BNSF poised to turn around 'crummy' year: Exec

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Burlington Northern Railroad has put investments in place to keep pace with growing shipments of crude oil and make up for a "crummy" year in 2014, Executive Chairman Matthew Rose said Friday.

"We knew that we had a different supply chain mix. The energy industry was really moving quite quickly, and we were trying to put in capacity. It's kind of like trying to overhaul an engine as you're going down the highway. A lot of challenges, [it was a] really crummy service year," he said on CNBC's "Squawk Box."

He said BNSF has started to get its rhythm after putting in historic investments of $5.4 billion to keep pace with increased rail traffic. The company struggled to handle a 400,000-unit increase last year as drillers shipped greater amounts of crude oil from North Dakota's Bakken oilfields and farmers produced a bumper agriculture crop.

"Quite frankly, it was more business than we can handle, and we don't have a good way to say, 'No, we don't want your business, no we don't want your business,' when the ag all came, the oil all came. The consumer was coming back," he said. " It's a world-class problem to have, but it's still a great problem."

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Rose made his comments in an interview from Omaha, Nebraska, where investors are gathering for Berkshire Hathaway's annual meeting on Saturday. The multinational conglomerate purchased BNSF in 2010 for $26 billion.

In its annual letter to shareholders, Berkshire Hathaway made the rare move of singling out BNSF as a laggard among its portfolio of subsidiaries.

On Thursday, Warren Buffett told CNBC that BNSF had "improved dramatically" in terms of train velocity and earnings. He said investors should expect to see a "big change."

"That's turned around even faster than I thought it would," he said.

BNSF may see its cost rise as the United States considers additional regulatory measures following a series of train derailments involving cars carrying crude oil and other volatile cargo, including two BNSF derailments in the last 15 months.

Canada's transport minister Lisa Raitt will be in Washington on Friday for a joint announcement with her U.S. counterpart aimed at harmonizing safety regulations on shipping crude oil by rail, a politically sensitive issue on both sides of the border.

Raitt and U.S. Transportation Secretary Anthony Foxx are expected to demand that railroad companies equip cars with electronically controlled pneumatic brakes, a proposal the industry has aggressively resisted.

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Rose said BNSF believes the industry needs a stronger tank car and applauds President Barack Obama's administration for its leadership in pushing forward the issue. However, the company is concerned that making changes to address one subsection of the fleet could negatively impact capacity.

"Anything that anybody does that has potential to take away capacity has the potential to have a major impact to the economy," he said. "Capacity is not abundant. Even though we're spending our way into it, the last thing we want to do is have a regulation that automatically takes away capacity."

BNSF supports phasing in safer, next generation tank cars and retrofitting cars, he said.

—Reuters contributed to this article.

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