A bill introduced by leaders in the U.S. House on Aug. 2 and endorsed by the SMART Transportation Division seeks to address complaints levied against the Class I rail carriers brought by customers and echoed by rail unions in hearings in the spring before the Surface Transportation Board (STB).

See a recap of that testimony here.

The Freight Rail Shipping Fair Market Act (H.R. 8649) reauthorizes the STB, the federal agency that oversees the economic regulation of freight rail in the country.

Among the bill’s purposes, according to a release from the U.S. House Transportation Committee: 

  • Strengthening STB’s authority to address rail service emergencies;
  • Requiring rail contracts to include service delivery standards and remedies, while leaving details to be privately negotiated between parties;
  • Providing STB with clear direction to resolve common carrier obligation complaints;
  • Creating financial incentives for both railroads and their customers to efficiently move railcars;
  • Supporting freight railroad efforts to identify where freight is located on their systems while in transit; and
  • Adequately funding STB to allow for quicker dispute resolution when petitioned. 

“I am proud to introduce the Freight Rail Shipping Fair Market Act with Chair DeFazio, Chair Scott, and Chair Costa to improve rail shipping nationwide,” Rail, Pipeline and Hazardous Materials Subcommittee Chair Donald M. Payne Jr. said. “The freight rail companies have focused on profits instead of performance and it has led to delays and problems in how we transport commodities to farms, factories, and stores across the country. My bill gives the Surface Transportation Board the power to prohibit rail rate increases during a rail emergency and resolve rail emergencies when they occur. This bill will improve the speed and reliability of rail service and guarantee that freight rail shipping continues to improve in the future without unnecessary regulations.” 

On the heels of his testimony before the STB in April, SMART-TD President Jeremy Ferguson testified in June before Payne’s subcommittee discussing labor’s concerns with rail operating tactics under Precision Scheduled Railroading (PSR).

U.S. Rep. Peter DeFazio of Oregon, chair of the House Transportation and Infrastructure Committee, who was critical of the railroads’ PSR tactics in a May appearance before the rail subcommittee, lent his support to the legislation.

“I am pleased to join Chair Payne on the Freight Rail Shipping Fair Market Act, which will hold the freight rail industry accountable for their appalling service to shippers and ultimately help American families burdened by the increased price of goods,” DeFazio said. “It is imperative that our rail network is reliable, and yet consolidation and Wall Street pressures on railroads to cut costs and increase profits have made that near impossible. This bill will level the playing field and provide railroad customers—many of which are transporting key food and energy products—the service they deserve. This bill will also provide the tools and guidance the Surface Transportation Board needs to fulfill its mandate and better regulate disputes among Class I railroads and their customers, weed out unfair practices, and incentivize efficient operations. I look forward to putting these policies into action, empowering the Board, and boosting competition in the freight rail industry.” 
 
“Whether carrying inputs to our farmers or moving their products to market, rail is a vital tool in the American agriculture industry. This fact has become increasingly apparent as rail service issues have created challenges for our farmers, grain elevators, and ethanol producers and resulted in increased costs for producers and consumers alike,” Agriculture Chair David Scott said. “I want to thank Chair DeFazio and Chair Payne for their work on this legislation, particularly their work with the agriculture community to address their concerns. I am proud to join as an original cosponsor of the Freight Rail Shipping Fair Market Act.”
 
“The pandemic has wreaked havoc on every segment of our economy. It has disrupted our supply chain, both in terms of imports and exports and has put our agricultural community at great risk. The time is now to sit down with rail carriers to fix this broken supply chain system. I support this legislation to improve freight rail service, reduce inflation, and ensure our shippers and suppliers are confident in the ability of our nation’s rail system to efficiently move goods and services. This is the only way to give consumers confidence in fair pricing and consistent access to products in grocery stores and on shelves,” House Subcommittee on Livestock and Foreign Agriculture Chair Jim Costa said.
 
