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Two key senators are calling on the Surface Transportation Board to address the problem of rail service delays that are harming the automotive industry.
In a July 8 letter to the STB, the co-chairs of the Senate Auto Caucus voiced concerns about serious freight rail delays that are having an impact on the nation’s automakers. They echoed concerns raised in an April letter to the STB from the Auto Alliance.
“We wish to reiterate the issues raised in the Auto Alliance letter and urge the STB to closely monitor this situation and work with the railroads to resolve the delays,” said U.S. Senators Rob Portman (R-Ohio) and Carl Levin (D-Mich.). “We understand that winter weather often results in seasonal rail service delays and that this winter was particularly severe. However, additional factors have exacerbated rail service disruptions nationwide. These include a shortage of railcars and an inadequate response to ameliorate this shortage, the annual month-over-month growth in auto production and auto exports as the industry rebounds from recession, and the boom in crude oil shipped by rail that is absorbing significant rail capacity.”
The Auto Alliance (the Alliance of Automobile Manufacturers) is a trade association of 12 car and light-truck manufacturers that includes BMW Group, Chrysler Group LLC, Ford Motor Company, General Motors Company, Jaguar Land Rover, Mazda, Mercedes-Benz USA, Mitsubishi Motors, Porsche, Toyota, Volkswagen Group and Volvo Cars.
The auto industry is the largest manufacturing sector in the United States, and rail is an essential component of the automotive industry’s national supply chain.
While rail service delays are being felt across industry sectors and across the country and need to be addressed, it is a particularly urgent matter for the automotive industry, the senators said, citing an April Wall Street Journal article that reported the industry faces a problem of nearly 160,000 finished automobiles on the ground awaiting rail transport. “This backlog costs automakers tens of millions of dollars in storage fees and alternative means of transporting vehicles and has resulted in vehicle shortages at some dealerships across the country. This situation has significantly impacted the ability of automakers to deliver products to consumers. We should be doing everything we can to support the resurgence of American manufacturing which is fed in large part by the comeback of the U.S. auto industry.”
“We urge the STB to closely monitor this situation and work with the railroads to find a timely solution to the rail service deficiencies currently plaguing the U.S. transportation system,” the senators concluded.
Although an STB spring hearing focused on rail service issues in the upper Midwest on the Canadian Pacific Railway and BNSF Railway systems, it is important to note that rail service troubles are not limited to those two carriers and that region, according to the Auto Alliance. In its April letter, the group said that the availability of empty multi-level railcars at loading locations served by all of the North American Class I railroads has been “woefully inadequate.” All automakers, regardless of which carrier they use to ship vehicles, have been adversely impacted by rail service disruptions.
And it’s not just a Midwest problem. “While many auto manufacturing assembly plants are located in the regions where the rail carriers have blamed severe weather for the service delays, including Illinois, Indiana, Michigan and Ohio, auto manufacturers with assembly plants in other parts of the country, in particular the Southeast, have also experienced delays. The failure of the rail carriers to supply a sufficient number of railcars in these areas has forced auto manufacturers to store vehicles at these plants, as well,” the group said.
The group noted that while this winter may have been more disruptive than prior years, auto manufacturers encounter service delays during the winter months every year. “Auto manufacturers and rail carriers communicate on a regular basis to discuss rail service issues, but the rail industry generally has been slow to respond to our industry’s concerns,” the alliance told the STB.
OmniTRAX, under a 30-year partnership with the Brownsville Navigation District (BND) of Cameron County, will manage the Brownsville & Rio Grande International Railroad. As part of the partnership, OmniTRAX will also develop a large-scale industrial park on land owned by BND, the parent governmental body of the Port of Brownsville.
Norma Torres will continue on as the president and COO of the railroad, and OmniTRAX expects to retain all personnel. The railroad will continue to be operated on behalf of the BND but under separate management and control.
“This is a great opportunity for OmniTRAX, the Brownsville & Rio Grande International Railroad and the people of Brownsville to bring in new industries, create new jobs, increase the tax base and boost the local economy,” said Kevin Shuba, CEO of OmniTRAX. “We are honored to be selected for the project by the Brownsville Navigation District and look forward to working with Norma Torres and the team at the railroad, the port and all other parties to reach these goals.”
