Posts Tagged ‘freight service issues’

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.

STB Wants More Detail in Service Recovery Plans

June 15, 2022

Federal regulators have ordered four Class 1 railroads to submit more detailed plans to resolve freight service issues that have plagued the industry in the past year.

The order applies to Norfolk Southern, CSX, BNSF and Union Pacific.

In particular, the U.S. Transportation Board has ordered the carriers to correct what regulators see as deficiencies in the service recovery plans all four carriers submitted last month.

The board is also ordering the railroads to provide more information on their actions to improve service and communications with customers, as well as more detailed information on what they’re doing to hire more workers in order to provide more reliable rail service.

For example, STB members were dissatisfied with the plans submitted by NS and UP because they failed to include six-month targets for achieving performance goals.

“Unfortunately, these four carriers submitted plans that were perfunctory and lacked the level of detail that was mandated by the board’s order,” STB officials said in a statement. “The plans generally omitted important information needed to assure the board and rail industry stakeholders that the largest railroads are addressing their deficiencies and have a clear and measurable trajectory for doing so.”

The STB’s statement said the recovery plans need additional information which the STB order has laid out.

The service recovery plans were ordered on May 6 and came shortly after a two days of hearing in late April on shipper complaints of poor rail service.

The STB’s original order said the service recovery plans were to describe remedial initiatives and promote a clearer vantage point into operating conditions on the rail network.

Class 1s Tell STB Service Recovery Plans

May 23, 2022

Four Class 1 railroads have filed with the U.S. Surface Transportation Board their plans to improve their freight service.

All of them said they have hired and are training new conductors as the carriers seek to return their service to more normal levels.

The carriers have been saying for months that crew shortages have hindered their ability to meet the expectations of their shippers.

The recovery plans were recently ordered by the STB following hearings in late April focusing on service issues the railroads have been having.

Regulators also directed the railroads to provide more information regarding their performance metrics, including local spot and pull performance as well as on-time performance within 24 hours of the original estimated time of arrival for carloads and intermodal trains.

In its six-page plan, CSX said it expects to return to 2019 service levels by the end of the year and has set a goal of 80 percent on-time performance for merchandise traffic.

Currently, CSX merchandise traffic has a 69 percent on-time rate while intermodal has been above 95 percent.

CSX said its local spot and pull performance was 83 percent for the week ending May 13.

It also said another goal is to increase average train speed by 7 percent and reduce terminal dwell by 10 percent over the next six months.

 “CSX’s service recovery focus is primarily on conductor hiring and resolving crew shortage issues in certain locations on the network,” the carrier wrote. “Adding more [motive] power to through trains would not improve service performance for CSX.”

Norfolk Southern submitted a seven-page plan that expressed uncertainty about being able to return to 2019 service levels within the next six months.

Currently, NS said, its on-time rate for merchandise traffic is 48 percent. The plan said that such things as average train speed, terminal dwell time, local service performance, and on-time performance are affected by a multitude of factors. Therefore, setting any targets or making any forecasts would be “speculative at best.”

“Where trains are not meeting expected schedules, Norfolk Southern has relaxed certain energy management tools and Norfolk Southern will continue to do so where appropriate and where it would have a positive impact on network fluidity,” NS wrote.

STB to Requires Class 1s to Report More Data

May 7, 2022

The U.S. Surface Transportation Board this week issued a regulation with eight parts that will require Class 1 railroads to provide more comprehensive performance and employment information.

The Board voted unanimously in favor of the rule, which largely is targeted at BNSF, CSX, Norfolk Southern and Union Pacific.

The carriers will be required to create by May 20 service recovery plans that are to be followed up with biweekly conference calls with STB staff.

The rule will be in effect for the next six months.

In its decision, the Board cited problems with rail freight service brought out in hearings it held in late April. It also said the rule is aimed at providing “industry-wide transparency, accountability, and improvements in rail service.”

All Class I railroads are being directed to submit weekly performance data and monthly employment data.

The information being sought by the STB included weekly average terminal dwell times, measured in hours, for each carrier’s 11th through 20th largest terminals.

Railroads are also directed to provide the weekly average number of train starts per day.

There are requirements to report on rail cars in storage, the number of cars in service with no mileage, the number of rail cars in service with the weekly average number of car-miles per day, and the aggregate number of car-miles per week.

Other information to be reported includes information on re-crews, the percentage of scheduled spots and pulls that were fulfilled, the weekly average number of local trains cancelled per day, the aggregate number of local trains cancelled per week, and the percentage of cars constructively or actually placed at destination within 24 hours of the original estimated time of arrival.

Railway Age columnist Frank Wilner described the reporting requirements as an effort to prompt carriers to solve their service problems on their own, beginning with transparency.

In a statement the Association of American Railroads said it was studying the STB’s rule but said its members will continue to work through the service problems they acknowledged having.

