Letter to Class I railroad execs from STB and FRA focuses on recent service issues

Leadership from the United States Department of Transportation’s Federal Railroad Administration (FRA) and the Surface Transportation Board (STB) penned letters to CEOs at the seven North American Class I railroads yesterday, focusing on recent railroad service issues, amid the ongoing COVID-19 pandemic.

The letter’s authors—Ronald Batory, FRA Administrator, Ann Begeman, STB Chairman, Martin Oberman, STB Vice Chairman, and Patrick Fuchs, STB Board Member—explained that the objective of the letter was to reemphasize the importance of safe, dependable rail service, at a time when the nation is focused on restoring jobs and economic recovery.

And the letter commended the Class I rail carriers for what it called a “ldquo;precedent-setting safety performance for the first five months of the year,” coupled with its collective efforts focused on provided reliable service and enhanced communication to rail shippers, going back to the beginning of COVID-19 pandemic, which has been well received throughout the U.S.

But that praise came with the caveat that both the STB and FRA have been alerted about service issues, in the form of missed industrial switches and excessively late or annulled trains due to crew availability issues.  

“As you know, with both increasing intermodal and carload volumes and a projected robust harvest fast approaching, railroad employee availability, together with sufficient equipment resourcing, is essential for safe, fluid rail service in support of the nation’s economic recovery,” the letter stated. “Given the challenges related to changing demand patterns and operating conditions, increased communication and transparency with rail shippers is especially important to ensure they have the information needed to plan their businesses and meet their own customers’ needs. It is our expectation that there will be heightened emphasis on improving employee availability, equipment resources, and robust communication to quickly resolve service issues as they arise and to prevent them from becoming widespread. Again, we commend the rail industry for its efforts during this challenging time for our nation, and we look forward to continuing to work with you to promote a safe and reliable rail network.”

In a series of Tweets posted yesterday, Tony Hatch, an independent railroad analyst and president of New York-based ABH Consulting, urged both the STB and FRA to stay in their respective “lanes,” as it relates to this letter.

“While I respect the [letter’s] four signatories, this isn’t their job!” he noted. “Railroads faced the all-time sawtooth—demand, destruction, and recovery. Recent metrics indicate they did it better—and safer—than could have expected.  And intermodal isn’t regulated.”

Railroad industry stakeholders have long maintained that service levels are typically at their peak during downturns and low-volume periods.

That was made clear by Bill Rennicke, partner at management consultancy Oliver Wyman, in the 2020 LM Rail/Intermodal Roundtable.

“The railroads have made structural changes to people, processes and infrastructure during the past five years that have made them more resilient, more agile, and more responsive in shifts to network demand. There is reason for optimism that this high service performance will continue as volumes return,” he said.

And Hatch added, in the same roundtable, that that the railroads have always shown the ability to follow the market down and adjust their operations to meet reduced volume.

“Their record in scaling back up is considerably more mixed,” he said. “Should we have a more energetic rebound from the current economic downturn, it will be an excellent test of the PSR (precision scheduled railroad) philosophy. PSR is supposed to make the railroads nimbler and better able to adjust to changing market conditions, either up or down. It should be interesting to observe.”