To better understand why rail service delivery problems persist, the Railroad Subcommittee held hearings in March and in May 2022, and the Surface Transportation Board held a hearing on urgent issues in freight rail service in late April 2022. All three hearings documented serious problems in the freight rail industry stemming from years of Wall Street focus on increasing railroad operating profits to allow for stock buybacks and dividends, rather than investing those profits in expanding critical freight rail service to more places and serving more industries. Despite these hearings and actions undertaken by the Surface Transportation Board, severe service issues continue to hamstring rail shipments across the country. This bill seeks to stem that tide.

Captured freight rail customers who stand to benefit from provisions in H.R. 8649 have signed on to support the Freight Rail Shipping Fair Market Act. They include: 

  • Agribusiness Association of Iowa
  • Agribusiness Council of Indiana
  • Agricultural Council of Arkansas
  • Agricultural Retailers Association
  • AgTC — Agriculture Transportation Coalition
  • Amcot
  • American Agri-Women
  • American Bakers Association
  • American Chemistry Council (ACC): 
  • American Cotton Producers
  • American Cotton Shippers Association
  • American Farm Bureau Federation
  • American Feed Industry Association
  • American Sheep Industry Association
  • American Soybean Association
  • American Sugar Cane League
  • Arkansas Rice Federation
  • Association of California Egg Farmers
  • California Association of Wheat Growers
  • California Cattlemen’s Association
  • California Grain and Feed Association
  • California Pork Producers Association
  • California Poultry Federation
  • Consumer Brands Association
  • Corn Refiners Association
  • Cottonseed and Feed Association
  • Freight Rail Customer Alliance
  • Georgia Agribusiness Council
  • Grain and Feed Association of Illinois
  • Growth Energy
  • International Dairy Foods Association
  • International Fresh Produce Association
  • Iowa Institute for Cooperatives
  • Kansas Association of Wheat Growers
  • Kansas Grain and Feed Association
  • Kansas Agribusiness Retailers Association
  • Laughlin Cartrell Inc.
  • Midsouth Grain Association
  • Minnesota Crop Production Retailers
  • Minnesota Grain and Feed Association
  • Minnesota Wheat Research & Promotion Council
  • Mississippi Feed and Grain Association
  • Montana Agricultural Business Association
  • Montana Grain Elevators Association
  • National Aquaculture Association
  • National Association of State Departments of Agriculture
  • National Association of Wheat Growers
  • National Cattlemen’s Beef Association
  • National Corn Growers Association
  • National Cotton Council of America
  • National Cotton Ginners Association
  • National Cottonseed Products Association
  • National Council of Farmer Cooperatives
  • National Grain and Feed Association
  • National Grange
  • National Industrial Transportation League
  • National Milk Producers Federation
  • National Oilseed Processors Association
  • National Sorghum Producers
  • Nebraska Agri-Business Association
  • Nebraska Cooperative Council
  • Nebraska Dry Pea and Lentil Commission
  • Nebraska Wheat Board
  • Nebraska Wheat Growers Association
  • New York State Agribusiness Association
  • North American Meat Institute
  • North American Millers’ Association
  • North Carolina Agribusiness Council
  • North Dakota Grain Dealers Association
  • Northeast Agribusiness and Feed Alliance
  • Northwest Chicken Council
  • Ohio AgriBusiness Association
  • Oklahoma Grain & Feed Association
  • Oklahoma Wheat Growers Association
  • Oregon Feed & Grain Association
  • Oregon Wheat Growers League
  • Pacific Egg & Poultry Association
  • Pacific Northwest Grain & Feed Association
  • Pet Food Institute
  • Plains Cotton Growers, Inc.
  • Portland Cement Association
  • Private Railcar Food and Beverage Association
  • Roquette
  • South Dakota Agri-Business Association (SDABA)
  • Soy Transportation Coalition
  • Specialty Soya and Grains Alliance
  • Tennessee Feed and Grain Association
  • Texas Ag Industries Association
  • Texas Grain and Feed Association
  • Texas Wheat Producers Association
  • The Fertilizer Institute
  • USA Rice
  • Wisconsin Agri-Business Association
  • Wyoming Wheat Marketing Commission

The full bill text and a fact sheet are available by following the links.

U.S. Rep Peter DeFazio (D-Ore.) testifies before the House Rail and Pipelines Subcommittee on May 12.


