‘Industries dependent upon the railroads’ service are forsaken’

Unions, ethanol and coal producers join grain shippers in push for STB to address rail service complaints

By Joanna Marsh for freightwaves.com

The Surface Transportation Board has scheduled a hearing for April 26-27 in response to a letter sent by the National Grain and Feed Association about worsening rail service. 

The March 24 letter has gotten support from various rail unions and other stakeholders in recent days. These stakeholders are also asking the STB to examine the causes behind the service delays. 

Here’s a roundup of what’s been said recently:

Unions criticize headcount reductions, blame service issues on lack of adequate staffing

The rail unions cite precision scheduled railroading(PSR) as being the cause of many of the service issues occurring today, according to recent correspondence to STB.

In a Monday letter to the board, the Transportation Trades Department (TTD) of the AFL-CIO said it agreed with NGFA’s assessment of deteriorating service conditions on the Union Pacific (NYSE: UNP), BNSF (NYSE: BRK.B) and Norfolk Southern (NYSE: NSC). The union said PSR, an approach that seeks to streamline operations, “looms large in the disruptions [NGFA] members are currently facing.”

PSR encouraged the railroads to trim their workforce, including staffing for the market-sensitive train and engine crews, according to the TTD letter signed by its president, Greg Regan. But when demand bounced back, the railroads didn’t have enough workers to manage the demand, Regan said.

“NGFA cites that a lack of available crews has resulted in long delays. This should come as no surprise, as the carriers have spent the last several years slashing tens of thousands of jobs across every craft, without regard to the impact this would have on the provision, quality or frequency of service,” Regan said. 

He said that to make up for the reduction in employee headcount, the absence policies adopted by some of the railroads became punitive. 

“Rather than pursue real measures to return headcount to appropriate levels, the carriers have instead focused on extracting maximal hours from the existing workforce under the threat of discipline and termination,” Regan said. 

“In an industry where fatigue is already endemic, further increasing the workload for existing employees is simply unsustainable. Not only do these policies invite further safety risks into the system, they are directly contributing to degradation of formerly good jobs on the railroad,” he continued, noting that there have been “several hundred resignations at BNSF” in response to the new attendance policy that became effective Feb. 1.

In an April 1 letter to the board, SMART-Transportation Division President Jeremy Ferguson also said the service deterioration as described by NGFA is attributable to the headcount reductions that occurred from the implementation of PSR. 

“Simply put, the railroads cannot sustain the same level of production they had prior to the advent of PSR given the number of drastic cuts they have made across their systems. To that point, approximately 33% of America’s railroad workforce was laid off with the initial implementation of PSR, with thousands of locomotives placed into storage,” Ferguson said. “This has resulted in a fundamental problem — there are not enough employees, nor locomotives available to operate the necessary number of trains required to provide a level of service that equals the current level of demand.”

Ferguson also suggested that the slower train speeds are because the railroads are seeking to save on fuel costs by reducing horsepower and using fewer locomotives. This leads to a snowballing effect since fewer locomotives means fewer, but longer, trains. 

“Fewer trains mean longer consists [lineups of railcars and locomotives]. Longer consists mean more congestion. And more congestion means less predictive work cycles and longer work hours for the crews (less availability). All of this results in much slower velocities across the systems,” Ferguson said. “This puts more pressure on the managers responsible for moving the trains and given that they are rewarded for terminal arrival and not customer service under PSR, the industries dependent upon the railroads’ service are forsaken.”

Service disruptions are also affecting ethanol, coal: Growth Energy and Sen. Capito

The service issues experienced by the U.S. grain industry are also extending to other commodities, say letters from Growth Energy and Sen. Shelley Moore Capito, D-W.Va.

In a Friday letter to the board, Chris Bliley, senior vice president of regulatory affairs for Growth Energy, a trade association representing 89 ethanol producers, said producers have had to curtail production as they await for delayed empty railcars to arrive. Once the ethanol is on the train, there are delays averaging between two and four days for both manifest and unit trains, although some delays have been as long as five to 12 days. 

“While we certainly understand that a variety of factors have contributed to these rail disruptions, it is imperative that all possible actions be taken by the nation’s railroads to ensure that these critical fuel supplies are immediately prioritized and reach markets as quickly as possible. Further delays could not only impact our industry but could ultimately increase fuel costs for American drivers,” Bliley said.

Meanwhile, a March 29 letter from Sen. Capito said coal producers in West Virginia haven’t had enough railcars to ship export-bound thermal and metallurgical coal. She asked STB to “review the railcar shortage and its impact on shipments.”

BNSF addresses service issues and NGFA’s concerns

In response to NGFA’s concerns, BNSF said it is implementing a number of initiatives aimed at restoring service fully to grain shippers, according to a March 30 letter by BNSF President and CEO Katie Farmer addressed to NGFA President and CEO Michael Seyfert.

Farmer acknowledged that the railroad is “not currently meeting our customers’ service expectations.” But it is taking “aggressive actions” to remedy service issues, such as by providing weekly service updates and seeking to hire an additional 1,000 train, yard and engine employees in 2022 as a means to ramp up crew availability.

BNSF has also recalled all previously furloughed train, yard and engine employees, including those in the key grain destination regions of the Pacific Northwest and California. Large monetary incentives are also being offered to those willing to transfer to high-demand areas, Farmer said.

BNSF also has measures to scale up equipment resources to ensure there is adequate power available. The western U.S. carrier has added more than 250 locomotives to the active fleet over the winter, with plans to add 100 more in the coming weeks, according to Farmer.

“We have increased resources at our locomotive shops to improve cycle times for maintenance and repair and get these units back online faster,” Farmer said. “These actions will help ensure we have additional locomotives above our projected threshold need in position to keep trains moving and reduce our total cars online.”

BNSF is seeking to better manage car inventory by reducing inventory levels on the network by 2%. While this might cause some short-term capacity constraints, the long-term benefit will be improved fluidity and velocity. BNSF would work with individual shippers to identify unproductive railcars, Farmer said. 

Customers also have access to technological tools that provide visibility into where shipments are.

“Allow me to reiterate that we are acutely aware of the effects our service challenges have had on your members. BNSF is committed to working nonstop until our network is fully restored and we are providing service that helps your members — and all of our customers — grow and thrive,” Farmer said.

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