The Brownsville & Rio Grande International Railroad is the exclusive common carrier for all facilities in the BND, where its line covers 45 miles. It also travels five miles into the city of Brownsville. The railroad provides connections to BNSF and Union Pacific, and it also has an intermediate connection via Union Pacific to Kansas City Southern De Mexico routes across the Rio Grande.
“The professional rail and industrial development team at OmniTRAX helps us take advantage of our proximity to Mexico and other strategic assets to drive economic growth in the Brownsville region. Their experience and the best practices they use position us for mutual success,” said Ralph Cowen, chairman of the board of Canal Commissioners of the Port of Brownsville.
OmniTRAX will work with the BND to develop an industrial park on 1,200 acres of the Port of Brownsville’s 40,000 acres of land that are available for development. The land is well-suited for light and heavy manufacturing, logistics, energy services, technology development and export/import warehousing.
“With recent energy reforms in Mexico, the anticipated development of the Burgos Basin just south of Brownsville and the energy expertise of OmniTRAX affiliate The Broe Group, we expect to take advantage of related opportunities for the Brownsville & Rio Grande International Railroad and the Port of Brownsville,” said OmniTRAX Chairman Brad Skinner.
The new arrangement is expected to take effect in August.
Rapid City, Pierre & Eastern Railroad, Inc. (RCP&E), a new subsidiary of Genesee & Wyoming, has completed the acquisition of the west end of the Dakota, Minnesota & Eastern (DM&E) rail line from Canadian Pacific for approximately $210 million and paid approximately $7.5 million for the purchase of certain inventory, equipment and vehicles. RCP&E began operations on the 670-mile rail line on June 1.
“We have the right people, locomotives, equipment and track infrastructure in place to provide the customer-focused service for which short line railroads are known,” said RCP&E President Brad Ovitt. “The RCP&E will be locally managed and operated, which enables decisions to be made closest to the customer and empowers our people to resolve issues with the goal of operating safely and exceeding customer expectations.”
Todd Bjornstad, RCP&E general manager, said, “In the days and weeks ahead, we’ll be creating a fleet of approximately 50 locomotives and 3,000 railcars dedicated to RCP&E customers, supplemented by additional railcars from our connecting Class I railroads, to ensure we have the power and cars to meet customer needs. Through the combination of these resources, our intent is to increase the level of service provided to customers, which will increase the flow of traffic over the railroad and, ultimately, improve customer satisfaction.”
Most of the new railroad’s 177 employees were hired from the DM&E operations, with additional employees expected to be hired. The line handles approximately 52,000 carloads annually, with shipments including grain, bentonite clay, ethanol, fertilizer and other products.
“In addition to growing business with existing customers on the line, we will be working with all four states that we serve to attract new businesses and drive more freight traffic to rail,” said Alicia Martin, head of RCP&E sales. “Through our three Class I railroad connections, we offer opportunities for RCP&E customers to reach new markets.”
In April, the Surface Transportation Board ordered BNSF and Canadian Pacific to report their plans and progress on ensuring the timely delivery of critical fertilizer shipments necessary to support spring planting. They were directed to file weekly status reports through May 30.
In a May 23 filing, BNSF said it has made significant progress to date in its six-week fertilizer campaign. “As the board knows, we implemented the campaign on April 12, 2014, which called for delivery of 52 trainloads of fertilizer over a six-week period in BNSF-direct unit train service. BNSF is pleased to report that we have now exceeded the 52-trainload goal for originations of fertilizer,” the railroad told the STB. As of the morning of May 22, BNSF had originated 53 trainloads since the six-week fertilizer push was implemented. Of those 53 originated trains, 50 have been delivered to their ultimate destination for unloading and the remainder is expected to be delivered soon.
BNSF said it has seen a decrease in the seven-day average miles-per-day (MPD) velocity on all fertilizer shipments during the prior week, which reflected the fact that a number of originated fertilizer shipments arrived at destinations over the last week where receivers are still holding prior trains for unloading because their storage and unloading capacity was already full. As a result, the fertilizer trains were held short of destination until the train ahead unloaded but remained on the miles-per-day clock at a zero MPD value, impacting velocity measures for that period.
BNSF said it also continues to move individual carloads of fertilizer in manifest service, and has handled an additional 17 fertilizer trainloads that it received in interline service for delivery on BNSF’s network since April 12.
CP, meanwhile, told the STB that performance metrics continue to reflect normalized service across its U.S. rail network.