Following up a hearing in late April on freight rail problems caused by Precision Scheduled Railroading (PSR), members of the Surface Transportation Board appeared before the U.S. House Rail and Pipelines Subcommittee on May 12 to further discuss steps to be taken to heal the nation’s supply chain.

U.S. Rep. Peter DeFazio delivers his statement on PSR.

“We are at a point of crisis, and we have to deal with that crisis meaningfully,” U.S. House Transportation and Infrastructure Chairman Peter DeFazio (D-Ore.) said. “Freight service in the United States in America, we used to have the best freight rail in the world, is abysmal.

“The evil ghost of Hunter Harrison lives on. The legacy of this man is disgusting, what he did he has addicted the CEOs of the rail industry to watching the ticker on Wall Street and using their resources to benefit their shareholders and not run railroads like railroads.”

DeFazio mentioned an unlikely alliance — shippers, energy and chemical companies, oil companies, big agriculture and rail labor — coalescing as Class Is’ service-averse PSR scheme continues to rake in record profits and benefit shareholders and CEOs.

“We’ve got to act more decisively and more quickly,” DeFazio told the STB members. “We’re going downhill here really quickly. You’re not there to protect the bottom line of these railroads and the CEOs’ bonuses. You’re not there even for the shippers’ bottom line. But are there to make this system work better, keep costs lower and be competitive.

“I want freight railroads to be successful … but that success should be defined by the amount of freight they move across the nation, the amount of greenhouse gas they prevent and the safety of their employees and the communities they traverse. Stock buybacks, dividends can’t be the measure of success for freight rail in this country.”

Surface Transportation Board Chairman Martin Oberman was appointed by President Biden in January 2021 after 29 percent workforce cuts that began before the COVID pandemic’s start — a total of more than 45,000 employees — these cuts can be linked to the current deteriorated service.

Surface Transportation Board Chairman Martin Oberman testifies before the subcommittee on May 12.

“The railroads could not possibly have screwed up this stuff anymore than they are doing on their own. There’s nothing we could do to make it worse right now. It is in terrible shape as has been indicated by members of the committee and at our hearing,” Oberman said. “They’ve cut labor to below the bone, really. They have thousands of locomotives that they’ve mothballed … That’s the big picture. That’s the overview that concerns me most. In order to make up for their shortage of labor, they’re overworking and abusing the workforces they have. Long-term employees are literally leaving. So you’re not only [dealing with] a shortage of workers but you’re losing a tremendous amount of institutional knowledge.

“Rail labor reports particular difficulty directly caused by increased job uncertainty, worsening working conditions and insufficient incentive,” he said. “I am not optimistic about significant improvement in service in the near term.”

The STB’s April 26 hearing resulted in a unanimous rulemaking mandate made days later that Class I carriers be required to detail on-time performance for first- and last-mile service, submit recovery plans and provide frequent updates to the board. A notice of proposed rulemaking also would provide emergency relief for rail customers in urgent need of rail service.

U.S. Rep. Steve Cohen asks about the BNSF “Hi-Viz” policy.

U.S. Rep. Steve Cohen, a Tennessee Democrat, brought up the “Hi-Viz” attendance policy that BNSF enacted in February, noting a letter he received from a 13-year retired veteran engineer that talked about the new challenges the punitive points-based attendance policy had given him in facing his medical challenges.

“Demands on employees have only increased,” Cohen said. “These unreasonable expectations are driving people out of the industry. They’re doing the minimum, which the federal government requires on FMLA and some other things, but they ought to be doing more than the minimum to bolster the workforce, care for their employees and bolster the rail industry in general.”

The low workforce levels are making it harder for service to recover, these “irresponsible” business cuts and layoff decisions by the railroads have also made people not want to come back, Oberman said.

“What could not be more clear is that the railroads do not have significant redundancy. It’s quite clear to me that they don’t have a cushion. As I have said many times, you wouldn ‘t send a football team out on the field without a backup quarterback. But what the railroads have done is just that,” he said. “They have set the rail crew levels at levels when they have no backup. So when there was COVID, when there’s a vortex, when there’s any disruption of workers getting to the job, the trains stopped running.

