Late last week, 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 it plans to hold public hearings later this month—on April 26-27—regarding recent rail service problems and recovery efforts relating to various Class I railroad carriers.
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.
“During my time on the Board, I have raised concerns about the primacy Class I railroads have placed on lowering their operating ratios and satisfying their shareholders even at the cost of their customers,” said STB Chairman Martin Oberman in a statement. “Part of that strategy has involved cutting their work force to the bare bones in order to reduce costs. Over the last six years, the Class Is collectively have reduced their work force by 29%—that is about 45,000 employees cut from the payrolls. In my view, all of this has directly contributed to where we are today—rail users experiencing serious deteriorations in rail service because, on too many parts of their networks, the railroads simply do not have a sufficient number of employees.
This hearing is not just about where we are but also about where we are going. The Board expects the railroads to explain the actions they will take to fix these issues. The Board will also consider stakeholder views on how it can use its authority—including measures to address emergencies, increase transparency, and promote reliable service—to ameliorate problems on the network.”
What’s more, 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.”