Posts Tagged ‘class 1 railroads’

Railroads Continue to Prepare for Work Stoppage, Senators Introduce Bill to Impose Contract Terms

September 13, 2022

As railroads begin to embargo traffic ahead of a possible national railroad strike and/or lockout that could begin as early as Friday, legislation has been introduced in the Senate to settle the dispute.

Amtrak said it would suspend service on four long-distance routes in advance of a possible railroad work stoppage.

The Senate resolution would force railroad labor unions and railroads to accept the recommendations made last month by a presidential emergency board.

It was introduced by Sens. Richard Burr (R-North Carolina) and Roger Wicker (R-Mississippi).

Negotiations for a new contract have been ongoing for more than two years with unions representing locomotive engineers and train conductors at loggerheads with management over wages, benefits and work rules.

To date, eight of the 12 railroad labor unions have reached tentative contract agreements with the National Carriers Conference Committee, which represents railroad management in the negotiations.

Those agreements have been described in statements issued by the two sides as generally following the recommendations of the PEB.

The PEB issued its recommendations on Aug. 16 and under federal law strikes and/or lockouts are prohibited for 30 days following that. The 30-day cooling off period will expire at 12:01 a.m. on Friday.

Amtrak said it will suspend service today on the routes of the Southwest Chief, Empire Builder, California Zephyr and portions of the route of the Texas Eagle.

The latter involves the Los Angeles to San Antonio segment of the Texas Eagle route, which overlaps with the route of the Sunset Limited.

The passenger carrier said suspensions could expand to all routes outside the Northeast Corridor by the end of the week.

The Amtrak statement said suspensions being imposed today will ensure that the affected trains can reach their endpoint terminals before a strike and/or lockout begins.

Although neither Amtrak or its workers are parties to the railroad labor negotiations, the passenger carrier uses track owned by freight railroads where a strike and/or lockout may occur.

In the event of a strike and/or lockout, Amtrak said it would continue operating trains that wholly use track that it owns or is owned by public agencies.

This includes the Northeast Corridor between Boston and Washington; the line between New Haven, Connecticut, and Springfield, Massachusetts; the Empire Corridor between New York and Albany-Rensselaer, New York; and the Keystone Corridor between Philadelphia and Harrisburg, Pennsylvania.

An Amtrak statement said passengers affected by service suspensions due to the labor dispute will be contacted and offered the opportunity to change their travel dates or offered a full refund of their fare without any cancellation fees.

In a related developments, Class 1 railroads have begun embargoing certain types of shipments starting today.

Norfolk Southern told its shippers that it will stop accepting intermodal and automotive traffic.

The NS notice said it will close the gates for loaded or empty intermodal units at its terminals as of noon Tuesday and would also stop accepting traffic at on-dock port facilities and privately owned intermodal terminals.

The notice said the gates would remain open for intermodal pickup until further notice. Customers using railroad-operated EMP and TMX containers will be unable to make reservations after 12:01 a.m. on Tuesday. They will be able to return empty containers to NS terminals as normal until further notice.

Automotive traffic gates will close at 5 p.m. on Tuesday, with an embargo on auto traffic beginning at 12:01 a.m. on Wednesday.

The railroad also said it is planning “for the orderly lay down of trains in the bulk network” and will contact customers moving bulk commodities in unit trains with specific details.

CSX has also began on Monday an embargo of “high hazardous, toxic by inhalation and poisonous by inhalation” cargo.

Class 1 Carriers Embargoing Traffic in Advance of Possible Railroad Strike Later This Week.

September 12, 2022

With the prospect of a railroad strike looming late this week, Class 1 railroads said over the weekend they are implementing plans to park hazardous materials starting today (Sept. 12).

Norfolk Southern said it would begin parking trains that did not include hazardous cargo as early as Tuesday.

The Class 1 carriers began sending notices to shippers last Friday to warn them of potential service disruptions should a strike occur.

In a joint statement, leaders of the SMART Transportation Division and the Brotherhood of Locomotive Engineers called the moves by a carriers scare tactics.

“The railroads are using shippers, consumers, and the supply chain of our nation as pawns in an effort to get our unions to cave into their contract demands knowing that our members would never accept them,” the union presidents wrote.

The Association of American Railroads said in a statement that among the hazardous materials that railroads are sidelining in anticipation of a strike are chlorine, which is used to purify drinking water, and chemicals used in fertilizer.

