NGFA Takes Railroads to Task With STB (UPDATED April 13, 2022)

“One NGFA member has spent an additional $3 million on secondary freight in the last month to try and keep animals fed. This is additional freight they should not have to purchase, and this reduces available freight to others and makes the secondary freight market even more expensive. Another example is an NGFA member that had to stop selling feed while it waited on a train that sat loaded at origin for 7 days due to a lack of available rail crews. Many other NGFA members have similar ongoing rail service-related issues.” – NGFA President and CEO Michael J. Seyfert

The National Grain and Feed Association (NGFA) on March 24 sent a letter to Surface Transportation Board Chairman Marty Oberman complaining, on behalf of its members, about what it calls “a network problem affecting entire regions of the country.”

(Editor’s note: For the latest updates, see “Rail Labor Weighs In.”)

NGFA President and CEO Michael J. Seyfert noted problems ranging from full grain elevators waiting for railcars to potentially starved livestock. “NGFA understands that a variety of circumstances have contributed to the rail service disruptions, but we believe the impact is much more drastic and prolonged due to rail carrier decisions to overly adopt certain principles of Precision Scheduled Railroading and due to significant reductions in crew numbers,” he said. “The ability to recover when normal rail operations are stressed has decreased significantly in the era of PSR and reduced crews, and rail customers and our nation’s supply chains are negatively impacted.”

Seyfert’s letter, in full:

“The National Grain and Feed Association (NGFA) greatly appreciates the Surface Transportation Board’s (STB) oversight of rail service issues and its interest in updates. I write to relay serious complaints from NGFA member companies about significant rail service disruptions for the Union Pacific (UP), Burlington Northern Santa Fe (BNSF) and Norfolk Southern (NS). 

“The NGFA, established in 1896, consists of more than 1,000 grain, feed, processing, exporting and other grain-related companies that operate more than 8,000 facilities handling U.S. grains and oilseeds. Its membership includes grain elevators; feed and feed ingredient manufacturers; biofuels companies; grain and oilseed processors and millers; exporters; livestock and poultry integrators; and associated firms that provide goods and services to the nation’s grain, feed, and processing industry. The NGFA also consists of 27 affiliated State and Regional Grain and Feed Associations. 

“NGFA’s preference is to seek commercial solutions between individual rail customers and their rail carriers. However, the service issues that our member companies are raising indicate that the problem is a network problem affecting entire regions of the country. 

“For example, at rail origins, NGFA members are unable to purchase grain from farmers because they are full while awaiting loaded trains to be moved out by the railroad. Conversely, at rail destinations, NGFA members have run out of grain and have been forced to shut down flour mills and feed mills and cut off sales to customers while awaiting grain deliveries. In some instances, it has left NGFA members unable to deliver feed to livestock producers that may not have alternative feed sources. In an effort to continue service for customers during the rail service disruptions, NGFA members have done as much as possible to keep animals fed, but the ability to stretch resources is exhausted and growing more tenuous with each additional day of service delays. 

“One NGFA member has spent an additional $3 million on secondary freight in the last month to try and keep animals fed. This is additional freight they should not have to purchase, and this reduces available freight to others and makes the secondary freight market even more expensive. Another example is an NGFA member that had to stop selling feed while it waited on a train that sat loaded at origin for 7 days due to a lack of available rail crews. Many other NGFA members have similar ongoing rail service-related issues. 

“NGFA understands that a variety of circumstances have contributed to the rail service disruptions, but we believe the impact is much more drastic and prolonged due to rail carrier decisions to overly adopt certain principles of Precision Scheduled Railroading and due to significant reductions in crew numbers. The ability to recover when normal rail operations are stressed has decreased significantly in the era of PSR and reduced crews, and rail customers and our nation’s supply chains are negatively impacted. 

“Current rail service indicates rail customers are not being adequately served, and NGFA feels forced to ask STB to step in. In the short run, NGFA asks STB to request plans from these rail carriers to bring rail service up to an acceptable level and to request weekly rail service updates. In the long run, NGFA requests for STB to have rail carriers provide annual service assurance plans to help reduce the probability of future widespread rail service disruptions.” 

Railroad Responses

Railway Age asked BNSF, Norfolk Southern, Union Pacific and the Association of American Railroads for statements responding to NGFA.

Norfolk Southern did not respond.

Union Pacific said, rather briefly, “We are committed to supporting our customers and moving forward together amid the ongoing supply chain and labor challenges, which we are actively working to address.”

