The rail industry’s role in overcoming supply chain challenges was the theme of a May 11 hearing of the House Committee on Transportation and Infrastructure, Subcommittee on Railroads, Pipelines, and Hazardous Materials. It was part of what the T&I Committee called its continued “focus on ongoing supply chain challenges throughout the transportation sector, with the goal of identifying potential legislative solutions.” Among the five witnesses was American Short Line and Regional Railroad Association (ASLRRA) President Chuck Baker, who urged Congress members “to wield their pen with precision.”
The hearing, “Getting Back on Track: Exploring Rail Supply Chain Resilience and Challenges,” was led by Rep. Troy Nehls (R-Tex.), the new Subcommittee Chairman.
In his opening remarks, as prepared, Nehls told hearing participants: “As examined in previous supply chain hearings, freight rail remained comparatively resilient. However, it still encounters many challenges that are both unique to and common across all freight transportation modes … Railroads are in the process of re-hiring furloughed workers and are actively training new employees to expand freight capacity. Today [May 11], the Subcommittee will hear from our witnesses about the current challenges to the freight rail industry in meeting supply chain goals and ongoing efforts to address these issues.”
Railway Age provides a roundup of written testimony from Association of American Railroads (AAR) President and CEO Ian Jefferies; ASLRRA’s Baker; American Chemistry Council (ACC) President Chris Jahn; Transportation Trades Department, AFL-CIO (TTD) President Greg Regan; and Reason Foundation Senior Transportation Policy Analyst Marc Scribner.
“Unprecedented events in 2021 and 2022 caused major global supply chain dislocations that impacted every business, industry, and family in the United States and the rest of the world,” Jefferies reported in written testimony (above). “While those pressures have mostly abated, U.S. freight railroads continue to face three primary, inextricably linked opportunities: furthering safety advancement, improving employee relations, and providing strong service to our customers.”
He pointed out that newly released data from the Federal Railroad Administration (FRA) confirms that 2022 was “the safest year ever for incidents involving hazardous materials and for mainline derailments,” but noted that “[e]very train accident is one too many, and the need to make progress in the march to zero accidents is ever present.”
“Freight railroads do not need any additional incentive to be safe—it is core to all that we do,” Jefferies reported. “As such, when investigation into the recent derailment in East Palestine demonstrated areas where additional work was necessary to drive down risk and enhance safety, railroads took voluntary, proactive, data-driven steps to ensure a similar accident would never happen again.” This included the installation of approximately 1,000 additional new wayside hotbox detectors on the national network.
“Railroads will also continue to invest in modern technologies and equipment, such as automated track inspection, implement safety protocols, and prioritize safety training for their employees,” Jefferies noted. “The next great leap forward in safety will depend on the ability of railroads to innovate and deploy new technologies, but achieving the maximum benefit from these new technologies will require regulatory flexibility.”
Jefferies also pointed out that over the past 15 years, freight railroads have invested, on average, $23.9 billion of their own capital to improve and maintain their networks annually. “To put this into perspective,” he said, “that is $1 billion more than the historic investments Congress made this year in rail and multi-modal programs in the Infrastructure Investment and Jobs Act (IIJA) and the fiscal year 2023 Omnibus combined.” He added that policymakers “should consider the impact of proposals on railroads’ abilities to make these investments in the future and weigh potential consequences to safety, capacity, efficiency, and service reliability.”
Jefferies told the Subcommittee members that railroads’ “single-biggest ongoing service-related challenge remains finding and keeping employees.” The recent round of collective bargaining “ended with more acrimony than anyone would have preferred, and rail management and unions clearly have work to do to restore trust,” he said. “The joint goal is a more positive work environment, increased job satisfaction, and higher employee retention. Railroads are making real progress. Beyond pay and health care benefits that rank in the top 10% of all industries, railroads are working to build stronger relationships with their employees. Every Class I railroad, for example, has recently announced agreements with many of their unions on ways to improve quality of life, such as more predictable work schedules and additional paid sick leave.” And rail employment is growing, according to Jefferies. “In March 2023, Class I freight railroad employment was up 7.5% (nearly 8,500 employees) over January 2022 and is at its highest level since April 2020,” he reported.