“Railroads are taking all measures necessary to handle sensitive cargo in accordance with federal regulations to ensure that no such cargo is left on an unattended or unsecured train in the event of a work stoppage due to an impasse in labor negotiations,” AAR said.

The AAR statement said the anticipatory actions being taken by railroads do not mean a work stoppage is certain.

BNSF asked its shippers to contract members of Congress “to let them know the impact a rail service interruption would have on your business and your customers.”

Some railroad industry observes believe that the Sept. 16 deadline to reach new agreements might be extended because eight railroad labor unions have reached tentative agreements and extending the deadline would give members of those unions additional time to complete the ratification process.

STB Says 5 Class 1 Railroads Revenue Adequate

September 7, 2022

Five Class 1 Railroads have been found by the U.S. Surface Transportation Board to have been revenue adequate for 2021.

The five are  BNSF, CSX, Norfolk Southern, Soo Line (the U.S. affiliate of Canadian Pacific) and Union Pacific.

This means regulators have determined that the railroads achieved a rate of return on net investment was equal to or greater than the agency’s calculation of the average cost of capital for the freight rail industry, which for 2021 is 10.37 percent.

By railroad the 2021 return on investment figures for U.S. Class 1 carriers were BNSF:13.19 percent; CSX: 15.51 percent; Grand Trunk Corp. (the U.S. affiliate of Canaadian Natiional): 7.79 percent; Kansas City Southern: 8.25 percent; Norfolk Southern: 13.18 percent: Soo Line: 13.51 percent; and Union Pacific: 17.03 percent.

Class 1 Employment Up in July

August 25, 2022

Class 1 railroad employment rose slightly in July the U.S. Surface Transportation Board reported this week.

The STB report said the 116,407 Class 1 employees in the United States as of mid-July was 0.13 percent higher than the number employed the previous month.

The July 2022 workforce was 0.64 percent higher than it was in July 2021 levels.

Three out of six employment categories posted month-to-month increases including executives, officials and staff assistants, up 0.97 percent to 7,838 employees; professional and administrative, up 0.47 percent to 9,905; and transportation (train and engine), up 0.36 percent to 48,252.

Seeing declines were maintenance of equipment and stores, down 0.33 percent to 17,324 employees; maintenance of way and structures, down 0.26 percent to 28,417; and transportation (other than train and engine), down 0.09 percent to 4,671.

On a year over year comparison executives, officials and staff assistants were up 7.06 percent while train and engine was up 1.59 percent.

Seeing decreases were professional and administrative, down 1.8 percent; transportation (other than train and engine), down 1.27 percent; maintenance of equipment and stores, down 1.11 percent; and maintenance of way and structures, down 0.34 percent.

STB Worried About Grain Shipment Disruptions

August 23, 2022

The U.S. Surface Transportation Board has expressed concern that Class I railroads will be unable to handle this year’s harvest season grain shipping demands.

Regulators sent a letter dated Aug. 18 to the top executives of the Class 1 carriers that also said it awaited their comments during an Aug. 25 meeting of the National Grain Car Council in Kansas City, Missouri.

“The board is particularly interested in your reports related to your preparedness to meet the demands of the fall harvest as it begins to ramp up in September and extends through the turn of the year,” the letter said in part.

“In light of current challenges affecting the four largest Class I railroads, the board is concerned about the Class I railroads’ ability to meet grain shipping needs and is highly focused on whether railroads will have sufficient crew, locomotive, equipment and capacity resources along key corridors supporting domestic and international markets.”

The letter also said regulators want to hear during the Kansas City meeting from shippers, short line and rail-car industry representatives about the matter.

Rail PEB Seems to Split Differences in Report

August 17, 2022

The presidential emergency board appointed to recommend a settlement of the contract talks between Class 1 railroads and their unions has decided to split the differences.

Various news reports, including those by Trains magazine and the Reuters news agency, said the PEB is recommending that the railroads drop their demand that conductors be removed from locomotive cabs but also recommended pay increases that are well below what the unions were seeking.

If both sides agree to adopt the PEB recommendations, workers would receive a 22 percent pay hike over the life of the contract as well as $1,000 in service recognition bonus payments per year over the five years of the contract. The two sides could also agree to use the PEB findings as a basis for a new contract agreement.

The unions, which represent 115,000 railroad workers, had reportedly sought a 28 percent pay increase while the carriers offered 16 percent.