“Railroads work diligently with their customers and supply chain partners to ensure we can meet our customers’ needs,” AAR spokesperson Ted Greener said. “The past couple of years have seen unprecedented disruptions in the supply chain, which railroads continue to navigate alongside others–including customers. Yet, in the face of these challenges, 2021 saw the railroads move the highest volume of grain since 2008. Cooperation and communication are key to progress, and railroads will continue to ensure the free flow of goods to serve our customers and support the nation’s economy.”

BNSF, pointing to its March 25 Agricultural Products Network Update, provided a detailed response providing specific reasons for its service problems, and how they are being addressed:

“During the past few months, frequent extreme weather, particularly across our North Region, coupled with major service interruptions in Southern California and on our Southern Transcon route through the Southwest and into the Central Plains, have significantly impacted our ability to effectively align available resources with freight volumes. These issues, along with ongoing global supply chain disruptions due to impacts from the COVID-19 pandemic, have strained resource availability in multiple locations and resulted in reduced productivity and excess railcar inventory.

“BNSF operating teams have responded with an aggressive program to restore service to the level our customers expect. Our most recent network update provides details about those efforts and the incremental progress we have seen in addressing elevated railcar inventory levels, reduced velocity and resource imbalances with freight volumes. Additionally, we will provide our customers with weekly updates on our service recovery.”

BNSF President and CEO Katie Farmer also sent a letter, dated March 30, to NGFA in response to its service concerns. Download below:

Rail Labor Weighs In

Rail labor, currently in contract negotiations, was quick to join the NGFA in attacking the railroads, adding its own spin, couched as ”additional context,” most of which is focused on BNSF’s Hi-Viz attendance system. Following is a letter sent on April 1 to Oberman from SMART-TD President Jeremy Ferguson:

“SMART-Transportation Division (SMART-TD) is responding to the National Grain and Feed Association’s (NGFA) March 24, 2022, letter to the Surface Transportation Board (STB). In that letter, NGFA highlights significant service disruptions experienced by its members because of the applicable railroads’ implementation and advancement of the precision scheduled railroading (PSR) business model. We write today in support of the NGFA and subsequently wish to express to STB additional context which, from our perspective, has contributed to the cause of these disruptions and, if not corrected, will continue to further degrade this nation’s supply chain.

“As you are aware, SMART-TD represents approximately 40,000 men and women working in the operational crafts of the freight railroad industry; including, but not limited to, conductor, locomotive engineer, yard foreman, switchman, trainmen, and yardmaster. This includes employees on all seven Class I railroads. Every one of these men and women have been adversely impacted by PSR, and each of them have their own story to tell as to why the railroads are failing to fulfill their end of the bargain regarding service.

“In the industry, it is common to hear PSR being described as doing ‘more-with-less.’ That statement, however, is simply incorrect. PSR is actually doing less-with-less. Simply put, the railroads cannot sustain the same level of production they had prior to the advent of PSR given the number of drastic cuts they have made across their systems. To that point, approximately 33% of America’s railroad workforce was laid-off with the initial implementation of PSR, with thousands of locomotives placed into storage. This has resulted in a fundamental problem—there are not enough employees, nor locomotives available to operate the necessary number of trains required to provide a level of service that equals the current level of demand.

“In typical PSR fashion, carriers are now compounding the shortages with hostile work environments via draconian attendance policies and unsafe working practices. For instance, on Feb. 1, 2022, BNSF imposed the most drastic version of attendance policies in the railroad industry called Hi-Viz. This new policy assesses discipline based on a point system. In summary, an employee is given 30 points for the rest of their career. Every time they are unable to work a compensated day, points are deducted from their 30-point total. For road crews, it is now almost impossible for them to ever have a perfect or good attendance status. The bottom-line issue with this policy as well the attendance policies on Norfolk Southern (NS) and Union Pacific (UP), is that all three of these railroads are requiring their employees to work 29 out of 30 days a month. (Under the previous policy on BNSF they were required to work or be available 24 to 26 days a month, which was without any discipline.)

“Additionally, employees are forced to come to work sick, and they are disincentivized from using authorized FMLA leave, going on vacation, and/or resting—even when exhausted. Employee time periods at home are minimal, and their time away from home has increased exponentially. These essential employees that sacrificed so much to keep this nation moving throughout the pandemic are now being forced to make a choice: stay awake to care for their family (when home) because time is limited; or go to sleep to get some rest. Crews are not getting time off at home and they have made clear that they are not going to work like this, especially when all Class I’s are making record profits.