They’re ‘Mad as Hell’ But Are Going to Have to Take it a Little Bit Longer

May 1, 2022

As I read the various accounts of the two days of hearings conducted by the U.S. Surface Transportation Board last week about the shoddy service that Class 1 railroads have been giving their customers, I thought about Howard Beale, the fictional television evening news anchor in the 1976 black comedy drama Network.

One of the most iconic moments in Network occurs when Beale tells his viewers, “I’m as mad as hell and I’m not going to take it anymore.”

That prompts thousands of them to go to a window of their home and shout the phrase to no one in particular. It might have made them feel better in the moment, but did little, if anything, to address the underlying causes of their frustration and anger.

A lot of shippers and railroad workers channeled their inner Howard Beale during the STB hearings.

Although none of them used the “mad as hell” phrasing while addressing the STB, many were just that although more in control of their emotions than was Beale.

Another Beale rant perhaps best summarized the likely outcome of the hearings.

Beale, whose rants had led to his being given his own TV show in front of a live audience, tells viewers that television is an illusion that promotes fantasies that can never be realized.

Many, if not most, of those who testified before the STB have their own fantasies that are unlikely to be realized. That is not to say that bits of pieces of them won’t come to fruition.

The STB hearings served two primary purposes. They were a forum for shippers and others to vent about how Class 1 railroads are behaving these days.

Shippers told tales of woe about how poor and unreliable service has adversely affected their own businesses. Some warned of severe effects to the U.S. economy if things don’t improve.

The STB hearings provided validation for those concerns even as there was widespread agreement that there are no easy and quick fixes to railroad service problems.

The second purpose of the hearings was an opportunity for those who testified to push their pet agendas.

Shippers want more regulation of the railroad industry, particularly in the realm of rate regulation.

Unions want to preserve jobs, which have vanished at a precipitous rate as Class 1 railroads have furloughed thousands in the name of operating more efficiently. Railroad workers also want relief from increasingly restrictive attendance policies such as the controversial Hi Viz scheme implemented by BNSF earlier this year.

The railroads want to preserve the status quo, which has enabled them to make handsome profits, but they also want one-person crews.

CSX CEO James Foote implored regulators to allow railroads to operate with one person crews.

The Class 1 railroads want to remove most conductors from aboard trains in favor of roving ground-based conductors who would be responsible for multiple trains within a defined territory.

“Let us run trains with one employee and this problem is solved,” Foote said in reference to operating crew shortages.

Staffing aboard trains is one of many points of conflict between unions and management in the current round of contract talks that have drug on since early 2020.

Aside from a handful of tense exchanges with STB members, the railroad executives who testified during the two days of hearings were the antithesis of Howard Beale.

They spoke in a measured and calm manner, acknowledging their service is lacking in quality, but did so only because they could not easily deny that.

The railroad executives took responsibility for the service woes but refused to blame them on their own behavior.

Repeatedly, the Class 1 executives said the service problems are occurring because of crew shortages that they insisted they are doing everything they can to address.

That is a standard strategy that companies under attack for poor performance rely upon. Concede nothing and blame external forces that you seek to frame as being largely beyond your control.

Examples of the latter include fallout from the COVID-19 pandemic and a tight labor market.

It is not as though these things haven’t played a role. It is just that they are not the only forces at work causing service issues.

None of the railroad executives acknowledged having given in to the pressure of Wall Street investors who have pushed railroads to cut costs in order to drive up profits.

The executives argued that the precision scheduled railroading model makes them more efficient and showed no inclination to jettison the practice of operating fewer and longer trains.

Another tactic the Class 1 railroads used during the hearings was to deny the severity of the problems identified by their adversaries. In some instances, the executives suggested some of what witnesses were saying was simply not true.

A lot of what witnesses said during the STB hearings should not be taken at face value. It is not as though the speakers were telling falsehoods, but they were not always giving a complete picture either.

It is true that some witnesses were more credible than others in giving a reasonably complete overview of the root causes of the service problems.

To get that complete picture you have to consider the totality of the testimony while taking into account that all speakers were promoting their self interests which at times are in conflict with the self interests of Class 1 railroad management.

Promulgating self interests often leads speakers to exaggerate threats to their well being and to understate the consequence of their own behavior.

Nothing that Class 1 railroads have done in adopting PSR makes them unique among North American corporations.

Chances are that all or nearly every shipper who complained about poor rail service also has engaged in the type of cost cutting and business decision making that Class 1 railroads have practiced.

Many, if not most, railroad shippers are publicly-held companies that also are subject to pressures from Wall Street investors.

One underlying problem is with shippers who can’t easily switch to other forms of transportation because they are moving bulk commodities that are most efficiently and/or less costly to move by rail than truck, water or air. Gettig good rail transportation can be a dilemma for shippers even in the best of circumstances.

