Worley Blog


Posted on: July 25th, 2022 by Clifford F. Lynch

In April, we wrote about the then-upcoming hearing before the Surface Transportation Board on the continuing deterioration in rail service. This hearing, entitled “Urgent Issues in Freight Rail Service”, was held on April 26-27, 2022, and focused on complaints about poor service on four Class I railroads – BNSF, CSX, NS, and UP. In the notice of the hearing, the STB Chairman said, “This hearing is not just about where we are, but also about where we are going. The Board expects the railroads to explain the actions they will take to fix these issues. The Board will also consider stakeholder views on how it can use its authority – including measures to address emergencies, increase transparency and promote reliable service – to ameliorate problems on the network.”

Twenty–five representatives from shippers, shipper organizations, and labor unions testified and related experiences with such things as crew shortages, the inability to move trains, tight car supply, unfilled car orders, switching delays and ineffective communication. In short, they had very little good to say about the carriers involved.

Most blamed the problems on adopting Precision Scheduling Railroading (PSR). As a reminder, PSR has been described as “a philosophy of constant monitoring and optimization of every asset throughout the organization. It is built on five foundations: improving customer service, controlling costs, optimizing asset utilization, operating safely, and valuing and developing employees.” While PSR has resulted in more profitable railroads, it has left herds of unhappy customers in its wake. As one witness at the hearing said, “……. shippers’ worst fears (about PSR) have become the current reality.”

Carrier representatives presented their plans for improvement, but Board members were underwhelmed and ordered the carriers to submit more comprehensive plans by the end of the year. Most of the explanations concerned crewing, citing a lack of labor sufficient to meet demand. Plans for improvement included such steps as hiring, training, retention, and relocation of crews to problem areas. None of the plans contained any creative measures for meeting their goals. Critics point out that one of the hallmarks of PSR was reduction in personnel, and rails are now faced with unscrambling the egg.

(For a good summary of Class I’s plans for improvement, see “Let’s Run It Back: U S Class I’s Offer Their Amended Service Recovery Plans”, at www.stifel.org.)

Just prior to the hearing, the STB took some positive steps, announcing a proposal to amend emergency service regulations to allow immediate relief for shippers whose situation requires it. The STB Chairman said, “…. existing emergency service rules are too cumbersome to be of use to shippers in need of immediate relief.”  On April 22, the STB announced, “Revision to Regulations for Expediting Relief for Service Emergencies” (Docket No EP762). This docket proposes to:

(1) amend procedures for parties seeking a Board order directing an incumbent carrier to take action to remedy a service emergency, (2) indicate that the Board may act in its own initiative to direct emergency service; (3) modify the informational requirements for parties in emergency service proceedings; (4) shorten the filing deadlines in emergency service proceedings and establish a time-frame for Board decisions; and (5) establish an accelerated process for certain acute service emergencies.

In explaining these changes, the Board said:

The amendments aim to address several concerns with 49 C.F.R. part 1146 that appear to diminish the ability of stakeholders to invoke the Board’s processes when they are most needed – during service emergencies that require immediate regulatory intervention. If stakeholders are unable or unwilling to pursue such remedies due to shortcomings of the current regulatory framework, unaddressed service emergencies create substantial negative impacts on the public.

While it does not appear that any of this – hearings, rule changes, plans, or promises – will result in any short-term improvement, it does appear that the STB is finally taking the situation seriously. The carriers have five months to prove that they do, as well.