“Not only has morale dropped to an all-time low, but employees are also leaving the industry in unprecedented numbers. These unilaterally implemented attendance edicts like Hi-Viz have resulted in the over 500 resignations on BNSF alone. These railroads can’t retain current employees, they are having an even more difficult time recruiting new employees given the extreme working conditions, and they have no intent on giving anyone a decent wage increase. There is no end to this tailspin they are in if they cannot keep the qualified employees they have. They are putting record profits ahead of all else, including their customers whose payment for the shipment of goods provides those record profits.

“From an operational standpoint, the railroads are intentionally slowing train speeds by reducing horsepower and using fewer locomotives to save on fuel costs. Regularly, crews are restricted from being able to operate their trains at the maximum authorized speed, as they are directed to limit the locomotive’s throttle position, acceleration, and overall train speed to no more than forty (40) mph. This not only impedes system fluidity, but it greatly hamstrings a railroad’s ability to service customers. The consequences of which are quite evident. Fewer locomotives mean fewer trains. Fewer trains mean longer consists. Longer consists mean more congestion. And more congestion means less predictive work cycles and longer work hours for the crews (less availability). All of this results in much slower velocities across the systems. This puts more pressure on the managers responsible for moving the trains and given that they are rewarded for terminal arrival and not customer service under PSR, the industries dependent upon the railroads’ service are forsaken.

“The freight rail network is at a breaking point. It cannot sustain anymore reductions. Substantial changes must be made, and they must be made quickly. We believe intervention from the STB is critically warranted and necessary to right this ship. It is not a coincidence that NGFA is sounding the alarm at this moment. America’s rail system was fluid, profitable, and healthy prior to PSR. Perhaps a look back would serve as a sufficient marker on where/how to start over.

“We as rail labor value the shippers we provide our services for and stand with them in finding a quick and collaborative resolution to the railroad supply chain crisis.”

Additionally, in an April 11 letter, Greg Regan, President of the Transportation Trades Department, AFL-CIO (TTD), called on the STB Chairman Oberman to address railroad service quality, in support of the NGFA:

“On behalf of the Transportation Trades Department, AFL-CIO (TTD) and the totality of rail labor as represented by our affiliated unions, I write in support of the sentiments raised by the National Grain and Feed Association’s (NGFA) March 24th letter to the Board. NGFA describes service disruptions its members are facing on the Union Pacific (UP), Burlington Northern Santa Fe (BNSF) and Norfolk Southern (NS), in both picking up and delivering grain and feed products. As NGFA discusses, this presents not only financial challenges for its members, but ultimately threatens the ability of the nation’s farmers to feed their livestock. 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.

“As NGFA correctly asserts, the scourge of Precision Scheduled Railroading (PSR) looms large in the disruptions its members are currently facing, as well as in the degraded service the freight rail network is providing broadly. Only a few months ago, at the height of the supply chain crisis, UP suspended service between the West Coast and its Global IV gateway in Chicago, and BNSF began rationing service over its LA/Long Beach-Chicago routes. For both NGFA’s members and the American consumer writ large, when the Class I railroads needed to step up and provide the quality service required by statute, the consequences of an operating model that prioritizes profits at the expense of service and safety prevented them from doing so.

“In particular, NGFA cites that a lack of available crews has resulted in long delays. This should come as no surprise, as the carriers have spent the last several years slashing tens of thousands of jobs across every craft, without regard to the impact this would have on the provision, quality, or frequency of service. With regard to crew shortages, in the five years prior to the pandemic BNSF cut its Train and Engine (T&E) workforce by 27%. NS has cut 24% of such employees, and UP has cut 32%. It is completely unsurprising that this would result in crew shortages and rigid inflexibility in the network. These cuts have occurred with complete impunity for the railroads, and we continue to urge the Board to consider the impacts of these ill-considered mass layoffs on service quality.

“For the employees that remain, Class I railroads have pursued policies determined to degrade what remains of job quality, dignity at work, and rail safety. The recent adoption of overly punitive and abusive attendance policies at BNSF and UP are indicative of this paradigm. Rather than pursue
real measures to return headcount to appropriate levels, the carriers have instead focused on extracting maximal hours from the existing workforce under the threat of discipline and termination. In an industry where fatigue is already endemic, further increasing the workload for existing employees is simply unsustainable. Not only do these policies invite further safety risks into the system, they are directly contributing to degradation of formerly good jobs on the railroad. Our unions are aware of several hundred resignations at BNSF in response to the adoption of its Hi-Viz attendance policy. At a time when NGFA’s members and other shippers like Growth Energy are clamoring for more service it is remarkable that a railroad is taking actions that are demonstrably driving its own employees away.

