Milling & Baking News - April 10, 2018 - 62

Transportation and Distribution

N.G.F.A. upbeat over response to
grain sector's rail service issues
WASHINGTON - The National Grain
and Feed Association said the railroad
oversight board has taken positive steps
to push Class I railroads to reverse three
months of decreasing rail service quality and "excessive charges" that shippers and receivers of grains, oilseeds and
grain products say shifted supply chains
to costlier, just-in-time deliveries.
These issues came to a head March 10
when Randall C. Gordon, president and
chief executive officer of the N.G.F.A.,
submitted a letter to the Surface Transportation Board, the federal adjudicatory board responsible for regulatory
oversight of freight railroads, including
rates, service, carrier mergers and the
construction, acquisition and abandonment of rail lines.
Mr. Gordon's letter noted "severe rail
service problems and excessive charges"
that "degraded service to unacceptable
levels and resulted in virtually non-existent surge capacity" to meet the needs
of grain and grain product companies.
That shifted supply chains and increased

"reliance on costlier truck transportation
just to get agricultural products moving," Mr. Gordon said. Meanwhile, carriers have instituted "new and unprecedented fees and charges" in a drive to
generate income.
Observations in the letter were
drawn from surveys of N.G.F.A.
members, which include suppliers of grain, feed and related
commercial businesses, as well
as input from the North American Millers' Association.
"We began hearing from some
of our shipping and receiving
members back in December," Mr.
Gordon said on April 3. "And then those
concerns continued, and seemingly intensified a bit, in January and February,
particularly on some of the carriers."
The letter addressed specific grievances against six railroad companies that
"far transcend the routine imperfections
in rail service performance" and "cannot be explained away by the vagaries of
weather." The companies are the BNSF

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Railway Co., Canadian National Railway Co., Canadian Pacific Railway, CSX
Transportation Co., Norfolk Southern
Railroad and Union Pacific Railroad.
Service deterioration of this magnitude
is not unprecedented in recent years. An
untouchable combination rail service
problems emerged in the late summer
and fall of 2013 when increased shipments of crude oil from North Dakota's Bakken Formation coincided
with a large grain crop and a
spike in pre-holiday consumers
goods demand spurred by a
rebounding economy led to an
uptick in intermodal rail shipments. Both were exacerbated
by severe weather conditions
through the winter into 2014.
"That was probably an even
more severe situation than exists currently," Mr. Gordon said, but reiterated
a difference made clear in last month's
letter: A "fundamental concern" that
an aggressive drive to satisfy investors
is the "underlying root" of new and
higher fees and changes that degraded
service.
"I think the change here is some of
the major railroads have made business
decisions to basically reduce capacity
and, seemingly, to reduce locomotives
and crews to try to cut costs and operating ratios in order to impress Wall
Street investors and shareholders," Mr.
Gordon said. "And that has caused, we
think, a curtailment in their ability to
serve their customers."
Mr. Gordon excluded BNSF Railway
from those motivations, and the company wasn't among those drawing "the
most numerous, consistent and persistent
complaints." Transit delays and increased
dwell time for Pacific Northwest-bound
trains, and power and crew shortages in
other corridors, especially Houston, were
the only BNSF trouble area cited.
"I think right now we're hearing the
biggest concerns involving the Union
Pacific, the Canadian National and, to a
degree, the Norfolk Southern Railway,"
he said.
Most complaints regarded significant
delays and detail each company's consistently problematic locations and the
cause. Locomotive and crew shortages
were specified in many cases, which included manifest trains of grain products
and flour remaining idle for up to two
weeks. Other enduring problems included locomotive breakdowns; switching
issues that caused plant shutdowns and
production declines; misrouted cars and
subsequent loading of incorrect product,
which led to further delays and shortages while cars were cleaned; delayed
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Milling & Baking News - April 10, 2018

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