“Remember, when you lay off an experienced engineer or conductor and there’s no assurance they’ll come back and many of them did not — they went into other industries. To replace that person under FRA restrictions and just general common sense requires six months of training.”

U.S. Rep. Troy Nehls gives incorrect information about rail workers’ salaries.

U.S. Rep. Troy Nehls (R-Texas), railing against inflation and union density in the rail industry, himself produced some inflated and inaccurate estimate of the average Class I rail employee’s salary as being $137,000.

“At the hearing we had two weeks ago, the railroads came in and proudly proclaimed that they were trying to hire new conductors at $52,000 a year, not $137,000, and when I asked them how they were going to compete with Wal-Mart hiring truck drivers at $110,000, they didn’t have an answer,” Oberman countered.

U.S. Rep. Stephen Lynch of Massachusetts clears up misinformation by U.S. Rep. Troy Nehls about salaries of rail workers.

Nehls’ inaccurate statement also was later corrected by Rep. Stephen Lynch of Massachusetts, who also noted that rail workers were not rewarded for working through the pandemic and that nation rail contract negotiation have dragged on for more than two years.

“You can see the attention that the railroads have given to labor when you look at how much they’ve cut the labor force and how much they’re not respecting and looking out for their best interest, you can see that. They’re giving more money to their shareholders. There hasn’t been one major bonus or pay raise in those couple years that they’ve been working us out of COVID. No hint towards that,” STB member Robert Primus said.

STB Member Karen Hedlund also referred to the longer trains PSR uses that frequently dwarf the sidings on the lines, causing congestion and obstructing passenger rail’s on-time service and suspects that STB will need to address it.

“There’s one long-distance line that was above 80 percent,” she said. “Some of the shorter lines perform over 80 percent, but the long-distance lines do not perform well. When there’s a three-mile-long train in front of a little Amtrak train, the three-mile-long train may not be able to get out of the way for many, many miles.”

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.

On Friday, April 1, the SMART Transportation Division sought Surface Transportation Board Administrator Martin Oberman’s intervention in ending the precision scheduled railroading (PSR) onslaught that has caused continual havoc in the United States’ supply chain and gutted the rail workforce.

SMART-TD President Jeremy Ferguson detailed the anti-worker attendance policies implemented by the nation’s largest freight rail carriers while echoing concerns expressed March 24 by the head of the National Grain and Feed Association (NGFA), a group representing more than 8,000 facilities and firms that provide goods and services to the nation’s grain, feed, and processing industries.

“We believe intervention from the STB is critically warranted and necessary to right the ship,” Ferguson wrote. “Simply put, the railroads cannot sustain the same level of production they had to prior to the advent of PSR given the number of drastic cuts they’ve made across their systems.”

Railroads have cut thousands of workers since the onset of PSR in 2017, placed thousands of locomotives in storage and have been running longer and slower trains to drive down their operating ratios (OR). NGFA President Mike Seyfert said this has led to “significant service disruptions,” for its represented companies served by BNSF, Union Pacific and Norfolk Southern, in particular.

“The service issues that our member companies are raising indicate that the problem is a network problem affecting entire regions of the country,” Seyfert said. “NGFA members have done as much as possible to keep animals fed, but the ability to stretch resources is exhausted.”

Rail carriers such as the Warren Buffett-owned BNSF, the Union Pacific and Norfolk Southern enjoyed record profits in 2021, even as rail traffic and carloads fell short of previous high marks. A main source of this revenue has been through tens of thousands of workforce cuts implemented well before and during the COVID-19 pandemic. With the service difficulties reported by NGFA, rail carriers have been doing less with less and reaping higher rewards at the expense of customers and workers.

“Not only has morale dropped to an all-time low, but employees are leaving the industry in unprecedented numbers,” Ferguson wrote to Oberman. “The freight rail network is at a breaking point. It cannot sustain any more reductions. Substantial changes must be made and they must be made quickly.”

According to union-collected data, Ferguson wrote, more than 500 employees have quit the industry since BNSF implemented a points-based policy Feb. 1. The “Hi-Viz” policy requires workers to be available to work 29 out of 30 days a month in order to avoid punitive deductions on their attendance records that eventually would lead to suspension and dismissal.

