2019: Will BNSF electrify?
AUDIENCE MEMBER: Good morning. My name is Bill Moyer and I’m from Vashon Island, Washington. And I’m part of a team called “The Solutionary Rail Project.”
Interestingly, only 3.5 percent of the value of freight in the U.S. moves on trains. Berkshire Hathaway is incredibly well positioned with its investments in the northern and southern trans-con through BNSF to grab far more of that freight traffic off of the roads and get diesel out of our communities, as well as harness transmission corridors for your Berkshire renewable energy assets, for which you’re obviously very proud.
Would you consider meeting with us to look at a proposal for utilizing your assets and leveraging a public/private partnership to electrify your railroads and open those corridors for a renewable energy future?
WARREN BUFFETT: No, I — we’ve examined a lot of things in terms of LNG. I mean, they’re — obviously, we want to become more energy efficient, as well as just generally efficient.
And I’m not sure about the value of freight. You mentioned 3 1/2 percent. I believe — I mean, I’m not sure what figure you’re using as the denominator there.
Because if you look at movement of traffic by ton miles, rails are around 40 percent of the U.S. — we’re not talking local deliveries or all kinds of things like that — but they’re 40 percent, roughly, by rail.
And BNSF moves more ton miles than any other entity. We move 15 percent-plus of all the ton miles moved in the United States.
But if you take trucking, for example, on intermodal freight, we’re extremely competitive on the longer hauls, but the shorter the haul, the more likely it is that the flexibility of freight, where a truck can go anyplace and we have rails. So, the equation changes depending on distance hauled and other factors, but distance hauled is a huge factor.
We can move a ton mile 500 — we can move 500-plus ton miles of freight for one gallon of diesel. And that is far more efficient than trucks.
So, the long-haul traffic, and the heavy traffic, is going to go to the rails, and we try to improve our part of the equation on that all the time.
But if you’re going to transport something ten or 20 or 30 miles between a shipper and a receiver, and they’re — you’re not going to move that by rail.
So, we look at things all the time, I can assure you.
Carl Ice is in — well, he’s probably here now, and he’ll be in the other room — and he’s running the railroad. You’re free to talk to him, but I don’t see any breakthrough like you’re talking about. I do see us getting more efficient year-by-year-by-year.
And obviously, if driverless trucks become part of the equation, that moves things toward trucking. But on long-haul, heavy stuff, and there’s a lot of it, you’re looking at the railroad that carries more than any other mode of transportation. And BNSF is the leader. Charlie?
CHARLIE MUNGER: Well, over the long term, our questioner is on the side of the angels. Sooner or later, we’ll have it more electrified. I think Greg (Abel) will decide when it happens.
WARREN BUFFETT: Yeah. But we’re all working on the technology but —
And we’re considerably more efficient than ten, 20, 30 years ago, if you look at the numbers. But it —
One interesting figure, I think right after World War II, when the country probably had about 140 million people against our 330 million now, so we had 40 percent of the population. We had over a million-and-a-half people employed in the railroad industry. Now there’s less than 200,000 and we’re carrying a whole lot more freight.
Now, obviously there’s some change in passengers. But the efficiency of the railroads compared to — and the safety — compared to what it was even immediately after World War II has improved dramatically. Charlie, anything more?
CHARLIE MUNGER: No.