Jun 24, 2022

Four Largest U.S. Railroads Fail to File Adequate Service Recovery Plans

STB: Carriers submitted plans that were 'perfunctory' and lacked details

The Surface Transportation Board (STB) has issued an order directing BNSF Railway Co. (BNSF), CSX Transportation, Inc. (CSX), Norfolk Southern Railway (NSR), and Union Pacific Railroad (UP) to correct deficiencies in their rail service recovery plans filed in response to a STB order issued on May 6, 2022.

STB had required these four Class I carriers to develop service recovery plans as a result of the severe service deficits presently permeating their rail networks.

STB is also ordering these carriers to provide additional information on their actions to improve service and communications with their customers as well as additional detailed information to demonstrate their monthly progress in increasing the size of their work forces to levels needed to provide reliable rail service.

Rail service issues impact grain industry

The service recovery plans, together with the additional requested information, are crucial components of STB’s active monitoring of the nation’s freight rail industry and particularly STB’s focused efforts to ensure that the large carriers overcome the significant service challenges affecting many rail users and the public.

On April 26 and April 27, STB held a two-day public hearing on the recent significant performance deterioration of the freight rail industry.

The National Grain and Feed Association (NGFA) testified before STB on April 26, listing several examples of rail service failures experienced by grain shippers across the country.

STB also heard testimony from BNSF, CSX, NSR, and UP about the causes, extent and likely duration of service disruptions and their remedial initiatives.

In response to the extensive problems described at the hearing, on May 6, STB issued an order requiring the four largest U.S. railroads – BNSF, CSX, NSR, and UP – to file service recovery plans that would specifically describe their key remedial initiatives and promote a clearer vantage point into operating conditions on the rail network.

Submitted plans lack details. omit important information

Unfortunately, these four carriers submitted plans that were perfunctory and lacked the level of detail that was mandated by STB’s order.

The plans generally omitted important information needed to assure STB and rail industry stakeholders that the largest railroads are addressing their deficiencies and have a clear and measurable trajectory for doing so.

Of particular concern was the fact that UP and NSR flatly refused to provide the six-month targets for achieving their performance goals explicitly required by STB’s order.

Because of the plans’ shortcomings, STB finds it necessary to require the railroads to supplement their plans and provides explicit further instruction on the critical information they must include.

Plans fail to 'nstill confidence that carriers have a serious approach to problem

“Freight rail is critical to our nation’s economy, and we must ensure the railroads are doing everything within their means to transport commodities that are crucial to the public welfare, such as animal feed, food ingredients, fuel products and fertilizers, and critical chemicals,” said Chairman Martin Oberman.

“We are in the middle of a rail service crisis and STB continues to receive reports about persistent, acute, and dramatic problems in rail transportation, disrupting critical supply chains and shutting down companies."

Oberman also noted the freight rail industry is currently struggling to provide adequate rail service, yet the service recovery plans received are "woefully deficient and do not comport with the spirit or the letter of STB’s order."

"The plans simply failed to instill confidence that the carriers have a serious approach to fixing a problem caused by their own lack of preparedness to respond to external shocks and fluctuations in demand, including especially short-sighted management of labor forces and other resources," said Oberman.

"While the railroads must always comply with STB orders, it is particularly disturbing that the railroads failed to comply with the order requiring them to file adequate service recovery plans."

Oberman concluded that under circumstances where service is not meeting customers’ needs, an adequate plan is not too much to ask from highly sophisticated companies with important public responsibilities.

"I had expected a better response from the carriers to STB’s previous order, and now with more explicit instructions, which should not have been needed, there will be no excuse for continued lack of compliance," he said.

Lisa Cleaver

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