BNSF sees long-term, robust China growth: CEO

NEW YORK (Reuters) - U.S. railroad Burlington Northern Santa Fe Corp.(BNI.N: Quote, Profile, Research, Stock Buzz) sees long-term robust growth from customers bringing goods into the United States from China, the company's top executive said on Monday.

"We see a long, long window and the only thing that would stop that is some legislative trade embargo, which is not going to happen ... or (if) China overheated its economy," Chief Executive Matthew Rose said, speaking at the Reuters Manufacturing and Transportation Summit in New York.

Rose said that customers such as retailing leader Wal-Mart Stores Inc. (WMT.N: Quote, Profile, Research, Stock Buzz) have told the railroad to count on continued compound annual trade growth with China of 8 percent to 10 percent. Like other railroads, Burlington Northern Santa Fe has benefited from rising U.S. imports.

The Fort Worth, Texas-based company's CEO said U.S. railroads are backing a 25-percent investment tax credit that would provide more stimulus for good investments in infrastructure, but "would not be enough to make a bad investment happen."

Rising imports and a growing demand from U.S. utilities for coal have strained rail capacity, leading to complaints from customers over congestion.

The railroads respond that they have increased capital expenditures, but add there is only so much they can invest without guaranteeing decent returns. Rose said a tax credit would be better than a proposed trust fund, which some customers such as package delivery company United Parcel Service Inc. (UPS.N: Quote, Profile, Research, Stock Buzz) have suggested.

"(A trust fund) is a bad idea," Rose said. "(Investments would) not go where the market really needs it."

Rose said U.S. short line railroads -- there are currently around 500 of them -- will see consolidation in the years to come, with Class I companies -- the term for the major U.S. railroads -- buying and selling short lines in order to adjust productivity and capacity.

"We may see some Class I's filling in their network for productivity opportunities and capacity opportunities," he said. "Those short lines divested (by Class I's) will be those not needed for capacity."

Rose said that while high fuel costs have not apparently harmed the U.S. economy so far, that would change if rises continued unchecked.

"At some point, high energy costs will have a meaningful impact on the U.S. economy," Rose said.