Food Supply Trouble Pinned on Railroad ‘Negligence,’ Layoffs (1)

Labor unions are blaming freight railroad operators for cutting employees to streamline operations, contributing to rail delays and straining the nation’s food and energy supply chains.

Worker shortages caused by layoffs have hurt the U.S. economy by delaying freight rail shippers, the Transportation Trades Department, AFL-CIO told the Surface Transportation Board rail regulator in a letter released Tuesday. It specifically called out grain companies’ concerns about disruption on tracks operated by Union Pacific Corp., Burlington Northern Santa Fe, and Norfolk Southern Corp.

Rail labor unions, along with agriculture and energy shippers, say precision-scheduled railroading has allowed for leaner operations, but at the expense of job cuts and service problems. PSR is a strategy used by railroads to streamline their operations by adjusting their scheduling and using fewer rail cars.

“The notion that our nation’s food supply chain is threatened by the continued negligence and intransigence of the railroad industry is both stunning and unacceptable,” Greg Regan, president of TTD, wrote to STB Chairman Martin Oberman.

Photo: Bing Guan/Bloomberg

Railroad oil tankers in the freight depot in California.

Lawmakers and the Biden administration have sought to address supply chain bottlenecks through proposed legislation and executive orders. The Surface Transportation Board, which oversees freight rail rate and service issues, announced last week that the panel would hold a hearing this month about the recent rail service problems.

Class I railroads, the nation’s largest railway carriers, have cut their workforce “to the bare bones in order to reduce costs,” decreasing it by 29%, or roughly 45,000 employees, over the last six years, Oberman said last week.

STB has directed officials from BNSF, CSX Transportation Inc., Norfolk Southern, and Union Pacific to appear at the hearing. Oberman said the board will ask railroads what they are doing to fix the delays, and consider how the STB can use its authority to address them.

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CSX said it plans to participate in the hearing and would respond to STB’s concerns then, and Norfolk Southern also said it will be at the hearing. Union Pacific said in a statement that it is working to address service concerns by adding locomotives and hiring additional workers.

The STB’s attention to the issue comes as the House Transportation and Infrastructure Committee weighs further authority for the regulator as part of reauthorization legislation. Lawmakers last year asked the Government Accountability Office to study the impact of PSR, and said at a March hearing that they were waiting for the watchdog’s results.

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Ethanol, Food Disruptions

Complaints about service disruptions have poured into the STB in recent weeks. Chris Bliley, senior vice president of regulatory affairs at Growth Energy, said the group’s 89 ethanol producers rely on rail for nearly 70% of shipments, and have reported many disruptions, including when one train sat for 12 days before moving.

The National Grain and Feed Association wrote to Oberman, blaming Union Pacific, BNSF, and Norfolk Southern for train delays when picking up and delivering grain and feed products. The group said one of its members spent an extra $3 million on secondary freight, and wants the STB to request weekly service updates from the carriers.

Read more: Why Supply Chains Are Entering Third Year of Chaos: QuickTake

Katie Farmer, president and CEO of BNSF, said in a response letter that the rail network was aware it wasn’t “currently meeting our customers’ service expectations” and that it was taking “aggressive measures” to improve. Farmer said the company faces the same attrition and hiring challenges as others, but plans to hire 1,000 workers this year.

The Biden administration has also urged the STB to act. Agriculture Secretary Tom Vilsack recommended several steps, including allowing private railcar owners to assess delay charges on the railroads for inefficient car use.

Labor unions argue the root of the problems come from job cuts ahead of the pandemic and more recent attendance policies that have led to resignations. BNSF cut its train and engine workforce by 27%, Norfolk Southern by 24%, and Union Pacific by 32% in the five years before the pandemic, TTD said in its letter. The International Association of Sheet Metal, Air, Rail and Transportation Workers expressed similar concerns earlier this month.

TTD wrote in the letter that they “call for action from STB and from Congress on the issues of service quality.” While the transportation board can issue fines and findings, Regan said the board must be able to effectively enforce the law as it’s currently written—or may need Congress to give it more authority.

“The federal government as a whole needs to address the problems that have been created by bad business practices in the railroad industry,” Regan said in an interview.

To contact the reporter on this story: Lillianna Byington in Washington at lbyington@bloombergindustry.com

To contact the editors responsible for this story: Anna Yukhananov at ayukhananov@bloombergindustry.com; Sarah Babbage at sbabbage@bgov.com