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Freight railroads and shippers, not surprisingly, have opposite views on new legislation in the Senate dealing with the Surface Transportation Board.
The Association of American Railroads (AAR) is concerned that the Surface Transportation Board (STB) Reauthorization Bill (S.2777) will harm the railroads’ ability to move what the economy demands and deliver the service shippers expect. The AAR also believes that the proposed legislation, if allowed to proceed in its current form, would have a negative effect on the industry’s continued reinvestment of record amounts of private capital into the freight rail system and on future hiring. The Senate Commerce Committee held a mark-up and passed the bill on Sept. 17.
AAR President Edward R. Hamberger said railroads have several serious concerns with the bill, beginning with the legislation directing the STB to pursue regulations that could cap rates and require railroads to turn over traffic to competitors. “The rail industry believes this legislation will harm the ability of the nation’s railroads to invest in the network and improve service for our shippers,” he said, noting that railroads are moving the most freight in the last seven years and that some commodities are up double digits over last year. “These new restrictive regulations would be imposed on the nation’s railroads at a time when investments in capacity, new equipment and new hires are needed.”
According to the AAR, several other sections of the STB reauthorization bill could also harm the rail industry. These include directing the STB to prevent railroads from using the common approach of railroads and shippers alike in contract negotiations to “bundle” offers, but allowing shippers to continue to do so. The AAR says the STB has no authority over rail contracts and should not be directed to interfere in agreements that are arms-length transactions freely entered into by both parties. The AAR also believes that the STB already has broad regulatory oversight over the railroads. The legislation, however, would give the STB expanded authority to launch investigations of a railroad even where no complaint against the railroad has been lodged.
“On the one hand, everyone wants to see capacity grow and traffic flow unimpeded, and on the other hand there are those that want to undercut our very ability to get the capital necessary to invest,” stated Hamberger. “This is a perfect example of you simply can’t have it both ways. America’s rail industry is urging policymakers not to rush this legislation and instead give all stakeholders the opportunity to have a more productive conversation to try to find common ground.”
The National Industrial Transportation League, speaking on behalf of its shipper membership, has announced its strong support of the Senate legislation, which was introduced last week by Senators Jay Rockefeller (D-WV) and John Thune (R-SD).
“League members are gratified that Chairman Rockefeller and Ranking Member Thune have introduced an exceptionally well-crafted bill which, if enacted, will improve the operation and effectiveness of the Surface Transportation Board,” said League President and CEO Bruce Carlton. “Insuring that the STB has the resources it needs to carry out its statutory mandates is important to our members and rail shippers generally.”
“Senators Rockefeller and Thune have demonstrated the importance of a well-functioning STB by proposing legislation that will expand Board membership and its authority to help ensure that our nation’s rail system operates effectively and efficiently for the benefit of both railroads and shippers,” continued Carlton. “This bill is a shining example of effective and appropriate Congressional oversight to give this important federal agency needed new tools and direction.”
The bill calls for the addition of two new members to the Board and also encourages the STB to move forward in a timely manner on the League’s proposed competitive switching rulemaking to improve the state of competition for so-called captive shippers. “By bringing this bipartisan proposal forward now the Commerce Committee’s leadership has demonstrated a unity of purpose which we admire. Moreover, they have managed to draft a bill that does not reregulate the rail industry but appropriately requires the STB to achieve more balance in its policies and determine the necessary degree of economic regulation for the freight rail industry. They certainly have the League’s support and respect for a job well done,” concluded Carlton.
Sen. John D. (Jay) Rockefeller, IV, chairman of the Senate Committee on Commerce, Science, and Transportation, announced a full committee hearing for Sept. 10 titled, “Freight Rail Service: Improving the Performance of America’s Rail System.” The hearing will focus on rail service issues throughout the country, including congestion and locomotive and railcar shortages. Stakeholders will discuss the impact of rail service issues on various industries and the economy. That hearing will be webcast live via the Senate Commerce Committee website.
The STB, meanwhile, will hold a field hearing on Sept. 4 in Fargo, N.D., to hear reports from shippers and others on service issues on the U.S. rail network and to hear from rail industry executives on their efforts to address service problems. The hearing is expected to discuss and examine further steps to improve service. A live video broadcast will be available from the STB’s website.
Representatives from BNSF Railway, Canadian Pacific, Genesee & Wyoming, Inc., Amtrak, National Coal Transportation Association, Western Coal Traffic League, Alliance for Rail Competition, American Soybean Association, and the North Dakota Grain Growers Association are among those expected to appear at the hearing.
North Dakota Gov. Jack Dalrymple, U.S. Senators John Hoeven and Heidi Heitkamp and Rep. Kevin Cramer are also expected to testify.
U.S. Sen. John Thune (R-S.D.), ranking member of the Senate Commerce Committee, said his panel’s hearing will examine the rail service backlogs in South Dakota and throughout the region that have led to service disruptions for South Dakota farmers, ethanol producers, utilities, and other businesses. “With the backlog in rail service and grain bins reaching capacity, South Dakota producers have limited storage options for both last year’s and this year’s expected record-breaking harvest,” said Thune. “I will continue working with Chairman Rockefeller and the Surface Transportation Board (STB) to seek commitments from the railroads to address the backlog of grain orders to minimize the harm that South Dakota producers face in getting their crops to market. I look forward to the committee’s upcoming hearing and hope it will better highlight for committee members and the general public the scale and scope of the challenges that shippers are facing across the country.”
Linda Bauer Darr, a Washington veteran with transportation association expertise, has been selected as the next president of the American Short Line and Regional Railroad Association.