###

The SMART Transportation Division is comprised of approximately 125,000 active and retired members of the former United Transportation Union, who work in a variety of crafts in the transportation industry.

Rep. DeFazio

WASHINGTON – Chair of the House Committee on Transportation and Infrastructure Peter DeFazio (D-Ore.) sent a letter to the Surface Transportation Board (STB) opposing the approval of a trust for the proposed merger of the Canadian National (CN) and Kansas City Southern (KCS) railroads. In his letter, DeFazio stated that approving the trust is not in the public interest and would reduce competition.
“A single holding company responsible for this traffic would likely change rail traffic patterns in the significant areas of parallel service overlap and that would reduce the rail service options these 300 customers currently enjoy,” Chair DeFazio wrote in his letter. “I am also troubled that this combination of Class I railroads serving all three nations in North America will exacerbate U.S. job losses from cross-border trade agreements that prioritize profits over people and inflict harm on worker’s rights, consumer safety, and the environment.”
In April 2021, Chair DeFazio issued a statement after Canadian Pacific (CP) and CN each made separate multi-billion dollar offers to buy KCS, warning that the bidding war that ensued for the railroad threatened to usher in a new round of consolidations in the rail sector, ultimately threatening jobs and affecting shipping in the U.S.
DeFazio’s full letter to STB can be found below and here.
 


 
July 26, 2021
Ms. Cynthia Brown
Chief, Section of Administration
Office of Proceedings
Surface Transportation Board
395 E Street, S.W.
Washington, DC 20423
Re: Finance Docket No. 36514, Canadian National Railway Company, et al. – Control – Kansas City  Southern Railway Company, et al.
Dear Ms. Brown:
I am writing to express opposition to the voting trust proposed by Canadian National Railway Company (CN) in its proposed merger with Kansas City Southern Railway Company (KCS). I am concerned that this proposed trust is not in the public interest. The trust would reduce competition and prejudice the outcome of the Surface Transportation Board’s merger proceeding.
In its May 14, 2021, submission to this docket, the Antitrust Division of the U.S. Department of Justice explained how voting trusts reduce competition both in general for railroad mergers and in particular to the consideration of a voting trust for CN and KCS. In general, putting two formerly competitive businesses under a single holding company immediately reduces the parties’ incentives to engage in competition. While the Surface Transportation Board regularly allowed railroad trusts throughout the many railroad consolidations of the 1980s and 1990s, the board has made the requirements to approve a voting trust more stringent since 2001 as part of an overall reform of merger rules. Now, according to 49 CFR 1180.4(b)(4)(iv), applicants must demonstrate that trusts would be in the public interest. Approving a CN-KCS trust would signal to the rest of the rail industry that the STB is engaging in business as usual, despite the requirement to consider the public interest, and could launch a new round of mergers.
Specifically with regard to the potential for a CN-KCS trust, I am concerned that approximately 300 current customers overlap on the CN and KCS networks. A single holding company responsible for this traffic would likely change rail traffic patterns in the significant areas of parallel service overlap and that would reduce the rail service options these 300 customers currently enjoy. I am also troubled that this combination of Class I railroads serving all three nations in North America will exacerbate U.S. job losses from cross-border trade agreements that prioritize profits over people and inflict harm on worker’s rights, consumer safety, and the environment.
I trust that the Surface Transportation Board will look at the specific facts of this action and conclude that approving a trust is too much, too soon. Too much authority in one company to somehow keep two companies competing against each other that have significant service overlap and too soon because allowing the trust creates a new floor purchase price for any other potential competitive bidders for KCS railroad. 
Sincerely,
Peter A. DeFazio

On May 27, the chair of the federal Surface Transportation Board (STB) Martin J. Oberman reached out to all Class I CEOs asking them whether the carriers are prepared to reverse the workforce cuts they have made in anticipation of handling an economic rebound as the coronavirus pandemic wanes.