The PEB’s recommended pay increase works out to between 4 percent and 7 percent a year through 2024. Workers would receive back pay increases of 3 percent for 2020 and 3.5 percent for 2021.

Workers should receive an additional paid day off each year, the PEB recommended.

As for health care benefits, the PEB recommended what it termed modest changes that would include no reductions in benefits or a shift in cost-sharing, aside from a previously agreed upon 15 percent employee contribution per month.

The recommendations called for railroads and their unions to continue negotiating over the scheduling of work shifts for train and engine workers and if no agreement can be reached submitting the issue to binding arbitration.

Along those lines, the PEB recommended that the matter of making conductors ground-based positions be negotiated at the local rather than national level.

By federal law, work stoppages are prohibited for the next 30 days. If one or both of the parties in the contract impasse rejects the PEB findings, they will be free to either strike, in the case of the unions, or lock out workers in the case of railroad management.

If one or both of those occur, Congress could step in and impose a settlement.

Contract talks began in early 2020. By law, railroad contracts never expire but can be amended from time to time.

Historically, contract talks often take years to resolve. The last national railroad strike occurred in 1992.

The three-member PEB was appointed by President Joseph Biden in July and given a month to investigate the contract situation and issue recommendations for a settlement.

An article about the PEB recommendations can be found at the website of Trains magazine at https://www.trains.com/trn/news-reviews/news-wire/presidential-emergency-board-issues-rail-contract-recommendations-meant-to-avert-strike/

The article includes a link to download the PEB report.

Chemical Shippers See No Meaningful Improvements in Rail Freight Service

August 17, 2022

The American Chemistry Council last week said that efforts by Class 1 railroads to improve their freight service have yet to yield any “meaningful service improvements.”

The trade group said it reached that conclusion after surveying its members. It shared results of that survey with the U.S. Surface Transportation Board.

Nearly half of the respondents (46 percent) said that during July “rail delays/service challenges had gotten worse since the fourth quarter of 2021.”

Just 7 percent of respondents said service has improved. When the ACC asked the same question of its members in March, 39 percent said service has worsened.

In the most recent survey, 90 percent of respondents said they had experienced “longer transit times for rail service” while 66 percent reported having experienced missed switches, 64 percent said they had experienced reduced service days, 59 percent said they had incurred increased demurrage charges and 59 percent said they had seen increased rates.

Oberman Says RRs Need to Pay Crews More

August 7, 2022

U.S. Surface Transportation Board Chairman Martin J. Oberman appears to be putting his thumb on the scales in favor of labor unions in their negotiations for a new contract with the nation’s major railroads.

In an interview with Trains magazine, Oberman said rail freight service is suffering because BNSF, CSX, Norfolk Southern, and Union Pacific are not paying enough to retain and recruit train crews.

“There is a price that will get you enough workers,” Oberman told Trains during the interview, which was conducted before a congressional hearing. “I don’t know what that price is. But everything has a price.”

Oberman said during the interview that federal regulators have no plans to mandate crew levels even though he linked those to the quality of service that railroads provide.

However, he made it clear his belief that paying crews more money would alleviate the crew shortages that the carriers say are the root cause of their service issues.

“If you need another 400 crews to move those trains that are sitting out there, pay whatever price you need to get them,” Oberman told Trains. “Don’t come in and tell me it’s hard to hire. And it’s not like they can’t afford it. They’re paying out billions and billions every year in stock buybacks. You could use some of that to get the workforce you need.”

During hearings held by the STB last spring to investigate the ongoing rail freight service issues, Class 1 railroad executives argued the crew shortages are due to factors that are largely out of their control.

Specifically, the executives said, workers who were furloughed during a recession triggered by the COVID-19 pandemic didn’t return to work once recalled. The railroad executives also cited higher than normal attrition rates among its work force and a tight labor market.

Some executives even talked about it being tough to hire conductors due to the nature of the job involving working outdoors at all hours in all kinds of weather, and being away from home a lot.

Wages and benefits have been a major sticking point in labor negotiations over the past three years with unions reportedly seeking more money than the carriers are willing to pay.

By some reports, the unions are seeking a 31 percent wage increase while the railroads have offered 17 percent over a five-year period.

The dispute is now being reviewed by a presidential emergency board that will make non-binding recommendations for a settlement.

If either side rejects those recommendations, they would be free to engage in a strike or lockout a month after the PEB issues its findings.

