An August request from the Surface Transportation Board (STB) and the Federal Railroad Administration (FRA) asking the Class I railroads to report how they’re addressing service issues amid rising rail volumes got a response from shippers as well.
Shippers seek data for first-mile/last-mile movements
A coalition of shippers is asking the Board and FRA to consider collecting data covering first-mile and last-mile rail movements so that the Board can have a more informed view of rail service.
“Our organizations and our members believe that the omission of first-mile/last-mile data from the service data being reported to the Board is a significant and growing concern. Absent such data, the Board, shippers, and receivers lack relevant information as to how the rail networks are actually performing and whether carriers are providing, and shippers are receiving, service that comports with the railroads’ common carrier obligation and that can support restoration of the general economy,” the shippers said in a joint letter dated Aug. 31.
Groups signing the letter included the Freight Rail Customer Alliance, the National Coal Transportation Association, the National Industrial Transportation League and the Private Railcar Food and Beverage Association.
The shippers’ coalition argued that STB should collect first-mile/last-mile data because it helps to assess how demurrage charges are applied in situations where service to individual shipper facilities is questionable.
They also said the data currently being collected omits first-mile/last-mile service for railcars that aren’t part of unit trains. Unit trains typically move a single commodity, whereas manifest trains haul a variety of commodities.
“Cars that are part of a unit train are captured within unit train average train speed and dwell, and non-unit train rail cars are presumably captured within average train speed and dwell, for the period they are part of a longer train,” the shippers said. “The problem is that these individual cars are not part of a larger train during first-mile/last-mile service, and thus their data is not captured during those intervals.”
Furthermore, the railroads have been increasing their deployment of manifest trains because of precision scheduled railroading, the shippers said.
“We recognize that collecting and compiling first-mile/last-mile information is not a simple matter, as it involves aggregating data from numerous individual and often diverse areas and types of shippers,” the shippers’ coalition said. “At the same time, the information is certainly something that the railroads collect, compile, and utilize, as the first-mile/last-mile operations require a substantial commitment of railroad resources, including personnel, equipment, and management, and it is not something that can be provided randomly, and even less so in a PSR environment. Moreover, it is a function that the Class I railroads have increasingly outsourced to their short-line partners, which now originate or deliver nearly one out of every five railcars.”
Class I railroads say they’re working with customers
Meanwhile, in individual letters to STB, the CEOs of the Class I railroads said they have been working with customers to see how they can respond to their needs. They also said they have brought back furloughed employees and put previously stored locomotives back into service.
These letters also updated the Board about what service progress has occurred since May.
Canadian railway CN (NYSE: CNI) said in a Sept. 3 letter that it has been placing employees in areas where there might be upcoming customer demand, such as Iowa, where there will be an anticipated grain harvest. It also said that more than 1,600 furloughed employees systemwide had been reemployed since mid-June. Nearly 600 employees were still on furlough in the U.S. as of last Thursday, although some of those have recall dates through this Wednesday.
The railway also said it has re-introduced the majority of the 731 locomotives it had placed in storage in May, with only 240 remaining in storage as of Aug. 27. It also moved 200 hopper cars from Canada to the U.S. in July and August to serve an uptick in demand.
CSX (NASDAQ: CSX) wrote in a Sept. 1 letter that it is “well-prepared” to handle the upcoming harvest and fall peak season, with its locomotive fleet now within 9% of its pre-pandemic levels. During the weeks when the pandemic hit hardest, CSX had over 30% of its locomotive fleet in storage. The company also said it has brought back roughly 80% of the employees it furloughed because of the pandemic.
“We continue to engage our customers with frequent and meaningful communication and to reinforce our preparedness for providing safe and effective rail service as we navigate the pandemic tougher,” CSX President and CEO Jim Foote said.
Norfolk Southern (NYSE: NSC) said it has undertaken an “aggressive campaign” to meet with customers across its system so that it can hear customers’ needs and understand their markets, and then come up with an action plan to address issues.
Norfolk Southern has approximately 270 locomotives and 15,500 railcars in storage that it can pull if demand warrants. The railroad’s furlough return is 67%, with 550 train and engine (T&E) previously furloughed employees back at work.
“Let me assure you that BNSF will continue to communicate frequently with our customers across a number of complementary communications platforms, including regular direct interactions with our sales and marketing teams, in order to provide timely and relevant information in support of our mutual business and decision-making needs,” said BNSF President and CEO Carl Ice.
Ice also said velocity was up 17% year-to-date compared with 2019, with local customer service performance at 90.9% year-to-date, which is 4.1% higher than the same period in 2019.
Canadian Pacific (NYSE: CP) wrote that its on-time performance quarter-to-date for its U.S. operations improved year-over-year despite the pandemic. at 96% versus 92% for the same period a year ago. Train speed was also up 8% year-over-year.
Of the 1,162 train and engine (T&E) employees working in the U.S., 375 were on furlough at the beginning of the quarter, but 80 are expected to be called back sometime this quarter, with an additional 121 T&E employees expected to be called back by year’s end. Meanwhile, 991 locomotives out of a fleet of 1,300 units are in active service or are available, with an additional 19 locomotives in storage that are ready for service.
“Adjusting, controlling and tempering our assets and crew availability in step with customer demand is normal, ongoing business practice for us. Our team drills into the operating plan on a weekly basis to right size our resources in response to the current sizing and needs of our customers,” said CP President and CEO Keith Creel in an Aug. 24 letter. “This requires communication and working with our customers, which we do, as they recover their business and supply chains. Yes, this requires judgment and forecasting based on experience, both on the operating and the sales and marketing side. And while we recognize we still have work to do, we believe we do this better than most.”