“It is for these reasons that we wholeheartedly reject the characterizations of the issue in BNSF’s March 30th reply. BNSF’s statement waving away the issues of crew shortages and citing, ‘the same attrition and hiring obstacles that nearly all U.S. corporations are experiencing at the moment’ is simply inaccurate. The situation that BNSF and the other Class I carriers find themselves in is solely of their own making—they unceremoniously eliminated thousands of T&E employees prior to realizing their services were needed, and have degraded job quality to the point that they are unnecessarily increasing attrition and discouraging new entrants to this essential workforce. We are also unimpressed by BNSF’s comment that it has increased its T&E workforce by 3.6% year-over-year as of February, when headcount is still down 9% from the beginning of the pandemic (March 2020). This rate has continued to be divorced from the return of carloads from a pandemic low point, and has only come as a response to the crisis circumstances the carrier has now found itself in.

“It must also be recognized that the current shortage of T&E employees has been negatively compounded by BNSF’s refusal to properly manage the employees that they have. The vast majority of T&E employees have no assigned days off, and predictability for when they are called to work is nearly non-existent. They are forced to leave home for work while fatigued and sick, or face disciplinary consequences, with as little as two hours’ notice on a daily basis. Once on the job, T&E employees frequently find themselves stuck on trains waiting for a relief crew, after having worked the maximum hours allowed under FRA’s Hours of Service laws, further delaying their arrival at their away from home hotel and the start of their required rest for their trip home.

“Finally, after their shifts end, these employees are often left stuck at hotels for far longer than required, sometimes for multiple days before the trip back, and are then expected to work another shift in as little as 10 hours after arriving at home.

“In addition, like many Class 1 Carriers, BNSF has imposed its own operational changes that have slowed traffic to a crawl. Forcing trains in excess of two miles in length over territories where passing tracks are not of sufficient length to keep other trains moving also requires the use of additional crews that are often not available. BNSF has also reduced its train speeds dramatically on many of its lines, making for longer trips. All of these changes require trains to be regularly recrewed just to get trains to their normal crew change point. BNSF’s only solution is to force these employees to work more, yet this is not a sustainable solution. Instead, it stands to further harm the nation’s supply chain.

Finally, we strongly endorse NGFA’s call for action from STB and from Congress on the issues of service quality. It is clear that a lack of oversight has allowed Class I railroads to operate in a manner that is harmful to shippers, employees, and the American public, and these issues will not resolve out of self-regulation by the carriers. We urge the Board to continue to delve into the service issues faced by shippers, and how these issues have been caused or exacerbated by an overly reduced workforce, T&E and otherwise. We also call on the Board to consider how it can leverage its existing authorities to address these problems, including robust enforcement and application of the “reasonable service” component of freight railroads’ common carrier obligations.

“We appreciate your consideration and look forward to continuing to work with the Board on these matters.”

Editor’s Comment: Seems to me as though there’s a fair amount of exaggeration, and assertions that just don’t add up. Let’s see some verifiable facts and figures. Marty Oberman is smart enough to distinguish fact from fiction. Just sayin’ – William C. Vantuono

Wilner, the Last Word

“The NGFA letter echoes shipper concerns expressed during the STB’s mid-March public hearing on a proposal to implement a Reciprocal Switching remedy,” comments Railway Age Capitol Hill Contributing Editor Frank Wilner. “It goes to the core of Chairman Oberman’s probe of a railroad’s common carrier responsibility—a hazily defined duty of railroads to provide transportation or service on reasonable request. 

“Since railroads were first regulated in 1887 as to rates and practices, Congress has never provided a statutory definition of the common carrier responsibility, leaving the four corners of that duty in regulatory and judicial limbo. Many shippers assert railroads are shirking that hazily defined common carrier responsibility for two reasons: One is to demarket freight considered only marginally profitable; the second because the shipper facility or some other aspect of the freight offerings is not compatible with Precision Scheduled Railroading.

“Allegations of demarketing of freight are grimily similar to investment funds buying up rent-controlled residential buildings and then cutting services in an effort to drive out the renters with the object of converting the buildings to high-end condominiums for purchase.”