Surface Transportation Board issues NPRM regarding weekly rail service metrics

On December 31, the Department of Transportation’s Surface Transportation Board (STB) said it issued a Notice of Proposed Rulemaking (NPRM) that proposes new regulations to require Class I railroads and the Chicago Transportation Coordination Office, through its Class I members, to report certain service performance metrics to the STB on a weekly basis.

This follows an October 8 temporary data collection order from the STB, which came on the heels of concerns expressed at public STB hearing, other communications, and data collected by the STB .

STB officials said that “[t]he collection of performance data on a weekly basis would allow the Board not only to better understand current service issues, but also to more quickly identify and help resolve possible future regional or national service disruptions. Transparency would also benefit rail shippers and stakeholders by helping them to better plan operations and make informed decisions based on publicly available, near real-time data, and their own analysis of performance trends over time.”

In October, when the STB announced it was requiring Class I railroads to
to publicly file weekly data reports on service performance, effective October 22, the STB said it was being done “in an effort to promote industry-wide transparency, accountability, and improved service.” And it added that this directive comes on the heels of a September 2014 STB hearing in Fargo, North Dakota focused on rail service issues that began in late 2013.

At that hearing and others hosted by the STB, the STB said that many rail shippers expressed concerns about the lack of publicly available rail service metrics and requested access to certain performance data from the railroads to help them better understand the scope, magnitude, and impact of the current service problems. The data collected pursuant to this order will give the Board and interested parties a better real-time understanding of the current rail service issues.

And the STB added that at the September hearing “stakeholders expressed a need for greater industry-wide transparency with regard to rail service, noting that “[S]hippers assert that performance metrics are important for rail users to plan logistics, minimize economic harm to operations and revenues, assist with business planning, and to better serve their own customers during the service-recovery period. Shippers have also stated that information would bring transparency regarding the extent to which the railroads are improving and resolving the ongoing service issues.”

These service issues stemmed from the harsh winter weather in 2013, with service capabilities slowly remaining on the mend.

“The railroads are diligently working to iron out their debilitating service issues,” wrote Stifel Nicolas analyst John Larkin in a recent research note. “Incremental locomotives, additional crews, expanded yards, extended passing sidings, additional passing sidings, and double track mainlines are all being added in an effort to restore service levels to those generated in 2012 and early 2013. Routing protocols are being reevaluated and carriers have developed plans to provide more fluid operations through Chicago. The CREATE project in Chicago continues to slowly eliminate bottlenecks, one at a time.”

The STB said it will require each Class I rail carrier to file the following on a weekly basis:
-system train speed by the following types of trains, intermodal, grain unit, coal unit, automotive unit, crude oil unit, ethanol unit, manifest, and all other;
-weekly average terminal dwell time, measured in hours, excluding cars on run-through trains, or cars that arrive at and depart from a terminal on the same through train, for that carrier’s system and its ten largest terminals in terms of railcar capacity;
-total cars on line by various car types for the reporting week, including box, covered hopper, gondola, intermodal, multilevel, open hopper, tank, and other;
-weekly average dwell time at origin for unit train shipments sorted by grain, coal, automotive, crude oil, ethanol, and all other train units;
-the weekly number of trains held short of destination or scheduled interchange for longer than six hours sorted by train type; and
-the weekly number of loaded and empty cars, stated separately, in revenue service that have not moved in (a) more than 120 hours, (b) more than 48 hours but less than or equal to 120 hours, among others

The Association of American Railroads (AAR) was somewhat skeptical about the impact of the STB’s decision to require weekly service metrics.

“We are examining the STB decision,” said AAR President and CEO Edward R. Hamberger in October.  “Since 1999, railroads have on a weekly basis voluntarily provided the STB and the public with railroad performance measures on terminal dwell time, velocity and cars online. It is unclear how the increased reporting requirements in today’s order will in any way lead to improved service.”

The AAR’s top executive added that railroads are investing and hiring at an accelerated pace to provide the capacity needed to meet growing demand as traffic continues to rebound to pre-recession levels.

Brooks Bentz, LM contributing editor and supply chain consultant, said these weekly service metrics reporting are not a huge deal for shippers or the Class I carriers.
“Getting timely, accurate data that is useful in the short-term may be a bit of a challenge, but otherwise I think it’s not a bad thing to have available,” he said. “The key will be in how the information is reported…is it consistent across all carriers, for example and how is it calculated.  It will likely take a while to work out bugs and anomalies, of course.”

Bentz said he does not think the notion of more frequent reporting is necessarily a bad thing, aside from the additional workload it imposes.  

“I’m not sure the ‘juice is worth the squeeze’ however,” he explained. “Generic reporting gives you a general impression of what is going on, but every shipper and consignee has different expectations and needs (e.g., the attributes of unit coal train performance are different from chemical tanks, plastic resin covered hoppers and intermodal boxes, as they are from each other). Real-time visibility and performance management tailored to each customer Supply Chain should be the end-game.  That goes beyond the reach of CLM messaging to a GPS-based type of reporting.  The technology exists.  What is needed is the corporate will on the part of customers and carriers to devise an economically feasible, industry-wide solution. If you need a knee replacement, you can put a brace on it and walk with a cane or you can bite the bullet and do the surgery.  The band-aid approach just puts off the inevitable.”

In addressing how service came to become such a major issue, Association of American Railroads President and CEO Ed Hamberger said at the RailTrends conference that major changes in traffic commodity mix, with two record grain markets and gains in domestic intermodal, too.

“What it takes [to meet demand] is investment, hiring, putting steel on the ground and buying locomotives, which is what we are doing,” he said. “The hard work that the industry is putting in is paying dividends in service improvements, but there is still a long way to go.”

He added that the industry is doing a lot of work in Chicago, which is the epicenter of the nation’s rail network, and that area will have a much higher level of network management in place, which he expects to lead to future service improvements.

And the high level of investments railroads are making into their networks needs to continue, noting that the sector has invested a cumulative $525 billion on service-related efforts going back to 1980, with $25 billion invested in 2013 and $26 billion in 2014. What’s more over the last three years the industry has hired 45,000 people, with 10,000 of those hired having served in U.S. armed forces.

For these levels of investment and hiring to continue, Hamberger said regulatory interference needs to be kept to a minimum.