Senate committee hearing zeroed in on rail service shortcomings

Rail congestion in parts of the nation are slowing grain, automotive and chemical shipments, and railroads need to do more to improve their performance, rail shipper organization representatives and politicians said yesterday at a hearing on freight-rail service conducted by the Senate Committee on Commerce, Science and Transportation.

Rail delays in Minnesota have cost corn, wheat and soybean farmers about $100 million because of lower prices in spring, said U.S. Sen. Amy Klobuchar (D-Minn.), citing a University of Minnesota study finding. Railroads need to address the ongoing delays, she said in a press release.

"Agriculture producers depend on reliable freight rail as a critical component in their overall supply chain," said Klobuchar. "As projections show more traffic on freight rail corridors in the coming years, the need to ensure reliable freight rail service can’t be just an afterthought. It must be a priority."

During his testimony, U.S. Sen. John Thune (R-S.D.), the committee's ranking member, reiterated the ongoing rail-service concerns of South Dakota ag product shippers.

"In all my years of working on rail matters, I have never seen producers more concerned than they are now regarding their restricted capability to move grain to market," he said. "It is my hope that this hearing will continue to bring attention to the rail service backlogs that South Dakota shippers, and shippers nationwide, are currently facing, and encourage continued discussion about both short-term and long-term solutions to address these issues.”

In the automotive sector, rail congestion has cost automakers tens of millions of dollars per month in an effort to avoid traffic snarls, said Alliance of Automobile Manufacturers Vice President of Federal Government Affairs Shane Karr. Meanwhile, chemical shippers are experiencing soaring freight-rail rates and decreasing access to competitive and reliable rail service, said American Chemistry Council President and Chief Executive Officer Cal Dooley, adding that the council supports the recently introduced STB Reauthorization Act of 2014.

"A healthy, efficient and affordable freight-rail system is essential to the success of the chemical industry, many other manufacturers and the U.S. economy overall," said Dooley. "We firmly believe that greater competition and a more equitable approach to resolving rates are not mutually exclusive with a thriving, profitable freight-rail system."

However, today's balanced regulatory system protects shippers and enables the rail industry to continue refining itself to work more efficiently for its customers, said Association of American Railroads President and CEO Ed Hamberger.

"If the economic foundation of the industry is undercut, the rail industry's two key pillars of safety and capacity will be eroded," he said.

Hamberger acknowledged increased demand for rail service, compounded by extreme weather in winter and spring, has prompted service challenges for railroads in some regions of the country. And U.S. rail traffic is at a seven-year high: Average weekly volume was higher in August than in any month since October 2007, and grain shipments were up 16 percent year over year, he said.

But railroads "are working tirelessly" to address the service issues through investments in equipment and people, said Hamberger, adding that billions of dollars are spent each year to expand network capacity, purchase new equipment and hire thousands more workers.

"Railroads are working to restore service to the quality that our rail customers have come to expect and that we expect of ourselves," he said. "They are focused on remedying these issues as quickly and efficiently as possible."

Despite railroads' ongoing investments, both BNSF Railway Co. and Canadian Pacific need to add resources to meet the growing demand for ag products shipping in North Dakota and the upper Midwest, said Sen. John Hoeven (R-N.D.).

"Ultimately, what will resolve these delays is greater rail capacity to not only catch up with delayed shipments but also to manage this year's harvest," he said. "Because of our growing economy and dynamic farm sector, railroads must commit to investing in more rail infrastructure, which means more locomotives, more rail cars and more crews."

BNSF has made substantial commitments to expand infrastructure and increase personnel, but CP needs to make the same type of commitment, said Hoeven.

"It is also imperative that CP implement transparent and fair way to reserve cars and track orders for our farmers and elevators," he said. "The investments and changes we are pushing for will benefit not just North Dakota shippers, but also the railroads themselves as they grow with our state."