“Overall, Chicago and other U.S. terminal performance remain consistent with last week. Terminal dwell is trending up marginally as heavy volumes of interchange shipments are being presented to the railway. Train speeds continue to improve and reflect a 3-percent improvement week over week. With respect to fertilizer, as a result of consistent and improved average transit times carload volume levels are trending above the three-year average for the fourth consecutive week,” the railroad said.
The status reports from CP and BNSF were an outgrowth of the agency’s April 10 rail service hearing. The agency was concerned that delayed fertilizer shipments could mean missed planting deadlines that could, in turn, have long-lasting and widespread effects for Midwest farmers and the overall economy.
The board of directors of the League of Railway Industry Women has voted unanimously to name one of its annual college scholarships in memory of former LRIW President Connie Sumara.
Mrs. Sumara, one of the founders of the organization and its longest-serving president, passed away March 2 following a brief illness. She was a dedicated employee of Chicago Freight Car Leasing Co. (CFCL) for 26 years, beginning her career as office manager and ultimately working her way up to Vice President and Director of Customer Support before retiring in November of 2012.
The LRIW credited CFCL for helping to make the Connie Sumara Memorial Scholarship possible.
“Connie led by example as she sought opportunities to keep our industry progressing forward, and this was extremely evident in her work to develop and grow the LRIW. This scholarship mirrors that dedication to progress and growth through the opportunity it provides for the recipients, who themselves have set out to lead by example. We can’t think of a better way to honor Connie than through a scholarship that recognizes others with her ambition,” stated Fred R. Sasser, CEO of Sasser Family Holdings, parent company of CFCL.
“Connie made significant contributions to the launch and growth of the LRIW and was an active board participant even in retirement,” noted current LRIW President Susan Robertson. “We wanted her legacy to live on and thought the scholarship to an LRIW member seeking higher education and training or a college student would be a great way to accomplish that.”
The 2014/2015 LRIW scholarship applications are due July 1 and can be downloaded here. Questions about the scholarship process can be directed to LRIW Scholarship Committee Chair Kathy Keeney on firstname.lastname@example.org or (410) 788-0376.
More than 1,600 railroad and supplier representatives attended last week’s American Short Line and Regional Railroad Association annual convention in sunny San Diego.
The ASLRRA 2014 Connections convention attracted the organization’s second-highest number of exhibitors. Rail industry suppliers and contractors took up more than 210 exhibit booths at the sold-out exhibit hall at San Diego Hilton Bayfront, displaying some of the latest technology products and services.
Alan Matheson, chairman of the 2014 convention, was particularly pleased by the turnout of so many of his short line railroad colleagues for the West Coast event and noted that there were more than 200 new attendees at this year’s convention. Matheson serves as chief mechanical officer for Tacoma Rail.
The event marked the last annual convention for ASLRRA President Rich Timmons, who is retiring later this year as leader of the association. A search committee has been formed and the ASLRRA’s Executive Committee targets having a new president in place this fall to accommodate a smooth transition. Timmons has been praised widely for his role in raising the short line industry’s national profile and growing the association.
ASLRRA 2014 Connections featured more than 40 breakout educational sessions addressing railroading’s hottest topics, and keynote remarks from Federal Railroad Administrator Joe Szabo and BNSF Railway CEO Carl Ice and a panel discussion with top executives from short line holding companies.
The step is the first follow-up action from the agency’s April 10 rail service hearing. The agency wants to hear their plans “given the immediate need for fertilizer to meet rapidly approaching planting deadlines, and the potential long-lasting and widespread effects of missing those deadlines.”
“This directive is intended to focus each carrier’s attention on these very time-sensitive deliveries while the carriers simultaneously work to address the extensive service and car supply issues for all commodities and to get those commodities moving on the rail network. The board continues to closely monitor rail service metrics data for all movements and consider other efforts to address rail service issues,” the agency said.
CP and BNSF are directed to each provide weekly status reports over the next six weeks, beginning April 25, regarding the delivery of fertilizer on their networks. These reports will include fertilizer delivery data, by state, indicating the number of cars, shipped or received, which are billed to agricultural destinations, and the number of cars placed during each prior week. CP and BNSF need to also include actual performance versus trip plan data for fertilizer shipments.
BNSF, meanwhile, put out a special service bulletin this week advising of its plans to handle peak demand for fertilizer movements. “As we enter the next few weeks of peak demand for fertilizer, we understand the shortness of the season and the necessity of timely delivery in order to safeguard that producers can get this year’s crops planted with the proper plant nutrients. BNSF is undertaking several specific actions to expedite fertilizer delivery to ensure our customers have the fertilizer where and when they need it.”
