Two Class I railroads, BNSF Railway and CN, recently offered up their rebuttals to leadership at the Department of Transportation’s Surface Transportation Board (STB), regarding ongoing concerns over railroad service issues.
This comes on the heels of letters penned earlier this month by STB Chairman Ann Begeman and Vice Chairman Deb Miller to the top executives at the seven North American Class I railroads, requesting each carrier’s service outlook for both the near term and the rest of 2018.
As previously reported by LM, these letters noted how the STB “has become increasingly concerned about the overall state of rail service based on the weekly data collected.” And they noted that most Class I railroads’ data indicate that service is deteriorating, while system average dwell time has climbed. For those same railroads, other key metrics-such as the average number of cars in revenue service that have not moved in 48 hours or more-are trending in an unfavorable direction, STB said.
STB leadership requested that each Class I railroad carrier to provide a written response related to their respective outlooks for rail operations across their networks to address various issues related to rail service adequacy, including: locomotive availability; employee resources; local service performance; demand; communication; and capacity restraints. A deadline for replies from Class Is was not mentioned in the letters.
While a deadline was not cited, that did not stop two Class I carriers, BNSF and CN, from being proactive and submitting their replies to the STB.
CN President and CEO J.J. Ruest wrote that that his company recognized last year that the unexpected growth coming to its network was going to require additional locomotives, and in December 2017 it made an announcement that it was going to purchase 200 new GE locomotives for its largest order since 2014, with the first 60 locomotives to begin arriving in June 2018.
“In order to boost our capacity immediately, we have leased 130 locomotives, which came online in the first three months of the year,” wrote Ruest. “We are confident that with the leased equipment and the delivery of new locomotives later this year, CN has the power we need.”
Ruest also highlighted other efforts CN has been making to augment its service levels, including: an aggressive hiring plan in bringing on 3,400 new employees for train crews in 2017 to meet gains in volume growth; making sequential improvements in various operating metrics, including train speed, network velocity, and reducing port dwell times and ground counts at its major intermodal ports.
CN does not plan to adjust its current volume guidance of a 3-5% revenue ton-mile growth in 2018, and Ruest said CN is confident that the steps we are taking will leave it well positioned to handle our volumes, particularly in the second half of the year.
“[W]e are acquiring the equipment, hiring the people, building the track infrastructure, and continuing to invest in technology to be well positioned for 2018 and beyond,” noted Ruest. “We will meet the needs of an expanding North American economy and the growing supply chain service demands of our customers.”
Citing challenging operating conditions at different locations along its Northern Transcon during the winter months, BNSF Railway President and CEO Carl Ice wrote in his letter that BNSF believes the worst of those impacts are behind them as the carrier heads into spring.
“During the first few months of the year, winter weather-including heavy snow and below-zero temperatures-impacted velocity and fluidity on portions of our primary route between the Pacific Northwest and the Midwest,” he wrote.
But things have improved of late, with Ice noting that total volume moved by BNSF marks a historic high for this time of year as BNSF topped 200,000 units for five straight weeks and eight of the last nine weeks through March 22. And he also pointed out that for the same period dwell time has dropped by more than 7% annually on a year-to-date basis despite two simultaneous derailments in February on both Southern Transcon Northern HiLine along with two trains being stranded for multiple days under snow and ice on single mainline track sections of the HiLine, which caused major intermodal disruptions, he said.
“BNSF ‘s business model has always been to grow with all of our customers who want to ship on our railroad, earn value for the service we provide, and reinvest back into the railroad to be positioned for future growth,” wrote Ice. “Our record investments in capacity and maintenance over the past several years have positioned us well to meet our customers’ expectations. Weekly carloads have increased during 2018 and, despite seasonal challenges, we continue to gain momentum as spring approaches. As the economy continues to improve, additional volume is anticipated and we believe that we are prepared to handle that traffic; however, we will not hesitate to add infrastructure, equipment, and people to handle this anticipated growth.”
While the STB issued a mandate to Class I railroads over service plans, Larry Gross, president of Gross Transportation Consulting, said that it is not really in a position to accomplish much except for indicating to railroad management that this is an issue that is significant and they cannot treat it as business as usual.
“The railroads have generally demonstrated that they are not really good at flexing upward quickly and they don’t have that capability anymore, so they were caught off guard and now they have been digging out,” Gross said. “When they say ‘we had terrible weather,’ well, winter comes every year, especially in Canada, and I think one of the problems is that these massive trains they are running now i.e. these very long 12,000 foot monster trains have been very efficient… but in the winter that creates some issues and makes them perhaps a little more vulnerable to the cold weather operating conditions and then they have to shorten the trains up and flex up more resources…but that is all pretty predictable.”
One of the things these service issues is illustrating is the interconnected of the North American network, where it is not possible for one railroad’s issues to remain isolated, and Gross explained that is certainly what is happening on the intermodal side, primarily in Chicago where one railroad gets behind mainly because of dray capacity issues.