N.G.F.A. seeks heightened monitoring of rail service

by Jay Sjerven
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WASHINGTON — The National Grain and Feed Association on April 17 urged the federal Surface Transportation Board (S.T.B.) to require Class I rail carriers to report and make publicly available several specific service-related metrics in the aftermath of the serious disruption in rail service that began last fall.

 In a written statement, the N.G.F.A. told the S.T.B. of the impacts and costs rail service disruptions have had on grain elevators, grain processors, integrators and exporters. The N.G.F.A.’s comments centered on service-related disruptions involving the BNSF, Norfolk Southern, Canadian Pacific and CSX Railways. The N.G.F.A.’s statement was endorsed by the Agricultural Retailers Association, the Corn Refiners Association, the National Chicken Council, the National Council for Farmer Cooperatives, the National Oilseed Processors Association and the North American Millers’ Association.

“The sheer gravity, magnitude and scope of rail service disruptions now being experienced are unprecedented, and have rippled through all sectors of grain-based agriculture,” Kevin Thompson, assistant vice-president for the grain and oilseed business of Cargill, Wayzata, Minn., and chairman of the N.G.F.A. Rail Shipper/Receiver Committee, told the S.T.B. in testimony that summarized the organization’s written statement.

The N.G.F.A. said country elevators and other originators of grain and grain products are hesitant to price and book forward sales from farmers or commercial elevators because they cannot count on predictable rail service or reflect the current level of freight costs in their price bids.

Grain processors and export elevators have idled or significantly reduced operating capacity because of an inability to predictably source sufficient quantities of grains and oilseeds.

Millers in the upper and central Midwest have confronted facility shutdowns as they run out of raw commodities to process, including oats and certain classes of wheat.

Still other grain processing and animal feeding operations, particularly in the eastern United States, were shifting to comparatively inefficient and much more costly long-haul truck movements in an attempt to obtain sufficient quantities of grains and oilseeds, the N.G.F.A. said. Still others were switching rail origination to other carriers where possible.

The N.G.F.A. asserted the United States’ reputation as the world’s most reliable supplier of grains, oilseeds and grain products has been put at risk.

The N.G.F.A.’s statement noted the immediate need to deliver fertilizer before spring planting in the Upper Midwest, with diversion of such shipments to trucks amounting to millions of dollars in additional shipping costs.

In addition, country elevators and other grain facilities that found it necessary to utilize emergency space (ground piles) to store greater-than-normal quantities of grain as a result of the heavy 2013 harvest and permanent storage filled to capacity faced a March 31 deadline for relocating outside-stored grain to permanent storage.

The N.G.F.A.’s statement pointed to specific examples provided by member companies in response to its request concerning the impacts and costs of service-related disruptions, including delays in receiving rail equipment, idling of rail cars on tracks for extended periods while awaiting locomotives, reduced turn-times for shipper-owned equipment, deteriorating basis levels in upper Midwestern Plains states and the ballooning costs of obtaining freight in the secondary market at levels reaching up to $6,000 per car. The N.G.F.A. noted that several member companies reported that costs to their individual firms ranged from $10 million to $20 million or more during the October 2013 to March 2014 period.

The N.G.F.A. urged the S.T.B. to assess the implications on rail carriers’ common-carrier obligation to provide reasonable service on reasonable request, particularly if carriers choose to skew their allocation of equipment and service toward products (such as coal, energy and intermodal) in an effort to maximize profits.

The association also said the current level of service-related disruptions warranted heightened monitoring by the S.T.B., as well as the collection and public dissemination by the agency of rail service metrics from Class I rail carriers. Specifically, the N.G.F.A. urged the S.T.B. to collect and disseminate publicly the following service-related metrics:

1 — Real-time information on train velocity and cycle times, as well as realistic projections for restoring service.

2 — Weekly rail car loadings by product and state.

3 — Weekly average dwell times for trains hauling grain and grain products, coal and crude oil from January 2012 onward.

4 — Weekly averages for miles-per-day transited for grain, coal and crude oil since January 2012 going forward.

5 — The level of capacity utilization by rail corridors, particularly in the heavy grain corridors of the Pacific Northwest and Texas Gulf. For example, if a Class I carrier’s capacity is 40 trains per day within the Pacific Northwest corridor, what percentage of that capacity currently is being utilized, and what is the product mix?

6 — Real-time data on the number of grain/oilseed, coal and crude oil sets transported by quarter starting in January 2012 and into the future.

7 — Breakouts of capital spending by Class I carriers. 

The N.G.F.A. commended rail carriers for investing in their infrastructure, particularly investments that add to capacity to serve growing demand. But it said carriers should report the share of capital spending being directed to new infrastructure capacity, such as new track, versus replacement of existing infrastructure. The N.G.F.A. also recommended that the S.T.B. require carriers to report on a quarterly basis net crew and locomotive changes so rail users better may assess these barometers of potential service improvement.

In addition, the N.G.F.A. recommended that the S.T.B. obtain and make available publicly the following information for each Class I carrier:

What plans, if any, does each of the Class I carriers now experiencing service disruptions have to take on additional business before current service issues are resolved?  Will carriers award power and crews on a first-come, first-served basis during this period of severe service disruption? Further, what, if any, resources have been transferred from the Canadian Pacific's U.S. operations to Canada?

What plans do Class I carriers have for reducing operations-related service disruptions that occurred last fall, including maintenance-of-way restrictions. The N.G.F.A. said the S.T.B. should require Class I carriers to provide rail customers with advance information on the precise location and duration of specific service disruptions caused by infrastructure projects.

Finally, the N.G.F.A. said the S.T.B., during this period of service disruption, should require affected Class I rail carriers to provide consistent, web-based communications and e-blasts to all of their rail customers on the status of their service and train orders.

“Some Class I railroads are doing a commendable job in this regard — the BNSF and CSX, in particular,” the N.G.F.A. said. “But others clearly are not, relying more on word-of-mouth or calls to specific, but not all, customers. Rail users need more consistency in communications across-the-board, particularly in this service-disrupted environment.”

The N.G.F.A. concluded by stating that current rail-service disruptions “point to the urgency” of the United States adopting a comprehensive “all-of-the-above” transportation infrastructure policy that supports all modes — particularly inland waterways, harbors and ports, and highways.

“We need all transportation modes if we’re going to move this nation,” the N.G.F.A. said.
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