Shippers Push Congress to Fix Rail Troubles After Averted Strike

Freight shippers are pressing Congress to address rail delays and service problems that slow the supply chain, in the wake of last week’s eleventh-hour deal averting a crippling national rail workers’ strike.

“This agreement helps put one major problem to rest, but also highlights the work that needs to be done to resolve the freight rail problems that are continuing to harm the U.S. economy,” dozens of groups that ship goods by rail said in a recent letter to lawmakers.

Shipping groups are using the close call over a strike to push Congress to advance contentious legislation that aims to strengthen the authority of the Surface Transportation Board, an independent agency that oversees rail, to address service emergencies and require contracts to have delivery standards.

“Now we’re back to the same poor rail service that we’ve come to know and expect from the railroads over the past few years and it’s gotten worse over time,” Chris Jahn, president and CEO of the American Chemistry Council, said.

Trains carry nearly 28% of US freight, the second most behind trucks, according to data from the Transportation Department. Farmers, manufacturers, and energy producers who ship by rail have been hurt by recent rail delays, the Rail Customer Coalition wrote in its recent letter.

The major railroads, including Union Pacific Corp., Burlington Northern Santa Fe, and Norfolk Southern Corp., have cut a large portion of workers in recent years, according to the STB, but are working to now increase hiring. Conditions for remaining workers, particularly sick leave, dominated negotiations that nearly led to a major strike last week.

Food Supply Trouble Pinned on Railroad ‘Negligence,’ Layoffs

Photo: Anna Moneymaker/Getty Images

President Joe Biden shakes hands with Labor Secretary Marty Walsh during an event at the White House on Sept. 15, 2022, in Washington, DC. Biden announced a tentative labor agreement between freight rail companies and unions.

‘Force Them’

The STB has been using rulemakings and emergency authorities in an effort to improve service. Lawmakers, labor, and shippers say more needs to be done.

House lawmakers on transportation and agriculture committees recently proposed a bill (H.R. 8649) to expand the board’s emergency powers to address rising rail service complaints. The bill, called the Freight Rail Shipping Fair Market Act, also would stiffen fines.

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More than 150 groups representing rail labor and freight rail customers support the bill, House Transportation and Infrastructure Chair Peter DeFazio (D-Ore.), a cosponsor, said.

“The railroads have no incentive to change their behavior—they’ve been raking in record profits despite dismal service—and the STB lacks the will to force them to do so,” DeFazio, who is retiring, said. “Our bill will provide the STB with the tools they need.”

The American Chemistry Council, which backs the bill, found in a survey published last month that about 97% of companies reported altering their operations because of supply chain problems and transportation disruptions.

More lawmakers are signing on to support the legislation, but it currently only has Democratic sponsors. The transportation panel listed STB reauthorization among its priorities for the year, but it’s running out of time to advance the bill.

“For too long freight rail companies have focused on cutting costs and lining the pockets of their shareholders over providing timely and reliable service so our farmers, manufacturers, and producers can get their goods to market,” Rep. Cindy Axne (D-Iowa) said in a statement this week announcing her support of the bill.

The legislation faces heavy opposition. The Association of American Railroads, which represents major freight railroads, opposes the bill. It’s also opposed by a coalition of groups including the Competitive Enterprise Institute and the Institute for Policy Innovation, that argue it would “significantly increase bureaucracy.”

Railroads understand that service is “not at the level customers expect or deserve,” Jessica Kahanek, AAR’s senior director of media relations, said, adding that “these temporary challenges do not justify the proposed STB reauthorization bill’s abandonment of the market-based principles.”

The Rail Customer Coalition wrote in its recent letter that service issues have led to higher prices and disruptions for products including food and fuel. Max Fisher, chief economist at National Grain and Feed Association, said more grain is expected to move by rail in the coming months and the group’s members continue to worry there aren’t enough rail crews to service the demand.

Workers Needed

The STB convened a hearing earlier this year to look into service complaints, saying that over the last six years, the major railroads collectively have cut their workforce 29%, which is about 45,000 employees. Unions and customers have also pointed to that as a reason behind backups.

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“The driving cause of so many of these problems are just the drastic reductions in workforce levels that we’ve seen over the last several years,” Greg Regan, president of the Transportation Trades Department, AFL-CIO, said. His group supports the bill to give the board more tools.

The rail industry says hiring is progressing and August employment is up 6.5% compared with January of this year, according to the Association of American Railroads.

Another issue on the industry’s radar is a proposed rule that could affect the sizes of crews. A proposal from the Biden administration would require at least two crew members on a train. Labor unions support the rule, while railroads oppose it.

Trains to Need at Least Two Crew Members Under Proposed Rule

The Federal Railroad Administration is extending the comment period on the proposal, according to a notice published in the Federal Register Thursday. Sen. Cynthia Lummis (R-Wyo.) pushed the FRA to extend the comment period, saying those who would be affected by the rule have been tied up with the contract negotiations.

Regan said railroads have tried to make the crew-size requirement a bargain issue, but “at its core, it is a safety issue.”

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

To contact the editors responsible for this story: Sarah Babbage at sbabbage@bgov.com; Robin Meszoly at rmeszoly@bgov.com