Although railroads have raised the wages of their new conductors and offered signing bonuses to new hires and retention bonuses to existing train operating personnel, Oberman told Trains those financial incentives are falling short and that railroad employment has yet to reach pre-pandemic levels.

“The railroads are not offering sufficient rewards – a combination of quality of life and compensation – to keep people there,” he said. “There’s a price at which people will stay.”

The story can be read at https://www.trains.com/trn/news-reviews/news-wire/stb-chairman-says-higher-pay-would-help-solve-railroad-crew-shortages/

Intermodal Business There for the Taking if Railroads Can Resolve Staffing, Service Issues

July 15, 2022

Class 1 railroad executives and industry observers say there is plenty of intermodal business out there for the taking.

The Intermodal Association of North America projects that domestic container volume will increase this year by 6.4 percent when compared to 2021 traffic.

But an analysis published on the website of Progressive Railroading found that landing that business will require the carriers to hire and train new operating personnel, solve equipment availability issues, and offer better and more consistent service.

The trade magazine’s analysis found that railroads are making some progress in addressing these issues, have a ways to go and it remains to be seen if the carriers can capture the volume growth that IANA predicts is out there.

Shippers also face issues stemming from higher fuel prices and railroads taking steps to limit congestion on their busiest routes.

These development could play out in adverse ways for shippers as they are gearing up for their peak season later this year. They also could play out during a time when consumer demand for retail goods is strong.

Working in favor of railroads is the fact that for now they are enjoying an economic advantage over trucks due to the latter having to grapple with driver shortages, tight capacity and higher fuel prices.

In some instances, railroads have developed alliances with trucking companies, ocean ports and shippers to better understand supply chain changes.

As has been the case for several months, railroads must deal with equipment imbalances that stem from containers not being unloaded promptly and returned for terminals.

This is being caused by, among other things, understaffed warehouses and distribution centers.

In particular this has led to a chassis shortage that industry observers expect to last into 2023.

A chassis is used to transport containers among ports, rail yards, container depots and shipper facilities. 

The challenge for the Class 1 railroads is taking steps to overcome these issues so that they can tap into the business that is available if they can handle it.

“It’s an exciting time in intermodal,” said CSX Vice President of Intermodal and Automotive Maryclare Kenney. “There are opportunities out there. Demand is strong for the intermodal product.” 

Figures provided by IANA show Class 1 intermodal volume in the first quarter of this year fell 6.6 percent.

The trade association expects intermodal volume to be up 1 percent for all of 2022 buoyed by additional container capacity service routes and increasing staff in the intermodal sector.

Those interviewed by Progressive Railroading all agree that a key to railroads realizing intermodal traffic gains is hiring additional operating personnel.

CSX, for example, has 6,700 train and engine workers but needs 300 more. In a normal year its T&E worker attrition rate is 7 percent. But of late it has risen to 10 percent.

Another key is providing more consistent service, a factor over which railroads have more control.

NS recently began implementing a new operating plan that focused on improving its intermodal operations.

The carrier is revamping intermodal operations to make them more consistent by balancing the flow of shipments through terminals, intermediate yards and the overall network.

It is seeking to eliminate choke points, reduce how much freight is handled en route and changing train schedules to improve and speed up network velocity.

CSX officials say they have reduced dwell time in recent months so that on-time intermodal performance has reached the low 90 percent range as opposed to 87 percent in the first quarter of this year.

The carrier is seeking to get that on-time percentage into the high 90s range.

The article can be read at https://www.progressiverailroading.com/intermodal/article/Class-I-railroads-expect-intermodal-boost-after-several-disruptive-supply-chain-kinks-smooth-out–67015

Little Class 1 Traffic Growth in 2nd Quarter

July 12, 2022

The second quarter was a rough one for North America’s Class 1 railroads.

Trains magazine reported on its website that only Canadian National gained traffic during the quarter, seeing a gain of 0.4 percent compared with the same period of 2022.

U.S. carload volume is down 8.5 percent for the first half of 2022 compared with 2019, according to figures compiled by the Association of American Railroads.

During the first quarter CSX and Canadian Pacific were the only Class 1 carriers to see growth in intermodal traffic.

For more information, read the article at https://www.trains.com/trn/news-reviews/news-wire/cn-posts-slight-quarterly-traffic-gain-while-other-big-systems-see-volume-declines/