Freight railroads continue to partner with customers “to find constructive ways to maintain network fluidity, especially at rail terminals,” Jefferies told the Subcommittee members. “For railroads, their biggest supply chain challenge in 2021 and 2022 was the inability of many rail customers to effectively process the flow of traffic, especially intermodal containers, into and out of rail terminals … Fortunately, these problems have been greatly reduced in recent months, thanks to cooperative efforts between railroads and their supply chain partners. Specific steps taken vary railroad to railroad but have included:
- “Increasing coordination between railroads to better manage the flow of traffic and with the trucking industry to take shipments as soon as warehousing capacity is available.
- “Offering incentives to customers for weekend or off-hour in-gating at facilities near ports and for out-gating a container when they in-gate a container at facilities.
- “Re-routing traffic away from busier to less crowded terminals.
- “Re-opening closed terminals to create additional storage capacity.
- “Increasing available storage capacity and staging space in and outside of terminals.
- “Creating additional railroad-to-railroad interchanges to limit demand on truck drayage.
- “Mounting containers onto any chassis brought in to help reduce dead-miles for truckers.
- “Railroads have also made a variety of online tools, apps, and other technologies available to their customers.”
Jefferies stressed that policymakers should be wary of proposals “motivated by politics or uninformed by data as they are unlikely to achieve meaningful safety or efficiency benefits and could have a wide range of unintended economic and environmental consequences, such as increased costs for shippers, and a negative impact on the safe movement of goods, including hazardous materials.”
Specifically, he said, “Policymakers should also ensure proposals do not ‘lock in’ existing technologies; encourage the use of innovative technologies to enhance safety and efficiency; are based on performance-based standards; and avoid undermining railroads’ ongoing efforts to collaborate with stakeholders to keep the national rail network fluid.” He added that “Congress should ensure that environmental regulations do not unduly inhibit the expansion, development, or construction of rail facilities that would meet supply chain needs and rail customers’ freight transportation demand. Railroads appreciate that Congress included project permitting provisions in the IIJA. If properly implemented, these reforms could help ensure that federal dollars and railroads’ investments for infrastructure projects go farther and unnecessary delays will be minimized.”
Jefferies summed up that railroads are “committed to collaborating with all stakeholders—the FRA, the Surface Transportation Board, their customers, their employees, elected officials, and many others—to attain the common goal of enhancing rail safety and keeping the goods that power our economy moving.”
“As challenges to the supply chain have arisen in recent years, short lines have acted as critical ‘shock absorbers’ for the freight rail network, blunting the impact of supply chain challenges on our customers through our flexible, friendly, responsive, and customized service,” Baker reported in written testimony (above).
He pointed out that shippers want to use rail “because it is generally less expensive, and sometimes far less expensive, than trucking,” but it “has not always had the reputation of being the easiest or simplest mode to access—it is incumbent on us as a freight rail industry to change that perception and offer consistent, predictable, reliable, easy-to-access service to our customers, and short lines are committed to leading the way on that front.”
He also noted that train accident and hazardous material accident rates for short lines are down 42% and 71%, respectively, since 2000, according to FRA data. “From 2019 to 2022, the overall freight rail industry experienced only 51 derailments with a hazardous material release, and only four of those occurred on a short line railroad,” he reported. “Of the 86 cars carrying hazardous materials that experienced a release in those derailments, only four of those cars were on a short line. During the same time frame, short line railroads ran an average of approximately 122 million train miles per year. Over that four-year period, derailments have declined from 298 to 254, derailments involving hazardous material cars have declined from 64 to 43, and as noted above, only four derailed cars released hazardous materials in those four years.”
The industry, Baker reported, “is committed to getting these numbers—all derailments, especially derailments with releases of hazardous materials, and reportable incidents—to zero and to keeping them there, but this overall safety context is important to understand before enacting potentially counterproductive regulations or legislation in the name of safety. …”
Baker pointed out that short lines are small enterprises with limited resources. “The federal government can provide crucial and impactful help to short lines, but at the same time efforts to regulate problems in the rail space can impose outsized burdens and demands on these railroads,” he said. “It is crucial that any new regulatory requirements be directly relevant to a safety benefit and realistic for a small business to implement.”
Baker outlined 11 areas in which Congress could act that “would both enhance the supply chain and advance safety in our industry:
- “Support important funding opportunities that help short line freight railroads invest in infrastructure.” This includes the Consolidated Rail Infrastructure and Safety Improvements (CRISI) grant program.
