BNSF Logistics
Springdale, Arkansas USA
March 3, 2003
By:
Evan Armstrong

Key Personnel:
Eric Wolfe, President
Todd Hoyt, VP Marketing

From zero to $150 million in two years. That accelerated rate of turnover growth for BNSF will continue through FY 2004, according to BNSF President, Eric Wolfe. Acquisitions will make up a large chunk of Wolfe’s plan, but organic growth will contribute over half of the expansion. At a time when most 3PLs are trying to mine mid-market accounts, BNSF’s organic growth will come from signing large accounts by offering unique service solutions.

Frito Lay, Wal-Mart de Mexico, U.S. Borax and others are buying integrated truck-rail solutions as BNSF moves into the lightly populated niche where value-added services are mixed with the two major transportation modes.

As part of its offering within this niche, BNSF Logistics is now moving to coordinate activities with those of its parent company’s warehouse/crossdock network. This service will be used primarily for railcar transloading to trucks.

Among these new niche relationships is a bulk potato operation for Frito Lay. This service involves loading TOFC refrigerated trailers near the border of Minnesota. The trailers are offloaded in Chicago and travel by highway to the processing plant in Frankfort, IN.

BNSF provides a different rail/truck service for Wal-Mart de Mexico in addition to providing trucking capacity into Wal-Mart’s Laredo DC. Rail boxcar movements of dry dog food are made from Texas to Mexico City and other major destinations where they are transloaded to trucks for delivery throughout Mexico. BNSF controls these movements from origin to destination.

For Home Depot, BNSF is managing intermodal and truck transportation of ceramic products to Home Depot international distribution centers strategically located in the U.S. In addition, BNSF delivers truck capacity to Home Depot for seasonal surge movements of lawn mowers and other products. Home Depot uses BNSF to deliver store racks and other fixtures requiring flatbed service.

All of these major accounts are also BNSF Railway customers and BNSF Logistics benefits from cross-selling opportunities.

Other value-added services include dedicated contract carriage, an expedited truck/rail service and pool distribution. BNSF’s dedicated contract carriage offerings utilize owner-operators for power. The expedited truck/rail service relies on Los Angeles – Chicago high speed intermodal coupled with truck delivery to the East Coast. Rates per mile for the joint service are in the $1.05 per mile range and four-day service is standard.

A major pool distribution customer is a restaurant furniture manufacturer with production facilities at two locations in Mississippi. Core contract carriers are used to handle truckload shipments to three flow-through centers controlled by BNSF. Final deliveries are made as less-than-truckload shipments from the flow-through deconsolidation centers.

Managing BNSF’s rapid expansion is a strong operations team under Wolfe’s leadership. Wolfe put most of the team together at J.B. Hunt several years ago. The team then traveled together from Hunt to Cardinal to BNSF.

This close knit group is long on operating experience. Key people like Lynda Norris in marketing have been added from the railway and others strengthening sales have come through acquisition.
Wolfe and his team have reasonable EBITS and have operated in the black consistently over the last two years. Under their tutelage, we expect BNSF to become one of the top North American 3PLs within the next five years.

Sources: A&A Primary Research, http://www.bnsflogistics.com/