to be "All Bridge Traffic" that is a relatively recent change.
BNSF and BN before it always wanted it back. Was originally done as I understand it as a union busting scheme with the thought being that MRL wouldn't make a go at it and Burlington Northern could soon have their way (The same era as their Winona Bridge scheme that I think one of you already made reference to). Yet MRL very much made a go at it despite some early violence.
The surprise here isn't that BNSF is getting it since that's always been the foregone conclusion. The surprise is that MRL is closing up before the lease expires in 2047 (Millionaires don't typically just liquidate successful assets in their old age, so I suspect there's more to this story). It's been the widely held view for decades that MRL would survive until then, with little hope of getting a lease extension at that time with the result being that BNSF gets their mainline back under in-house control.
Murphy SidingI thought MRL was connected to BNSF at both ends and most of their traffic came from BNSF. That seems like it would be an unlikley purchase by any other railroad.
UP connects at Sandpoint, ID, and continues to Portland and thence Seattle. UP also connects in the middle of MRL at Butte. To the east of MRL, there was the ex-MILW which was owned at one time by the State of SD and a shortline thru MN to Minneapolis where the UP connects to Chicago. However, BN bought out the SD link, so the line is no longer continuous.
I would be suprised if BN did not have some sort of "First Right of Refusal" for any pending sale.
CatFoodFlambe I have absolutly NO knowledge of the terms of the lease - but could MRL have been sold to interests other than BNSF which could have ransomed the BNSF overhead operation to extort a higher price? There are certainly financial entities out there who are capable of doing so.
I have absolutly NO knowledge of the terms of the lease - but could MRL have been sold to interests other than BNSF which could have ransomed the BNSF overhead operation to extort a higher price? There are certainly financial entities out there who are capable of doing so.
Well, more power to Warren Buffett then.. MRL did quite well with no track of their own and mostly bridgeline traffic. I guess the party had to stop at some point.
CN or CP don't have a physical connection. The traffic was bridge traffic for BNSF with very little originating and terminating traffic. This line is owned by BNSF. CN and CP aren't even a factor here... Nor would anybody else be...
Thanks to Chris / CopCarSS for my avatar.
And I was just getting used to the Wisconsin Central being gone.
As already stated multiple times, BNSF OWNS the track. MRL just had a lease. So MRL doesn't have any track to sell. CN or CP could buy the company and BNSF could likely immediately terminate the lease.
That and BNSF already owns the mainline track MRL operates. Also, I would suspect that BN/BNSF had first right of refusal to purchase MRL and/or the ability to quash any hostile acquisition.
MRL has always been a neat operation, but it is a monument to the short-sighted thinking of BN in the 1980's. Part of the reason behind BN's acquisition/merger with the Santa Fe was getting a real CEO to run the railroad - Rob Krebs. Krebs is the one that tried to get the MRL lines back in the late 1990's. He saw how stupid a move that was. However, as my dad likes to say, some things are easier to get into than out of.
After the architects of the 1970 merger retired, new non railroad management came on board and sold or short lined a few lines. About 20 years later present management realized the foolish moves. One example was the X CBQ line from Soo City to O Neil and it was taken back years later.
The MRL move was a fiasco and the BN was sorry they signed the agreement before the ink was dry on the contract.
Retired Clerk from Northtown Minneapolis.
I read on another site that the founder of the Washington group and the MRL is now 87 years old. He is a widower as his wife died before him and more than likely just wants to enjoy the rest of his time and this way will make sure his little piece of history will still live on. He proved to the BN and now BNSF that it is needed to their network so they will not be tearing up the tracks. He gets paid very well his employees all get to keep working for their new owners and the best part is he made a trainload of money in his deal that he can spread around now.
jeffhergert I would guess the reason is probably along the lines of Washington wanting to to cash out. The talk about improving/removing interchange really isn't a big deal. The haulage rights trains MRL handled wouldn't go through the interchange process. Only originating or terminating traffic on MRL would be truly interchanged.
I would guess the reason is probably along the lines of Washington wanting to to cash out. The talk about improving/removing interchange really isn't a big deal. The haulage rights trains MRL handled wouldn't go through the interchange process. Only originating or terminating traffic on MRL would be truly interchanged.
I don't have any inside information, but my bet is that you're correct: Washington was ready to cash out and the railroad is worth more to BNSF than to anyone else.
The haulage rights work OK, but having direct control makes it a lot easier to work the line into the long-term strategic plan. It's always awkward for either party to make major investments in improving a property that is under a long-term lease, and operationally there's a big difference between calculating the cost and benefits of a change versus having to negotiate those costs and benefits with another party.
When I first started in the BNSF Engineering Services department, the hot topic was a potential PNW export coal play, and we were planning a whole host of capacity improvements to support that traffic. I spent several months kicking off design work on siding extensions up and down the line from Laurel (Billings) to Shelby via Great Falls (and, in one case, trying to negotiate a private crossing relocation with a government entity).