- “Support short line disaster relief.” Baker encouraged Subcommittee members “to consider new programs to assist in rebuilding after a natural disaster.” He noted that in September 2022, “Hurricane Ian devastated Florida and destroyed short line railroad infrastructure. A Class III railroad in Fort Meyers, Fla., had estimated damages exceeding $30 million. Current insurance policies and federal programs are not able to meet the needs of small railroads who experience damages of this magnitude. As disaster recovery begins, short lines may play a critical role in moving goods in and out of the affected areas, but only if they can themselves recover quickly.”
- “Avoid any effort to increase the size and weight of commercial trucks.”
- “Support RailPulse and future initiatives that improve visibility and management of resources.”
- “Encourage regulations to keep pace with modern operational practices.” Baker said that “Congress should support the railroads’ move toward ATI [Automated Track Inspection] rather than letting the FRA mandate the use of potentially outdated manual inspections in all circumstances. This would free up scarce time and personnel resources and improve the supply chain.”
- “Support railroad workers by providing steady federal benefits.” Baker said that the “recently introduced bipartisan, bicameral Railroad Employee Equity and Fairness (REEF) Act would remove sequestration constraints on the railroad unemployment insurance program for railroad employees and ensure that they get the benefits they are entitled to.”
- “Allow the rail industry to hire back retirees more easily to help us quickly staff to appropriate levels.”
- “Maintain federal primacy and pre-emption on rail regulation.” Baker pointed out that “[w]hether it is a rash of state-level legislation and regulation on crew size mandates and blocked crossings, or the stunning overreach of the California Air Resource Board’s recent locomotive regulation, state regulation of freight railroading threatens to undermine the efficiency of the world’s premier freight rail network.”
- “Support permitting reform.” According to Baker, it is “simply too time-consuming and burdensome to get projects done. Whether the projects are new renewable energy installations, major rail terminals, or sometimes even relatively simple track upgrades, a disjointed permitting process is a major hindrance.”
- “Support advancing new regulations only if they are laser-focused on safety problems that warrant further action.” Baker pointed out that “[l]egislative and regulatory responses to an accident or incident should be responsive to the event, relevant to safety, and provide reasonable and realistic requirements for small businesses to implement. Legislators should take care to consider that all the facts are in hand, including the results of National Transportation Safety Board (NTSB) investigations.”
- “Support the Short Line Safety Institute (SLSI).”
“We urge Congress to wield their pen with precision in order to avoid unintended consequences to the supply chain,” Baker concluded.
“Railroads have made progress and recovered from the worst of the crisis,” Jahn reported in written testimony to the Subcommittee (above). “But rail service problems continue to disrupt supply chains and inflate prices for consumers. These problems will not fix themselves. Policymakers need to adopt reforms that incentivize railroads to make their networks more resilient and help prevent a future supply chain crisis.”
He pointed out that ACC “has conducted surveys of our member companies to better understand and detail the persistent challenges they face in moving freight in the U.S. by rail, truck, and water. The latest survey showed that while conditions improved in the second half of 2022, freight transportation challenges are far from resolved. Overall, nearly all companies (93%) say supply chain and freight transportation disruptions are impacting their U.S. manufacturing operations. Two-thirds noted improvements in the second half of 2022. However, 83% of companies report that despite this recent progress, conditions remain worse than they were prior to the pandemic. Unfortunately, chemical manufacturers report that they have not seen the same level of improvement for rail shipping as they have for truck and ocean shipping. In fact, 30% of companies said rail service problems were worse in the second half of 2022, and more than three quarters reported worse service than before the pandemic.”
He said that in 2022, “in addition to facing delays and reductions in service days, companies were increasingly subjected to railroad embargoes. … While rail embargoes are necessary in some circumstances, particularly in response to weather emergencies, ACC is concerned that railroads will increasingly turn to embargoes to manage long-term congestion problems.”