Darr, who is president and CEO of the American Moving and Storage Association, will succeed Rich Timmons, who is retiring at the end of this year after leading the association since 2002. Timmons assumed the helm of ASLRRA following an executive post at Norfolk Southern and a distinguished career in the Army where he attained the rank of lieutenant general.
Darr has been at AMSA since 2007 and has many years of experience in transportation policy, association management and government relations. Her experience includes senior posts with the American Trucking Associations and the American Bus Association, as well as serving during the Clinton Administration at the U.S. Department of Transportation. As Deputy Assistant Secretary for Budget and Programs, she interacted regularly with senior officials in the administration and at the White House and with members of Congress and their staffs on a wide range of transportation policy issues.
She serves on the board of the American Highway Users Alliance, the Eno Transportation Foundation’s Advisory Board, the Industry Advisory Panel of the Employee Relocation Council, and was appointed to the U.S. Chamber of Commerce’s Committee of 100 Top Association Executives. She holds a bachelor’s of science degree from the University of Maryland and has done post-graduate work at the University of Virginia and the Harvard Kennedy School of Government.
Darr joins a railroad association that has greatly expanded both its membership and scope of work on behalf of its members during Timmons’ tenure. She will step into a high-profile role as the voice of the nation’s 550 short line and regional railroads, which operate over 50,000 miles of track. She will represent the interests of these railroads before Congress, federal, and state regulatory agencies and on policy and technical committees of the U.S. railroad industry. On the legislative front, she will work on several of ASLRRA’s key issues, which include opposing legislative efforts that could harm the railroad industry’s current economic and antitrust regulatory environment, urging Congress to extend the short line infrastructure tax credit, and battling efforts to increase truck size and weight allowances.
“ASLRRA undertook a nearly year-long search for its new President and we believe we have concluded that search with an outstanding selection,” said ASLRRA Chairman Ed McKechnie. “Ms. Darr has significant experience in leading trade associations and has spent almost her entire career in the transportation industry. Her government service was at a very senior level in the agency that has direct budget and programmatic oversight over the Federal Railroad Administration, the federal agency with the most interaction with the railroad industry.”
Timmons is concluding his 12th year as ASLRRA’s president. “Rich transformed our Association,” said McKechnie, executive vice president and chief commercial officer for Watco Companies. “He made us a stronger, more effective and more member-focused organization and we are sincerely grateful for the energy and enthusiasm he gave us during his tenure. In Linda Darr we look to taking our Association to an even higher level of effectiveness as we address the challenges of improving safety, building on our legislative successes and enhancing the short line railroad brand.”
Association of American Railroads President Ed Hamberger applauded the choice. “I have known and worked with Linda over many years,” said Hamberger. “She is a smart, energetic leader with a wealth of experience in the transportation industry. I look forward to maintaining the strong partnership we have enjoyed with ASLRRA under Rich Timmons’ leadership.”
U.S. Transportation Secretary Anthony Foxx joined local, state and regional representatives to celebrate the opening of the 11.7-mile Silver Line extension, the first phase of the planned 23.1-mile extension of Washington, D.C.’s Metrorail service to Dulles International Airport and Loudoun County, Virginia. The new line, the largest expansion of Metrorail service in 20 years, connects the nation’s capital to the Virginia areas of Tysons Corner and Reston.
“The Obama Administration is proud to be a partner in delivering more world class transportation options to the Washington Metropolitan area and connecting thousands of residents and visitors with major employment, education and economic opportunities throughout the region,” said Secretary Foxx. “The Silver Line is an excellent example of why Congress should pass the President’s GROW AMERICA Act so we can meet the rising demand for more and better transportation choices by supporting projects like this across the country.”
The first phase includes five new stations, a 2,300-car commuter parking garage, the purchase of 64 rail cars, and expanded capacity at the West Falls Church rail yard. The new line is expected to serve approximately 85,700 daily riders by 2030.
Federal Transit Administration (FTA) Deputy Administrator Therese McMillan, who also attended the opening, said that with population growth expected to continue over the next two decades, the Silver Line is an excellent investment in the area’s transportation future. “This project will expand capacity for one of our nation’s largest transit agencies, accommodate thousands of additional riders for years to come, and offer a much-needed alternative to traffic congestion in Northern Virginia,” said McMillan.
The U.S. Department of Transportation is providing $900 million in FTA Capital Investment Grant (New Starts) Funding and $75 million in other DOT funds toward the $3.14 billion total project cost of the first phase of the Silver Line extension. The remaining cost is being covered by state and local funding sources.
In addition, DOT has approved a $1.87 billion Transportation Infrastructure Finance and Innovation Act (TIFIA) loan for construction of the second phase of the Silver Line extension to Loudoun County—the largest TIFIA loan in the program’s history.
The Silver Line is being constructed by the Metropolitan Washington Airports Authority (MWAA) and operated by the Washington Metropolitan Area Transit Authority (WMATA).
“The Silver Line will be a dynamic economic boost to the region,” said Virginia Governor Terry McAuliffe, who also attended the opening. “It will reduce congestion, create new jobs and begin to unlock Dulles Airport, one of Virginia’s most important economic assets. I am honored to have worked along so many leaders to help bring Phase 1 of this transformational project to fruition.”
Metrorail, the nation’s second busiest rapid transit system, grew 10 percent larger with the five new stations and new direct rail service between the Washington region’s two largest employment centers, as a result of the opening of the Silver Line’s first phase. The new rail line is the largest expansion of Metrorail — and the first time a new color has been added to the Metro map — since the Green Line opened in 1991.
With the opening of the Silver Line, Metrorail now serves a total of 91 stations on a 118-mile system in Virginia, Maryland, and the District of Columbia.
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.