Responding to pressure to be more transparent about their service performance following the major railroad mergers of the 1990s, the freight railroads began providing shippers and regulators weekly data on metrics such as rail car velocity and terminal dwell times.
But one measure that they haven’t been providing, asserts an executive at one of the country’s largest agribusiness companies, is how well they’ve been performing against the promise of Precision Scheduled Railroading (PSR), an operating methodology adopted by most of the railroads and one that can have a significant effect on first-mile and last-mile delivery for customers.
“As far as a rail shipper is concerned, the game is won or lost in that first-mile, last-mile segment of the supply chain,” said Brad Hildebrand, global lead for rail and barge at Cargill Inc., during a fireside chat Thursday with FreightWaves Senior Staff Reporter Joanna Marsh at FreightWaves Last Mile Logistics Summit. “If that’s not going well, it can have a huge impact on operations.”
Hildebrand recalled a 2017 hearing at the Surface Transportation Board (STB), which oversees rail rates and service, on deteriorating service at freight rail carrier CSX (NASDAQ: CSX) as it attempted to implement PSR. “I was quoted as saying PSR is nothing more than doing less with less,” Hildebrand said.
“It’s important to point out that the railroads are looking to optimize their networks to ensure that they’re moving railcars efficiently — which is always good. But they’re also streamlining their operations by trying to reduce the number of excess cars that are out on the network to really limit and manage the flow of cars in and out of their yards. So the hope and prayer and promise of PSR has always been, we’ll improve the efficiency of our network, and in exchange we will become more consistent as a railroad operator.”
To help hold the railroads to that promise, a coalition of shippers wrote the STB and the Federal Railroad Administration in late August asking that they consider collecting first-mile and last-mile rail movement data from the railroads so that they can get a more informed view of rail service.
“Many of our members have become increasingly aware of and concerned by the gap between the service data that the railroads report to the board and the level of service that shippers actually receive in the real world,” the coalition letter stated. “We believe that the gap stems in substantial part from the exclusion from the reporting of the first-mile/last-mile performance for traffic that does not move in unit trains.”
Hildebrand confirmed that Cargill, which generated $114 billion in revenue and operates in 70 countries, according to the company’s 2020 annual report, is a strong supporter of the effort to extract more transparency from the railroads.
“A number of carriers currently measure this during their normal course of operations, so we don’t think this would be a burden to add it to the list of metrics they provide to the STB,” he said. “It would help us and the STB measure and monitor how well the railroads are performing at a given time, and how they’re doing quarter to quarter, year over year, and would provide us with a very good snapshot of how effective they are.”
Hildebrand stressed that the whole notion of PSR was that the railroads would extract inefficiencies from their system, which would allow them to better serve their shipper customers. “If that’s so, they should be able to show not only how fast they move us from A to B, but also how accurate is their first-mile/last-mile performance.”