Jahn also told the Subcommittee members that “[p]olicies that promote greater competition within the rail industry can spur innovation, increase efficiencies, and drive healthy growth—just as it does throughout all sectors of the U.S. economy. … Unfortunately, many ACC members and other rail customers have no competitive transportation options.” He noted that the Surface Transportation Board (STB), in its recent quarterly report to Congress, “provided an extensive list of pending reforms that are critical to supporting a resilient, efficient and competitive rail sector. Some of these issues have languished for years without resolution. In particular, the Board has yet to complete work on its 2016 proposal to modernize its overly restrictive rules on reciprocal switching. … By finalizing this reform, the STB would finally provide greater access to competitive rail service as envisioned by Congress more than 40 years ago. Congress must exercise its oversight and encourage the Board to address freight rail issues and complete proceedings in a timely manner.”
Congress must also act on freight rail reform, according to Jahn, who said ACC recommended “establish[ing] minimum service delivery standards”; “improv[ing] data on competitive vs. non-competitive rail rates”; “level[ing] the playing field on demurrage charges”; providing “better access to the STB”; and ensuring that the STB “has adequate funding and staff to complete its work.”
“Freight rail is of vital importance to the U.S. economy, accounting for around 40% of long distance ton-miles and hauling one-third of U.S. exports,” Regan reported in written testimony (above). “When freight shipping demand soared during the pandemic, the freight rail network’s service, staffing, and safety issues severely hamstrung the supply chain. The Class I railroads missed a massive economic opportunity to grow the system and become more competitive with other freight industries. By working collaboratively with government—and yes, the unions that represent their workers—to reform their current operating model, Class I railroads can improve service and safety; move more freight in a greener, more efficient way; and improve U.S. economic competitiveness. The status quo, however, is unsustainable.”
Regan offered the following recommendations:
- “Congress should strengthen and better define the existing federal common carrier obligation the railroads have to serve their customers. Senator Tammy Baldwin introduced legislation last Congress that all rail labor unions and shipper groups from a wide array of industries, including the American Chemistry Council (ACC) endorsed. Senator Baldwin’s legislation would strengthen and better define the common carrier obligation of the railroads by spelling out what ‘reasonable request’ means and allow the STB to take into consideration items like workforce levels and the availability of equipment when determining whether the railroads are living up to their common carrier obligation. Similarly, then House T&I Railroad Subcommittee Chairman Donald Payne and House T&I Chairman Peter DeFazio introduced legislation last Congress to reauthorize the STB that would also strengthen and better define the common carrier obligation along with several other important provisions. We urge this Congress to pass similar legislation.”
- “Hire more workers.” Regan noted that “Class I railroads must address quality of life issues in order to hire and retain the sufficient number of employees necessary to sustain, and hopefully one day grow, the system.”
- “Provide paid sick leave.” Regan told the Subcommittee members: “Perhaps realizing the box they had put themselves in amid the nation’s outcry over the treatment of rail workers and the anger and low morale among their workforce, the Class I railroads at the beginning of this year started to negotiate on paid sick leave,” Regan said. “Many of TTD’s rail unions have reached agreements with the Class I railroads providing four days of sick leave and the ability to convert up to three personal days (if workers have that many) to paid sick days. … TTD and our unions are forever grateful to the 221 House members and 52 Senators last Congress who stood with the rail workers in their fight for paid sick leave. We are especially grateful to Ranking Member Payne for his legislation providing seven days of paid sick leave to all Class I rail workers and to Senator Sanders and Congresswoman DeLauro for their upcoming introduction of the Healthy Families Act, which would give all workers, including rail workers, paid sick leave. We urge Congress to pass this legislation.”
In sum, Regan said: “We have a unique opportunity to get freight rail back on track by passing meaningful rail safety and service improvement legislation and harnessing the IIJA’s historic funding in concert with greater investment from the railroads; we must achieve a combination of good government, good management, and good investment from the railroads to successfully grow the system. It is time for Congress and the railroads to act.”
In his written Subcommittee testimony (above), Scribner said that the “fallout from the COVID-19 pandemic raised the profile of issues related to freight transportation efficiency and resilience. While the supply chain chaos experienced during the last few years has moderated, Congress should continue to monitor these trends. Emerging automation technologies are expected to reshape the transportation sector in the coming decades. To encourage innovation, outdated prescriptive rules should be replaced with performance-based regulations. In the case of freight rail, Congress should ensure existing regulations and new policies do not unduly hamper freight rail’s ability to adapt to the evolving competitive landscape. A failure to do so would not only harm America’s consumers, who benefit greatly from robust competition between freight modes of transportation, but would have negative safety and environmental consequences as well.”