Ag groups are calling into question a number of practices employed by the nation’s rail carriers and the Surface Transportation Board is taking action in an effort to hold companies accountable.
The problems have been building up for several weeks. In March, the National Grain and Feed Association sent a letter to the STB, asking the agency to shed light on what it said were “severe rail service problems and excessive charges” facing its members trying to ship grains, oilseeds, and processed grain products using Class I railroads.
Aside from issues with specific individual carriers, NGFA noted a “fundamental concern among rail customers that the underlying root cause of these service and accessorial charge-related issues is Class I railroads’ aggressive effort to reduce their operating ratios to impress Wall Street investors and shareholders.”
NGFA surveys conducted among member companies in early March turned up several issues ranging from Canadian National Railroad cars waiting four to six weeks to be pulled, “significant transit delays” on BNSF trains headed to the Pacific Northwest, and a litany of new charges such as a $1,000-per-car fine imposed by Canadian Pacific Railway “if stenciling is faded.”
Service, NGFA contends, has been degraded “to unacceptable levels, and resulted in virtually non-existent surge capacity to meet rail customers’ needs.”
Mike Steenhoek, executive director of the Soy Transportation Coalition, tells Agri-Pulse the problems have been particularly bad in the eastern United States. Rates continue to be high, but rail customers say service is not of the quality they expect.
Mike Steenhoek, Soy Transportation Coalition
“Some railroads, it would be more chalked up to bad weather,” Steenhoek said. “Other railroads, they’ve just really gotten caught flat-footed and they didn’t have equipment mustered in anticipation of the harvest.”
In response to the letter from NGFA – and similar correspondence from the Alliance of Automobile Manufacturers – the STB wrote to a number of railroads asking for clarification of some of the stated claims. STB also requested a ”written response regarding the outlook for rail operations across your network.”
“In recent weeks, the Board has become increasingly concerned about the overall state of rail service,” STB leaders said, citing data collected every week. “Although there are exceptions, most Class I railroads’ data indicate that service is deteriorating.”
Some providers were willing to acknowledge fault, such as Canadian National, which noted that the company has “apologized publicly for not meeting the service expectations of our customers, nor our own high standards for service excellence.” BNSF mentioned “seasonal challenges to service performance in 2018,” but also said the company has “seen recent improvements as winter conditions abate and we expect that momentum to continue.”
In a March 29 letter to Chris Jahn, president of The Fertilizer Institute, STB Chair Ann Begeman and Vice Chair Deb Miller said STB staff is “scheduling weekly calls with certain carriers to better understand their service challenges and their plans for improving service.”
Agriculture has been particularly sensitive to rail service challenges since 2014, when grain elevators in the upper Midwest frequently had to wait for trains that could show up more than a month past their scheduled arrival date. The combination of bad weather and the need to ship oil out of western North Dakota created a “perfect storm” of demand issues, Steenhoek said.
However, the current issues don’t look to be headed in a similar direction.
“The best time to react to a problem is not when its fully unfurled, it’s when it’s in the process of being unfurled,” Steenhoek said. “I think we saw that in 2014, and you don’t want to have that repeated, so I think you’re seeing a lot more willingness to get engaged when we start seeing these problems manifest and materialize.”
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