Oberman

“I am specifically requesting that you also address whether you have any long-term plans, including your hiring plans for 2021 and 2022, to reverse any of the diminishing workforce levels which have resulted from your strategies in recent years,” Oberman said in his letter.
Rail employment data collected by the board indicate that since the onset of the COVID-19 pandemic in March 2020, that overall Class I rail employment has declined from 127,867 to 115,485, a reduction of 12,382 jobs. Train and engine personnel employment has been reduced by Class Is by nearly 5,000 workers from 51,801 in March 2020, to 46,951 in April 2021, the latest month for which STB data is available.
Oberman expressed concern that recent rail service problems reported by some shippers may relate to that broader trend of rail labor reductions over the last several years in addition to the furloughs and quarantines brought about by the COVID-19 pandemic.
“I recognize that these rail service challenges, at least to some extent, have been related to workforce reductions resulting from COVID-19 cases, quarantines, and furloughs based on the temporary decline in demand and the resultant adjustments made by railroads in nearly every facet of their businesses,” he wrote. “But I am also concerned by the extent to which these service issues may be related to or exacerbated by a broader trend of rail labor reductions that has been occurring over the past several years.”
Precision Scheduled Railroading (PSR), adopted by CSX under the helm of the late E. Hunter Harrison, has become an acceptable operating scheme among the largest U.S. railroads focused on reducing operating ratios by lengthening trains and emphasizing cost reductions by slashing employment, reducing the time available for inspections and mothballing equipment, as reported by The Associated Press and VICE Magazine.
From an economic perspective, Oberman said the STB has received some significant reports of flaws in the Class Is’ service model.
“Although many shippers have reported that railroads are providing consistent and dependable service, the Board has also received concerning reports from a meaningful number of rail customers of subpar performance, including missed switches, railcars delayed at intermediate yards or interchanges, extended out-of-route movements, and prolonged dwell at origin for some unit train traffic,” Oberman observed. “Additionally, we have been made aware of instances of significant congestion at various intermodal facilities, which has resulted in delayed train arrivals and disruptions to container availability.”
A review of share prices since Harrison was placed atop CSX by a hedge fund in March 2017, shows that shares for most of the Class I carriers have more than doubled since March 2017, except for Canadian National and BNSF (which is privately owned).
Conversely, STB rail employment data from April 2021, indicate that overall Class I employment has declined by nearly 34,000 jobs from 149,323 in March 2017, while train and engine personnel employment has gone down by 12,240 jobs from 59,191 in March 2017.
SMART Transportation Division President Jeremy Ferguson said he was pleased to see STB Chairman Oberman and the board taking an active role in protecting rail shippers and making sure T&E crews are properly staffed.
“This is a good first step in getting people back to work and getting the rail workforce to an adequate level,” President Ferguson said. “Let’s get our members some relief so they’re able to receive adequate rest and a quality of life they deserve.”
Link to STB article regarding the letters.
Link to STB site with Oberman’s letters to carrier executives.

Canadian Pacific’s acquisition of the Central Maine & Quebec Railway (CM&Q) was approved by the federal Surface Transportation Board (STB) on May 1, and will take effect June 18, 2020.
The purchase from Fortress Transportation and Infrastructure Investors LLC, officially by the wholly owned Soo Line subsidiary of CP, was originally announced Nov. 20, 2019, and with approval now gives the Class I carrier trackage and facilities running from St. Jean, Quebec, Canada, to Searsport, Maine.
In a filing with the STB, CP said it plans to upgrade CM&Q’s system to Class III standards with an investment of up to $75 million. STB members had no objections to the acquisition and dismissed comments and conditional requests by Springfield Terminal Railway Company, among others.
CM&Q owns approximately 244 miles of rail lines in Vermont and Maine and has operating rights across another 57 miles, according to the STB. The Canadian portion of CM&Q has about 237 miles of track which also will be transferred in the sale.
SMART Transportation Division represents 52 members on the CM&Q in the Transportation, Mechanical and Engineering Departments who belong to GO-049, which is represented by General Chairman Rick Lee.
Read the STB’s decision.