BNSF said it is taking the following measures to increase velocity on fertilizer shipments and improve the efficiency of sets in fertilizer service:
- Handling unit fertilizer similar to the logistics of grain shuttles, where customers have the capacity for rapid load/unload.
- For customers with this capability, BNSF will commit locomotives to these trains to reduce any potential delays and ensure expedited turn around service at origin and destination.
- Adding an additional shuttle set into fertilizer service to increase capacity through increased resources.
- Managing crew availability so that crews are in position when the train is ready to depart.
- Working to ensure accurate ETAs so facilities can be prepositioned to load and unload as fast as possible.
During the grain-crop week 33 that just ended, CN has spotted 4,456 hopper cars for loading at country grain elevators in Western Canada. CN has delivered more than 4,000 grain cars per week to Prairie elevators in the past three weeks, averaging 4,366 cars per week. This is 23 percent above CN’s average winter car-spotting.
“We began ramping up our grain loadings as soon as we got a meaningful break from this harsh winter’s extreme cold temperatures. We are pleased to see our network regaining fluidity,” said Claude Mongeau, CN president and chief executive officer. “That enables our team of dedicated railroaders to move more grain to address the backlog of traffic resulting from the 100-year crop harvested last fall.”
Mongeau said tackling the significant backlog will require solid end-to-end collaboration among all grain supply chain stakeholders.
CN is concerned that, with rail delivery volumes quickly increasing, grain elevator terminals on the Canadian West Coast could soon hit capacity. This would limit total export volumes before the Great Lakes shipping lane reopens and a strong export grain program can start at the Port of Thunder Bay, Ontario.
“The Great Lakes have been frozen over by this winter’s polar vortex to a degree not seen in several decades,” Mongeau explained. “We need urgent support from the Canadian Coast Guard to open navigation channels if we are to meet the federal government’s Order in Council requiring CN to move 500,000 tonnes, or close to 5,500 cars of grain per week.”
On March 7, an Order in Council was announced that requires CN and Canadian Pacific to increase weekly volumes to a combined target of 1,000,000 metric tonnes per week. The government could impose penalties of up to $100,000 a day if CP and CN do not meet the new requirement.
“Railways are not the only ones facing a significant challenge in moving this 100-year grain crop,” continued Mongeau. “It is becoming clear that other supply chain participants – grain elevator companies, shipping lines and ports — are also straining to handle the harvest given a full 50 percent increase in the amount of grain to move to export markets.”
“As I have said before, blaming railways alone – or even worse, threatening to punish them with re-regulation for an outsized crop and winter conditions beyond their control – will not help to move any more grain, now or over the longer term,” said Mongeau. “Canada urgently needs to move away from unproductive finger-pointing. We need to encourage supply chain collaboration and promote sound commercial solutions to address the challenge of moving so much grain. As a key part of the solution, CN is prepared to do its part if it is welcomed as a core member of Canada’s grain team.”
CN has called on its supply chain partners to help it comply with the Canadian government’s unprecedented order requiring the country’s two major railroads to each ship at least 500,000 tonnes of grain per week to ease a massive backlog that is harming farmers.
CN responded to the Order in Council announced on March 7 by Transport Minister Lisa Raitt and Agriculture Minister Gerry Ritz, which requires CN and Canadian Pacific to increase weekly volumes, over a four-week period, to a combined target of 1,000,000 metric tonnes per week – more than doubling the volume currently being moved. Last year’s record grain crop is putting significant pressure on Western Canada’s grain handling and transportation system.
The government is giving the railways four weeks to ramp up to the minimum level and could impose penalties of up to $100,000 a day if CP and CN don’t meet the new requirement.
A record harvest coupled with a transportation bottleneck has left grain sitting in bins across the Prairies. Last year’s harvest was up by about 20 million tonnes.
CN has to move 10 million more tonnes of export grain, or 50 percent more than any other crop. According to the company, 10 million tonnes is equivalent to twice the amount of export potash CN handles, 25 percent more than the total amount of lumber it moves to export, and almost as much coal as it moves to export in a year.
CN President and CEO Claude Mongeau said that “CN will do its part to meet the challenge of moving this 100-year record grain crop. Our assessment shows that an upper limit of around 5,500 cars per week may be achievable, but only if all members of the supply chain work together closely.”
