The federal Surface Transportation Board issued the following statement on Friday, May 6:

The Surface Transportation Board today announced that it will require certain railroads to submit service recovery plans as well as provide additional data and regular progress reports on rail service, operations, and employment.  These measures are meant to inform the Board’s assessment of further actions that may be warranted to address the acute service issues facing the rail industry and to promote industry-wide transparency, accountability, and improvements in rail service.

This decision follows extensive testimony on severe rail service issues reported by a wide range of witnesses — including agricultural, energy, and other shippers, as well as government officials, rail labor, and rail experts — during the Board’s April 26 and 27, 2022 public hearing in Urgent Issues in Freight Rail Service. The Board has also continued to review and monitor weekly rail service performance data, which indicate trends in deteriorating service. The decision focuses on the adequacy of recovery efforts involving BNSF Railway Company (BNSF), CSX Transportation (CSX), Norfolk Southern Railway Company (NS), and Union Pacific Railroad Company (UP), and it requires more comprehensive and customer-centric reporting of all Class I railroads’ service metrics.

“Our freight rail service hearing highlighted the grave concerns of shippers and others regarding freight rail service,” said Chairman Martin J. Oberman. “While the railroads have faced certain challenges over the last few years, the evidence produced at last week’s hearing is overwhelming that the railroads’ longstanding practice of reducing operating ratios by cutting employment levels, mothballing locomotives, and eliminating other essential resources are the central reasons  why farmers have been hours away from depopulating herds, manufacturing facilities have reduced operating hours, and shippers cannot get their products to market on time or receive essential raw materials for their companies. These failures are harming the nation’s economy and, in my view, are contributing to the inflationary forces affecting food and fuel in particular.”

“Requiring additional reporting from railroads may not be the final result of our hearing on service issues. Today’s decision is an immediate step the Board can take to enable needed monitoring of the improved efforts the railroads have been promising for months, and to determine if additional regulatory steps are necessary to promote reliable service.”

Today’s decision requires all Class I carriers to submit several specific reports on rail service, performance, and employment.  In addition, BNSF, CSX, NS, and UP are required to submit service recovery plans, progress reports, historical data, and participate in bi-weekly conference calls with Board staff.

A recording of the Board’s April 26 and 27, 2022 hearing in Urgent Issues in Freight Rail Service, may be viewed on the Board’s YouTube page.  Today’s decision in Urgent Issues in Freight Rail Service—Railroad Reporting, Docket No. EP 770 (Sub-No. 1), may be viewed and downloaded here.

Class I railroad officials have a two-day-long hearing before the federal Surface Transportation Board (STB) to prepare for later this month.

Reports from shippers to STB regarding poor service — the latest being a letter directly from the National Grain and Feed Association, a group representing more than 8,000 facilities — as well as a letter from Transportation Division President Jeremy Ferguson regarding precision scheduled railroading (PSR) and the self-inflicted worker shortages that have come with it have led up to the April 26 and 27 hearing.

The board, an independent and bipartisan federal agency charged with the economic regulation of various modes of surface transportation, primarily freight rail, announced the meeting April 7 in the light of indications of poor performance data.

“Rail network reliability is essential to the Nation’s economy and is a foremost priority of the Board. In recent weeks, the Board has heard informally from a broad range of stakeholders about inconsistent and unreliable rail service. The Board has also received reports from the Secretary of Agriculture and other stakeholders about the serious impact of these service trends on rail users, particularly with respect to shippers of agricultural and energy products. These reports have been validated by the Board’s weekly rail service performance data.”

Board Chairman Martin Oberman went into additional detail about how job cuts in particular have hampered the carriers.

“I have raised concerns about the primacy Class I railroads have placed on lowering their operating ratios and satisfying their shareholders even at the cost of their customers.  Part of that strategy has involved cutting their work force to the bare bones in order to reduce costs,” he said. “Over the last six years, the Class Is collectively have reduced their work force by 29% – that is about 45,000 employees cut from the payrolls.

