STB issues railroad service-related NPRM in advance of hearing

Following an announcement it made earlier this month, when it said it would hold a hearing on April 26-27, regarding recent rail service problems and recovery efforts relating to various Class I railroad carriers, entitled “Urgent Issues in Freight Rail Service,” the Surface Transportation Board (STB), an independent adjudicatory and economic-regulatory agency charged by Congress with resolving railroad rate and service disputes and reviewing proposed railroad mergers said late last week that it has issued a notice of proposed rulemaking (NPRM) that “amend emergency service rules to provide relief for shippers in situations that require immediate relief.”

STB added that a key part of this proposal is to clarify it may act on its own initiative to direct emergency rail service and to also establish what it called an accelerate process for acute service emergencies.

STB officials explained that going back over the last year, it has heard from industry stakeholders regarding inconsistent and unreliable rail service, explaining that “in recent weeks, rail service has become more unreliable, with most stakeholder concerns focusing on crew shortages and inability to move trains. What’s more, they added that it has received reports of other challenges, including: tight car supply and unfilled car orders; delays in transportation for carload and bulk traffic; increased origin dwell time for released unit trains; missed switches; and ineffective customer service. STB noted that these recent service issues have highlighted its need to provide shippers with the opportunity to receive swift action in order to ensure the nation’s freight rail traffic continues to move.

“The rail service challenges shippers are currently experiencing are amplified by certain recent conditions but are not new,” said STB Chairman Martin J. Oberman in a statement. “For several years the Board has gathered information showing that the existing emergency service rules are too cumbersome to be of use to shippers in need of immediate relief. This proposed rule would make it possible for a shipper to receive relief in a short but reasonable amount of time during an emergency. Given the persistent and serious problems presently affecting freight rail service, it is important for the Board to consider new approaches for providing much needed relief to rail customers, not only for the customers’ benefit, but for the well-being of the nation’s economy and all consumers.”

For the service-related hearings this week, STB said it will direct executive-level officials, including operating and human resources officials, of BNSF Railway Company, CSX Transportation, Inc., Norfolk Southern Railway Company, and Union Pacific Railroad Company to appear at the hearings. And it added that it will also invite and “welcome the attendance of” executive-level officials from Canadian National Railway Company, Kansas City Southern Railway Company, and Canadian Pacific Railway Company, with other carriers, rail customers, labor organizations, and other interested parties also welcome to report on recent service issues.

And STB said that Department of Transportation Secretary Pete Buttigieg will be the first speaker and will be followed by Deputy Secretary of Agriculture Dr. Jewel H. Bronaugh, and on behalf of himself, Commissioner Carl W. Bentzel of the Federal Maritime Commission.

As previously reported, STB’s Oberman said at last November’s RailTrends conference hosted by Progressive Railroading and independent railroad analyst Anthony B. Hatch that in recent years, Class I railroad service has deteriorated for substantial periods of time, calling it significant.

“Shippers view service as more unreliable and for some shippers that have had long-term service patterns, they have seen abrupt changes, like being informed on short notice they are being reduced from five days to three or being shifted from a weekend to a week day or vice versa,” he said. “Switches are being missed. and it is affecting their operations and manufacturing processes. I hear from many that certain types of services are being eliminated.

Some who relied for years on unit train service and invested in their own infrastructure at the encouragement of railroads to obtain unit train service have had unit train service cut off.”

What’s more, he observed that, in some cased, railroad workers are being required to work with limited days off of overtime, observing that there can be no question that too few workers means there is less ability to provide shippers with reliable service to customers.

From the railroad’s perspective, things are looking slightly better for the railroads’ part of the supply chain, Hatch recently told LM.

“The supply chain in general is improving, and there are fewer ships waiting off of the Ports of Los Angeles and Long Beach,” he said. “Railroads and the supply chain are always subject to continued shocks, like some Chinese ports being closed. And they took a big setback, which they are coming back from, with the Omicron variant.”

As an example, he pointed to the Genesee Wyoming Railroad, which is by far the largest short-line railroad holding company and owns more than 115 short-line railroads across the U.S., had 400 workers out with Covid, for all of 2021, and easily topped that in January 2022 alone, with that tally around 800.

“That shows what the railroads went through,” said Hatch. “They are having trouble staffing, but things are getting somewhat better. The railroads have vastly improved pipelines, with people going through their training programs. It all points to their January goals of having a strong second half and pulling out of this. There will be impacts from this enormous once in a century pandemic that will last into 2022, 2023, 2024, and 2025. There will be supply chain impacts that go on, but we really hope we can say that by the second half of this year things are clearly looking up. Traffic is already looking a little bit better led by carload. Intermodal is still suffering from port congestion, drayage shortages, and other issues. But it appears we are trending in the right direction, however, this is a fragile recovery so, again, further shocks, new and new variants can at least cause temporary havoc.”