“No supply chain in the world can reasonably be expected to handle a 10 million tonne increase in traffic on such short notice,” Mongeau continued. “It takes eight months to on-board and train a crew member, and seven to eight months to acquire cars and locomotives.”
Extreme winter conditions made the movement of this year’s record grain crop more difficult, causing a shortfall of around 10,000 carloads (around one million tonnes) compared to a normal winter grain flow. CN has moved approximately 10.5 million tonnes of grain from prairie Canada this crop year even after grain elevators shipped at least 10,000 carloads less than the available rail capacity in August. This throughput is on par with the average to-date performance over the last five crop years. CN’s grain performance to date benefited from record spotting performance from September to November, until extreme cold weather hit much of North America in December.
As soon as weather conditions permit and a strong Thunder Bay program starts, CN has indicated to the federal government its intention to ramp up towards 5,500 cars delivered to country elevators each week. CN will have the resources – locomotives, cars and crews – in place to support this record weekly spotting level. CN believes it can sustain this level of delivery, provided that there is strong collaboration from all partners in the supply chain – grain companies, country and terminal elevators. Critical factors will include: use of all sale corridors; timely loading and unloading of grain cars; and encouragement from the federal government to act in a collaborative manner in the grain supply chain.
“Hard work, joint objectives and a true spirit of collaboration will be essential to the industry being able to meet the very aggressive targets that have been set today by the federal government,” Mongeau said.
CN believes that the Minister of Agriculture’s call to introduce more regulation for grain transportation is both ill-advised and seriously counter-productive. “More regulation would lead to adversarial relationships within the supply chain at a time when collaboration is essential,” he said. “Sound policy calls for exactly the opposite: a more collaborative and commercial framework is what Canada needs to support a world-class grain growing sector.”
During a visit to Union Depot in St. Paul, Minn., yesterday, President Obama spelled out his vision for investing in America’s infrastructure with a $302 billion, four-year surface transportation reauthorization proposal and announced that $600 million is being made available by the U.S. Department of Transportation (DOT) to fund transportation projects.
The funding will be made through the Transportation Investment Generating Economic Recovery (TIGER ) Discretionary Grant Program for road, rail, transit and port projects. The TIGER grant program was recently funded in the Consolidated Appropriations Act.
The President was joined by U.S. Transportation Secretary Anthony Foxx for the announcement at the Union Depot, which received $35 million in the first round of TIGER grants to renovate the facility and restore tracks.
“President Obama knows that transportation means opportunity for so many Americans,” said Foxx. “TIGER investments answer the President’s challenge to expand opportunity through a strong transportation system that connects Americans with a better way of life.”
The highly competitive TIGER program, which offers federal funding initiatives for large, multi-modal projects, leverages federal funds with money from private sector partners, states, local governments, metropolitan planning organizations and transit agencies. The program emphasizes projects that support reliable, safe, and affordable transportation options that improve economic competitiveness, improve existing transportation systems, increase transportation options, improve energy efficiency, reduce fuel consumption and improve the safety of transportation systems.
In addition to funding for grants, Congress also provided the DOT with the flexibility to use up to $35 million of the 2014 TIGER funds for supporting the planning of innovative transportation solutions, as well as for freight, port and regional transportation planning, and for supporting efforts that improve efficiency and sustainable community development.
The President also outlined his proposed budget that dedicates $150 billion to address the funding of surface transportation programs and increase infrastructure investment. The amount will be used to fill the current funding gap in the Highway Trust Fund and also increase surface transportation investment over current projected levels by nearly $90 billion over the next four years. The plan will result in a total of $302 billion being invested over four years.
The proposal includes policies and reforms to prioritize investments for repairs and to improve safety with particular attention given to roads and bridges. It also increases average transit spending to $72 billion over four years, which will enable the expansion of new projects such as light rail.
The proposal will make permanent and provide $5 billion over four years for the TIGER competitive grant program and create a $10 billion multimodal freight grant program for rail, highway, and port projects.
DOT is now soliciting applications for the TIGER Discretionary Grants. Information on applying to the TIGER Grant Program is available at on the DOT website. Final applications may be submitted starting April 3, 2014, through Grants.gov. The final submission date is April 28, 2014. Registering for the application process must be completed before submitting an application. The registration project takes 2-4 weeks to complete.