Some members of Congress believe they have come up with the right way to address the freight railroad service deterioration that continues to plague the country’s transportation system.
Proposed legislation, called the Freight Rail Shipping Fair Market Act., would prohibit a railroad from raising rates during a service emergency like the current one impacting shippers throughout the United States.
The bill also would allow shippers with their own railcars to assess demurrage charges on the railroads, which shippers accuse of unfairly charging excessive fees for being unable to return rail equipment, too often because railroads make it impossible to meet the deadlines they set.
“This bill will level the playing field and provide railroad customers — many of which are transporting key food and energy products — the service they deserve,” said Rep. Peter DeFazio (D-OR), who is a co-sponsor of the legislation and who serves as powerful chairman of the House Committee on Transportation and Infrastructure.
“It is imperative that our rail network is reliable, and yet consolidation and Wall Street pressures on railroads to cut costs and increase profits have made that near impossible.”
He also said. his bill will also provide the tools and guidance needed by the Surface Transportation Board to fulfill its mandate and better regulate disputes among Class I railroads and their customers, weed out rampant unfair practices, and to incentivize more efficient operations.
More specifically, the committee says the bill will:
- Strengthen the STB’s authority to address rail service emergencies.
- Require rail contracts to include service delivery standards and remedies, while leaving details to be privately negotiated between the railroads and their customers.
- Provide the STB with direction to resolve common carrier obligation complaints.
- Create financial incentives for both the railroads and their customers to efficiently move and return railcars.
- Support freight railroad efforts to identify where freight is located on their systems while in transit.
- Adequately fund the STB to allow for quicker dispute resolution when petitioned.
Of course, this approach can work only if the bill is passed into law. With the upcoming elections looking likely to see a change in who controls Congress, a bill that so far has attracted only Democrat co-sponsors and has no evident support in the Senate seems unlikely to be enacted.
Adding to the legislation’s uncertain future is the fact that committee once influential chairman and congressional leader DeFazio has chosen a placid retirement occupation of fly-fishing in his home state of Oregon rather than run for re-election.
What is clear is that anecdotal evidence indicates railroad service quality has improved only slightly or not at all in most of the country. For example, the failure is impacting the Port of los Angeles, where piers are jammed with containers and warehouses are full because freight can’t move into the interior.
Rail union officials report that new conductors and other railroad worker recruits are walking away in the middle of training sessions rather than run the real risk of being over worked and eventually burned out in the same way they see has happened to veteran workers.
The STB Is Hamstrung
Earlier this year, the STB threatened several of the Class 1 railroads with further financial penalties, to be imposed on a daily basis, because of their continuing failure to provide up-to-date performance data and service improvement plans that had been demanded by the board.
In confronting the rail crisis, the board members have said all the right things and issued orders to the major rail companies, but it turns out that the STB simply is not strong enough to enforce its decrees.
It certainly sounded impressive when the board ordered rail lines to submit data and plans, but less so when the STB had to reveal the railroads either ignored the orders or supplied inadequate data.
Unfortunately, the size of the maximum fines are too small to intimidate these immense companies that boast double-digit billion dollar annual revenues. One thing the new bill would do is require the board to update the amounts of its civil penalties to follow recommendations made by the U.S. Government Accountability Office.
The board also is continuing to consider shipper requests that it mandate reciprocal switching, which is being sought in an effort to introduce more competition into a rail industry where the major players enjoy almost entire regional monopolies.
Under this proposal, railroads would have to allow competing rail companies to use their rail networks in exchange for reasonable accommodation. This has been fiercely resisted by American railroads although it has been used successfully in Canada for years, and the American lines have been doing it secretly among themselves for quite a while.
Rail interests are not happy with the bill. “This imprudent proposal turns the clock back more than 40 years and reinstates an unbalanced regulatory framework that replaces free-market principles with unjustified government mandates,” argues Ian Jefferies, president of the Association of American Railroads, which represents the Class 1 carriers
“Overreaching re-regulation will take us backward and won’t do a thing to solve current service challenges and supply chain problems,” he added. By virtue of today’s balanced regulatory framework, America’s freight railroads are, by virtually any measure, the best national freight rail system in the world.”
An extensive list of Shipper groups have voiced their support for the measure, including the Freight Rail Customer Alliance, National Industrial Transportation League, American Farm Bureau Federation, Agriculture Transportation Coalition, and the American Chemistry Council.
NITL Executive Director Nancy O’Liddy said. “Due to supply chain challenges complicated by railroad operation decisions, this bill also addresses the continued debilitating service problems being experienced by NITL members who move billions of dollars’ worth of freight on our nation’s rails.”
President of the American Chemistry Council Chris Jahn agreed. “This important legislation contains many thoughtful solutions that complement and line up well with the much-needed reforms being considered by the STB,” he said.
Jahn stressed, “We urge Congress and the STB to work together on meaningful reforms that will incentivize the railroads to provide reliable and competitive service and hold them accountable when they fail to deliver.”
Contributing to the rail service crisis has been the continuing challenge faced by the trucking industry in finding enough qualified drivers. This driver shortage has been exacerbated after the state of California recently starting to enforce a state law that pretty much bans the use of independent truck owner-operators in that state.