Railroads know that even if you’ll never hear a Class 1 executive say it.

In an analysis published in advance of the STB hearings, Trains magazine columnist Bill Stephens argued that the service problems of recent months by Class 1 railroads are nothing new. He cited a litany of past service meltdowns caused by weather and other calamities that unfolded long before PSR became a thing.

A similar point was made by a Wall Street analyst who researches railroad performance. He told regulators that every so often good service deteriorates into poor service, particularly when the operating climate becomes less than ideal.

Could railroads be better prepared for service downturns? Yes. Will they be? Probably not if the cost of doing so is more than they want to spend on operations.

There is little the STB can do in the short term in response to what it heard during the two-day hearings other than offer sympathy and empathy to shippers and workers while taking railroad executives to task for some of the meaningless and vague promises they’ve made in the past year about improving their service.

There is a long list of actions the STB lacks the authority to take and/or is reluctant to take for legal, practical and philosophical reasons.

The STB is not going to order railroads to stop practicing PSR. It is not going to order railroads to stop furloughing workers, and it won’t be telling them how many workers to keep on their payrolls.

What the STB can and might do is issue emergency orders to railroads to move certain types of freight by whatever means possible.

Regulators can and might promulgate or change existing rules on such things as reciprocal switching. This is where the underlying pet agendas of the various parties come into play.

The witnesses were laying groundwork for what they hope are future regulatory changes. As the old adage says, don’t let a crisis go to waste.

STB member also can keep the spotlight shining directly on railroad executives and their actions.

Class 1 railroad executives are aware of these potential moves and oppose all of them. Railroad executives may not like all facets of the status quo, but for the most part it serves them well.

Presumably the service woes will eventually ease although some underlying problems are likely to linger. The carriers might make some changes in an effort to show they are doing something other than trying to hire and train additional workers.

In the short run, shippers and unionized railroad workers may be mad as hell, but they have little recourse but to continue taking it while seeking to achieve fantasies that are unlikely to come to pass, at least in the manner that they envision them. Howard Beale, it seems, was on to something.

Commentary by Craig Sanders

Shippers, Workers Vent at STB Hearings

April 27, 2022

Years of frustration spilled out in the opening day of U.S. Surface Transportation Board hearings on Tuesday regarding the state of freight railroad service.

Witnesses representing rail shippers and railroad labor unions took turns blasting Class 1 railroads for their obsession with cost cutting, which they claim has brought the nation’s railroad network to a crawl.

One frequent target of the ire of the witnesses was the adoption in recent years of the precision scheduled railroading operating model that has resulted in fewer and longer trains, the closing of some classification yards, and the furloughing of thousands of rail operating workers.

Some of the witnesses argued that Class 1 railroads are more interested in pleasing shareholders who seek deeper spending cuts and higher profits.

The STB is holding the two-day hearings after receiving a deluge of complaints about poor rail freight service.

Statistics kept by the agency based upon reports provided by the railroads show that the average train speed is down and dwell time of cars in terminals has risen.

Shipper witnesses spoke of railroads missing scheduled switching, not picking up carloads in a timely manner, and non-responsive customer service departments.

For their part the railroads have blamed service issues on crew shortages and the effects of the CVOID-19 pandemic including congestion in the global supply chain. The railroads have said PSR is a more efficient way to operate.

The shipper witnesses cited a litany of adverse effects from poor rail service including ranchers facing decisions about thinning their livestock herds because they can’t get the feed they need to feed them.

“This is not a pandemic-related issue. We’re dealing with years of cuts that have gutted the rail network that’s making these service issues inevitable,” said Chris John, President and CEO of the American Chemistry Council. “Precision Scheduled Railroading is just doing less with less.”

In response to STB member questions, some shipper witnesses said some rail customers have avoided speaking out publicly about their problems for fear of retaliation from the railroads.

That led STB Chairman Martin Oberman to say such responses by railroads would be “completely unacceptable” and if proven should be dealt with in the “harshest way.”

Labor representatives said Class 1 railroads practicing PSR have reduced their workforce by 29 percent, or 45,000 workers.

They contended railroads have pared their workforces in an effort to lower their operating ratios, which is the percentage of revenue devoted to paying expenses.

Union witnesses who are also operating railroad employees said another cost-cutting move has been to limit the speeds of trains in an effort to save on fuel costs. However, the witnesses said, this means trains are unable to make track speed which results in congestion.

Chris Bond, a BNSF engineer and union official in Texas, said his employer recently eliminated some throttle restrictions ahead of the STB hearing in what was perhaps an effort to show progress in advance of the STB hearings.

More about the first day of the hearings can be read at  https://railfan.com/absolute-gridlock-shippers-labor-blame-precision-scheduled-railroading-for-service-woes/