Rail Supply Chain Woes Spur Biden Officials’ Turn to Regulator

Biden officials are getting more involved in freight rail service concerns and regulation as supply chain slowdowns plague the administration.

Congestion and service issues have become a “real problem” for industries across the country that need rail to move their goods, and the situation is now a priority for the administration, Transportation Secretary Pete Buttigieg told the board that oversees freight rail rate and service issues on Tuesday.

Buttigieg joined officials from the Agriculture Department and the independent Federal Maritime Commission at the start of the Surface Transportation Board’s two-day public hearing this week about recent rail service complaints. The hearing comes as shippers and labor unions complain that U.S. railroad business decisions have led to rail delays, worker shortages and strained supply chains, while rail executives blame the pandemic.

“The supply chain crisis has left us moving more goods with a smaller workforce, leading to higher costs and longer delays,” Buttigieg said.

Photo by Michael M. Santiago/Getty Images

Buttigieg speaks during an event in New York on April 8.

Surface Transportation Board Chairman Martin Oberman said this was the first time in more than 20 years that a transportation secretary came to address the board.

“The fact that the secretary is here this morning indicates the seriousness of the problems that have instigated this hearing,” Oberman said.

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Buttigieg called for more investment on the rail workforce since “turnover is still far above normal levels” and for the board to expand its data collection, as well as require improvement plans from railroads. He suggested the railroads consider the need for more employees and the impact of increasing service without expanding the workforce.

Traffic trouble on the rails have contributed to supply chain problems for different businesses and shippers, particularly in the agriculture sector.

Deputy Secretary of Agriculture Jewel Bronaugh said she came before the board to emphasize how serious rail service issues have become for farmers and ranchers. Poor rail service has halted the movement of grain, while agriculture shippers are paying 50 to 100% increase in cost to get service, she said.

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“In recent months, rail service complaints have grown in number and urgency,” Bronaugh said at the hearing, urging the board to use all the authority it has. “We cannot continue a system where the railroads face no consequences for providing unpredictable service.”

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. The board can take certain actions — it proposed a rule change on Friday that aims to bring immediate relief for shippers facing poor rail service. The rule would allow the board to direct emergency rail service on its own.

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

To contact the editors responsible for this story: Giuseppe Macri at gmacri@bgov.com; Bennett Roth at broth@bgov.com