As best I can recall, we hit a snag on one of the projects, and we reported up the chain of command that we would probably not be able to deliver the improvement in the expected year. The word came back down: No problem, we're canceling all those projects anyways. We finally reached an agreement with the MRL for the additional trains so we'll just send them that way.
And then, of course, in the end the export facility couldn't get permits, markets changed, and the whole opportunity disappeared.
That was my first lesson in the extraordinarily high mortality rate of railroad capacity projects, especially on lines and facilities that are not particularly strategic. It was also the first of many times where we had to invest a lot of planning effort into a growth opportunity that didn't pan out. (The Bakken crude-by-rail phenomenon occasionally felt like a dog that likes to chase cars and finally catches one...)
Dan
That MRL was receiving most of it's revenue from the haulage rights trains isn't new, either. They've been gauranteed so much overhead traffic. Clearly, without the overhead business MRL would never have been as big as it was. It would've been like other regionals living off on-line traffic. Admittedly, it sounds like the on-line business may not have been what it once was.
There are some details missing. In some ways it sounds like MRL is liquidating it's non leased assets and returning the leased ones to BNSF. Yet, other details make it sound like BNSF is absorbing the company as a separate entity. Details such as being able to keep MRL employees and it sounds like at MRL wage rates, work rules and benefits. (Could keeping an MRL entity in their pocket mean they might try and use it as a vehicle to bypass union negotiations on crew consists? Remember years ago when they wanted to go to engineer and conductor crews and threatened to lease the Chicago to Seattle main line to the Winona Bridge Railway Company?) MRL train and yard crews are represented by the BLE&T. The BNSF has BLE&T for enginemen, SMART (formerly UTU) for trainmen. My understanding is that the Northern Lines of BNSF (I believe that includes all of the pre Frisco BN.) have system seniority on the trainmen's side. SFbrkmn, feel free to jump in and correct anything I'm mistaken on.
Interesting times ahead.
To me - it soulds like the culmination of the original agreement that created the MRL as a way of setting it up as a 'short line' and thus break the existing labor agreements that were in effect on the territory prior to the establishment of the MRL. I have no fear that the MRL was a 'union busting' play.
Never too old to have a happy childhood!
How was the lease structured? Did MRL pay an up-front price, or rent? Didn't BN have contingencies for a take back? Did they have first right of refusal, and some guard-rails on re-acquisition price?
It would be interesting to see what ton-miles were on MRL in 1987 when BN decided the trackage was "excess to their needs" versus what they are today.
On a related note, I would suspect ton-miles on the former GN main line are higher today than they were in 1987 when BN thought they could handle all Northwest-Upper Midwest traffic on just the GN mainline.
BNSF has also been developing traffic between the Northwest and Texas in the last several years utilizing the former Fort Worth & Denver and CB&Q up to Montana and then former NP over to Washington.
Ok. Montana Rail Link. Here’s my analysis.
BN leased the line in 1987 for a number of reasons. These include but are not limited to:
One thing to point out is MRL’s structure. The construction of the Northern Pacific was funded using government-issued bonds which are not scheduled to be paid off until 2047. The NP or its successors are not allowed to sell any part of the railroad whose construction was financed using those bonds, so the MRL mainline is leased not owned. The branchlines, having been built using private capital much later, are owned. Most thought that when those bonds were finally paid off in 2047, MRL would either buy it's mainline outright or sell to BNSF. So this came as quite a surprise to everyone.
Now of course why would MRL sell and BNSF buy now?
For one thing, Dennis Washington, owner of MRL, is 87 years old. He might want to cash out on his railroad so he can spend his remaining years in relaxing splendor. MRL is extremely profitable. While we don’t have exact figures, we can be sure it generates a profit of over $500 million. We know this because back in 2020 MRL had the STB raise the Class I profitability threshold from $500 million to $900 million. MRL easily fetches a price of $2-$5 billion.
BNSF can easily afford MRL. Mr. Buffet is BNSF’s owner after all and he could easily afford to buy the entire railroad industry and have plenty left over. Now, despite having sold the railroad, BN/BNSF never truly packed up and left. They kept haulage right to facilitate the movement of trains from the Upper Midwest to the Pacific Northwest. Anything that can’t go over the ex-GN line though Northern Montana goes via MRL. The number of BNSF haulage rights trains has steadily increased over the years and now they account for the vast vast vast majority of trains polishing MRL rails. BNSF sends between 25 and 30 trains a day over MRL.
Taking back control of MRL also makes sense when you put today’s stressed supply chains into view. BNSF now fully controls one of its key mainlines. Having to stop and “change railroad” so to speak will always slow down travel time and make it harder to grow traffic. It’s why railroads stress single-line service as much as possible.
So in conclusion, Mr. Washington realized that MRL wasn’t what it used to be and could snatch a pretty penny from Mr. Buffet, who was willing to buy, and the two made a deal.
Can’t say I'm surprised.
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