BNSF News

Employees Trim Expenses Through Competitive Bidding

2009-11-02

Everyone is trimming budgets these days, so it's no surprise that BNSF is doing the same.

A group of just three individuals successfully trimmed more than $10.5 million in BNSF fuel costs, showing that even small teams can have a big impact on the bottom line.

Earlier this year, supply contracts providing about two-thirds of BNSF's fuel supply were put up for bid. The contracts represented about $2.5 billion worth of expense, based on the historical 12-month actual price of fuel and consumption. The expense reduction focused not on the total expense, which is driven by the price of crude oil, but on the variable components within the cost. These variable components -- including the margin charged by the refinery or distributor, taxes and the cost to distribute the fuel to BNSF's fueling locations -- can add more than $55 million to the total price.

This team of three, from Fuel Management and Fuel Logistics, noted that the market shift from last year could favor purchasers. Beginning in January, they mapped out a plan to develop alternative market quotes, sifted through the data and recommended changes to the provider network, netting more than $10 million in savings, or a 19 percent reduction in cost.

Because the demand at many BNSF fueling facilities exceeds locally available supply, the team had to coordinate supply from multiple vendors, often purchasing fuel from hundreds of miles away. They also considered the logistics of delivering the fuel via pipeline, truck and BNSF's own fleet of tanker cars.

"This is not as easy as shopping for gas at your local service station," said David Burr, assistant vice president, Fuel & Risk Management. "The team has to identify potential suppliers, negotiate the best prices and develop a plan to deliver the fuel to approximately 50 major and numerous small fueling facilities along the BNSF system. I am extremely proud of the job they do, as well as the entire Fuel Management team."

For their diligence to help the bottom line, these Fort Worth employees have received a BNSF Achievement Award.

• Kristi Radford, director, Fuel Management
• Mark Riney, manager, Fuel Logistics
• Allison Thies, manager, Fuel Logistics

The BNSF Achievement Award program, started in 1999, recognizes Team BNSF members who demonstrate BNSF's Vision and Values through initiative, efficiency, timeliness, vigilance, knowledge or innovation beyond normal job requirements. Every BNSF employee is eligible to be nominated for a BNSF Achievement Award. Employees may win more than one award during their careers. For more information about nominating a team or individual for an Achievement Award, visit the Communications tab on employee.bnsf.com.

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