Just before the start of the new year, deals that resulted in the Genesee & Wyoming (G&W) and the Central Maine & Quebec (CM&Q) changing hands were finalized.
The Surface Transportation Board in November cleared the way for Brookfield Asset Management and GIC, a Singapore wealth fund, to acquire Genesee & Wyoming, which controls Class II and III railroads in 41 states and, if considered collectively, has holdings that qualify it as a Class I carrier with more than 13,000 track miles.
A review by the Committee on Foreign Investment in the United States (CFIUS) permitted the acquisition to be finalized, and completion of the deal was announced Dec. 31. G&W is now a private entity and its stock is no longer traded publicly.
In the case of Canadian Pacific’s acquisition of CM&Q, the federal Surface Transportation Board still must sign off on the deal, which was announced Nov. 20, to make it official. Financial terms were finalized on Dec. 30, CP announced.
Once approved by the STB, CP’s purchase from Fortress Transportation and Infrastructure Investors LLC would give the Class I carrier trackage and facilities from St. Jean, Quebec, Canada, to Searsport, Maine.
SMART Transportation Division represents 52 members on the CM&Q in the Transportation, Mechanical and Engineering Departments who belong to GO-049, which is represented by General Chairman Rick Lee. CM&Q owns 481 miles of rail lines primarily in Quebec and Maine.

Disregarding comments by the SMART TD New York Legislative Board to the contrary, the Surface Transportation Board (STB) has granted an exemption to Brookfield Asset Management and DJP XX LLC that clears the way for their acquisition of short-line/regional railroad operator Genesee & Wyoming.
Genesee & Wyoming controls Class II and III railroads in 41 states and, if considered collectively, its holdings qualify it as a Class I carrier with more than 13,000 track miles.
The notice, published in the Federal Register Nov. 1 after a 3-0 vote by the board, concludes a postponement of the $8.4 billion acquisition put forth by the STB in late July. The acquisition, when completed, will make G&W a privately held company.
Brookfield Asset Management owns and operates assets in the utilities, transport, energy and data infrastructure across North and South America, Asia Pacific and Europe while DJP XX LLC is a subsidiary of GIC, a global investment firm that manages Singapore’s foreign reserves.
In early September, an attorney representing New York State Legislative Director Samuel J. Nasca filed reply comments asserting that the notice of exemption should be rejected or revoked because of the magnitude and nature of the transportation involved.
Nasca’s filing expressed concern regarding the role of foreign interests, including GIC, which would own 27% of equity in DJP XX and has links to the government of Singapore, and was not listed on the exemption application to the STB. He also identified Brookfield as controlling rail investments in Brazil — more than 10,000 km of rail tracks and stated that GWI controls rail carriers that are located in other countries including Canada, Australia and the United Kingdom and are not subject to Board jurisdiction.
Moreover, Nasca argued, employees could face negative ramifications if the deal went through.
“A number of the GWI carriers operate in or through New York State, and are represented by SMART/TD in collective (bargaining). Those GWI carriers not so represented by SMART/TD are nevertheless important for SMART/TD employees as such carriers interchange traffic with other GWI-represented carriers, or with other carriers outside the GWI family,” his filing stated. “Accordingly, SMART/TD employees stand to be adversely affected by Brookfield management decisions revising the structure of GWI or taking actions which may divert business to other units of the Brookfield organization.”
The board disregarded the concerns expressed for workers, about foreign interests and about the scale of the acquisition as well.
“SMART/TD-NY’s comments about the magnitude and nature of the transportation at issue do not support rejection of the notice or revocation of the exemption,” the board stated in the Federal Register notice.
STB member Marty Oberman, while voting to approve the exemption, did express some reservation about the magnitude of the exemption, stating in the Federal Register filing:
“This is by far the largest and most geographically diverse collection of railroads impacting the U.S. freight network ever to be processed as a class exemption under the Board’s existing regulations,” Oberman wrote. “In my opinion, this proceeding raises significant questions regarding whether transactions of this magnitude were contemplated when the class exemption regulations were adopted, and therefore raises questions as to whether it is appropriate for such major transactions to be eligible under those regulations in the first place.”
The proposed acquisition of G&W is expected to close by the end of 2019 or early 2020 pending review by the Committee on Foreign Investment in the United States (CFIUS).
Read Sam Nasca’s filing that opposes the exemption.
Read the entire Federal Register notice here.