“In my view, all of this has directly contributed to where we are today – rail users experiencing serious deteriorations in rail service because, on too many parts of their networks, the railroads simply do not have a sufficient number of employees.”

Carriers summoned to appear include BNSF Railway Company, CSX Transportation, Inc., Norfolk Southern Railway Company, and Union Pacific Railroad Company. Executive-level officials from the other three Class Is also were invited to attend, as were labor organizations and shippers.

The hearing will take place at the Board’s headquarters in Washington, D.C., with each session beginning at 9:30 a.m.

Tommy Manuzewski, a probationary member of our union’s Local 1566 (Buffalo, N.Y.), was severely injured in an accident late last month after being struck by a train in a Norfolk Southern yard.
Brother Manuzewski’s arm was amputated and his collarbone and multiple vertebrae were broken as well. He underwent successful emergency surgery after being placed in a medically induced coma after the accident, and his recovery likely will take years, doctors have said.
Because of his probationary status, his coverage through the railroad benefit system had not begun. In the latest update on Brother Manuszewski’s status published Nov. 6, Local 1566 Legislative Representative Joseph Kaier said that treatment is ongoing, focusing on pain management and in-patient rehabilitation.
An online fundraiser has been established by his local to help support Brother Manuzewski on GoFundMe.
“Tommy and his family have been devastated by these events,” Kaier wrote. “Tommy’s career as freight conductor is over, and soon his family’s bills will be racking up.”
Manuzewski helps care for his elderly parents and was to be married to his fiancee, Tammi Jo Smith, next summer.
Please contribute if you are able.


Net Earnings: Decreased to $1.131 billion from $1.338 billion.
Revenue: Decreased to $4.602 billion from $5.893 billion.
Operating Income: Decreased to $1.73 billion from $2.007 billion.
Operating Expenses:Decreased to $2.872 billion from $3.886 billion.
Operating Ratio: Improved by 3.7 points to 61.1%.
Link to read BNSF’s full earnings report.
 

Net Earnings: Decreased to C$908 million from C$1.25 billion.
Earnings Per Share: Diluted earnings per share decreased 59% to C$0.77 from C$1.88 and adjusted diluted EPS decreased 26% to C$1.28 from C$1.73.
Revenue: Decreased 19% to C$3.21 billion from C$3.96 billion.
Operating Income: Decreased 53% to C$785 million from C$1.27 billion.
Operating Expenses: Increased 6% to C$2.42 billion.
Operating Ratio: Declined by 18 points to 75.5%; adjusted operating ratio declined 2.9 points to 60.4% from 57.5%.
Link to read CN’s full earnings report.
 

Net Earnings: Decreased to C$635 million from C$724 million.
Earnings Per Share: Diluted earnings per share decreased 10% to $4.66; adjusted diluted earnings per share decreased 5% to $4.30.
Revenue: Decreased 9% to C$1.79 billion from C$1.98 billion.
Operating Income: Decreased to C$770 million from C$822 million.
Operating Expenses: Decreased to C$1.02 billion from C$1.16 billion.
Operating Ratio: Improved 140 basis points to 57%.
Link to read CP’s full earnings report.
 

Net Earnings: Decreased to $499 million from $870 million.
Earnings Per Share: Decreased to $0.65 from $1.08.
Revenue: Decreased 26% to $2.26 billion from $3.06 billion.
Operating Income: Decreased 37% to $828 million from $1.31 billion.
Operating Expenses: Decreased 19% to $1.43 billion from $1.76 billion.
Operating Ratio: Declined 5.9 points to 63.3%.
Link to read CSX’s full earnings report.
 

Net Earnings: Decreased to $109.7 million from $128.7 million.
Earnings Per Share: Decreased to $1.16 per diluted share from $1.28.
Revenue: Decreased to $547.9 million from $714 million.
Operating Income: Decreased to $180.4 million from $208 million.
Operating Expenses: Decreased to $367.5 million from $506 million.
Operating Ratio: Improved 3.8 points to 67.1% from 70.9%; adjusted operating ratio worsened 1.5 points to 65.2% from 63.7%.
Link to read KCS’s full earnings report.
 

Net Earnings: Decreased to $392 million from $722 million.
Earnings Per Share: Diluted earnings per share decreased to $1.53 from $2.70.
Revenue: Decreased 29% to $2.1 billion from $2.9 billion.
Operating Income: Decreased to $610 million from $1.1 billion.
Operating Expenses: Decreased 21% to $1.5 billion from $1.9 billion.
Operating Ratio: Worsened to 70.7% from 63.6%.
Link to read NS’s full earnings report.
 

Net Earnings: Decreased to $1.13 billion from $1.57 billion.
Earnings Per Share: Decreased to $1.67 per diluted share from $2.22 per diluted share.
Revenue: Decreased 24% to $4.2 billion from $5.6 billion.
Operating Income: Decreased 28% to $1.13 billion from $1.57 billion.
Operating Expenses: Decreased 22% to $2.59 billion from $3.34 billion.
Operating Ratio: Worsened 1.4 points to 61.0% from 59.6%.
Link to read UP’s full earnings report.
 


Notes: 

  • BNSF’s earnings report had not been released as of July 29, 2020. This post will be updated when the information becomes available.
  • Operating ratio is a railroad’s operating expenses expressed as a percentage of operating revenue, and is considered by economists to be the basic measure of carrier profitability. The lower the operating ratio, the more efficient the railroad.
  • All comparisons are made to 2019’s second-quarter results for each railroad.
  • All figures for CN & CP are in Canadian currency, except for earnings per share for CP

Norfolk Southern has sued in federal court an engineer and conductor who were aboard a freight train than collided with another NS train last month in Scott County, Ky.
According to the Lexington Herald-Leader, the suit claims the crew ignored a signal and failed to reduce the speed of their moving train and prevent the March 18 collision with a stopped train.
NS’s lawsuit seeks compensation from the crew for damages caused by the collision, which destroyed two locomotives and caused 13 cars to derail, the newspaper reported.
Read the full story at the Lexington Herald-Leader’s website.

An online fundraising effort has been started for a SMART TD conductor and an engineer who were severely injured Feb. 15 when their train derailed in Attica, N.Y.
Conductor Ben Garland of Local 1566 out of Buffalo, N.Y., and engineer Dave Tobey were hospitalized after their Norfolk Southern locomotive left the tracks and caught fire.

The fundraiser is available here: https://www.gofundme.com/dave-bens-railroad-medical-fund
Proceeds from the fund will be divided evenly among the men’s families as they recover from their injuries, which include fractures, spinal trauma and facial injuries.
A Local 1566 member who said he didn’t want to be named said he went to visit the accident site and couldn’t believe what he saw.
“I’ve never seen anything like it,” he said.
Online video footage from a drone posted by WHAM TV Channel 13 out of Rochester N.Y. shows a sinkhole underneath the tracks at the accident site. Local authorities said the cause of the derailment was under investigation.
Members have been pulling together to help the families of both men as they begin the road to recovery from their injuries.
“The families have been astonished by the amount of support,” said the Local 1566 member. “We’ve worked with these people — they’re family.”

ns_Logo U.S. railroad operator Norfolk Southern Corp all but rejected a $28.4 billion acquisition offer by Canadian Pacific Railway Ltd on Tuesday, calling it “low-premium” and warning it would face significant regulatory hurdles.

While Norfolk Southern said it would carefully evaluate the offer, its sour response represents a setback to Canadian Pacific as well as its largest shareholder, William Ackman’s activist hedge fund Pershing Square Capital Management LP.

Read more from Reuters.