America Needs Smarter Freight Rail Policies
The Rail Customer Coalition recently sent a letter to the head of President-elect Biden’s Transportation Transition Team to share the coalition’s top policy priorities for 2021 and to urge the new administration to support STB reform.
The country’s transportation network is at a tipping point due to the fact that federal policies have not been able to keep up with major and disruptive changes within the freight rail industry. Massive consolidation and major operational changes have diminished service and driven up the cost to ship by rail.
Small and large businesses across America depend on railroads to connect them with their customers and are calling on policymakers to act on solutions that will get freight rail back on track. That is why the Coalition supports regulatory reforms at the Surface Transportation Board (STB) that will promote a healthy, reliable and affordable freight rail network.
The letter specifically asks President-Elect Biden to move quickly to fill the critical roles of both a Chairman and new member at the STB. It calls for current STB Vice Chairman Martin Oberman to be designated as Chairman upon the start of the Biden Administration. The coalition also requests that the upcoming Board vacancy be filled with an individual who shares the commitment in moving the Board forward, as demonstrated by Vice Chairman Oberman and Member Patrick Fuchs. The nominee needs to be fair-minded, objective and innovative in addressing freight rail issues.
With such strong leadership, and a full complement of Board Members committed to fulfilling the entire mission of the Staggers Rail Act, the STB can establish a more balanced and modern regulatory system that helps ensure that rail remains a vital mode of transportation well into the future.
Rail Customers Applaud Senate Vote to Confirm Final STB Nominees
WASHINGTON (November 19, 2020) – Members of the Rail Customer Coalition (RCC) commend the U.S. Senate for confirming Robert Primus and Michelle Schultz to fill the two remaining vacancies on the Surface Transportation Board (STB).
In July, the RCC sent a letter to the U.S. Senate Committee on Commerce, Science, and Transportation urging the confirmation of the nominees. This is the first time the STB has been fully staffed since the Surface Transportation Board Reauthorization Act of 2015 expanded its membership from three to five commissioners. Following this strong bipartisan action by the Senate, the STB should move without further delay to adopt commonsense reforms that promote competition and streamline overly bureaucratic procedures.
The RCC represents the largest customers of freight rail, including manufacturers, farmers, and energy providers. Coalition members account for more than half of the total volume of cargo shipped by rail and generate more than three-quarters of the revenue collected by America’s Class I railroads, which is why a functioning and proactive STB is so essential to its members.
The following RCC member organizations issued statements regarding today’s important vote:
Chris Jahn, President & CEO, American Chemistry Council:
“We applaud Majority Leader McConnell, Minority Leader Schumer and the entire Senate for working together to confirm Mr. Primus and Ms. Schultz to the Surface Transportation Board. They bring a wealth of experience to the Board when it comes to tackling complex transportation and policy issues, which will serve them well as the STB looks to modernize the nation’s freight policies. With the addition of Primus and Schultz, the Board is in a strong position to enact much needed reforms and fulfill its Congressional mandate to promote a competitive and reliable freight rail system.”
Heidi Brock, President & CEO, American Forest & Paper Association:
“The U.S. Senate confirmation of Michelle Schultz and Robert Primus to the Surface Transportation Board now brings the board to its full complement. We recommend the board advance long-overdue freight rail policy reforms. The paper and wood products industry is eager to work with the board to revoke the outdated commodity exemption policy and ensure our companies have an avenue to address harmful service and pricing issues. Such reforms support our industry’s ability to move millions of tons of materials to production mills and final markets.”
Scott Heisel, VP & Technical Director, American Malting Barley Association:
“The American Malting Barley Association would like to express its appreciation to the U.S. Senate for confirming Ms. Michelle Schultz and Mr. Robert Primus to the Surface Transportation Board. The barley supply chain depends on safe, efficient, and reliable freight rail system. A fully staffed STB, and the experience these individuals bring, will enhance the reform and modernization efforts envisioned when Congress passed the STB Reauthorization Act of 2015.”
Zippy Duvall, President, American Farm Bureau Federation:
“Farmers and ranchers rely upon freight rail to move American-grown products from all regions of the country to markets at home and abroad, as well as to provide critical farm supplies to help plant, tend and harvest crops. Ensuring we have a functioning and fully staffed STB is critical for the agency to carry out its charge to protect the interests of farmers, rural businesses and railroads. We applaud the Senate for their action to confirm Robert Primus and Michelle Schultz.”
Chet Thompson, President & CEO, American Fuel and Petrochemical Manufacturers:
”We commend the Senate for its work to confirm Mr. Robert Primus and Ms. Michelle Schultz to the Surface Transportation Board, a key independent federal agency charged with monitoring the economic health and efficiency of our surface transportation system. These confirmations will bring an even deeper wealth of experience to an already accomplished Board and provide a full complement of board members to implement STB’s mission as it continues to tackle critical surface transportation issues. A healthy and efficient freight rail system benefits all stakeholders, and we look forward to STB’s continued efforts to modernize freight rail policy and fulfill the agency’s Congressional mandate to promote a fair, reliable, and competitive freight rail system.”
Robin Rorick, VP of Midstream and Industry Operations, American Petroleum Institute:
“API applauds the Senate’s bipartisan vote to fill the two vacancies on the Surface Transportation Board, and we congratulate Mr. Primus and Ms. Schultz on their appointments. Rail transportation is integral to providing American families and businesses with the reliable, affordable and cleaner energy they use every day, and we’re hopeful the fully-staffed STB will be able to enact needed reforms on our country’s rail system to enhance its performance and the relationships with the communities it serves.”
Tom Madrecki, VP of Supply Chain and Logistics, Consumer Brands Association:
“The Consumer Brands Association and its members congratulate Robert Primus and Michelle Schultz on their confirmation to the Surface Transportation Board. The Senate’s action to fill the last remaining STB vacancies are an important step in enhancing intermodal transportation and freight rail performance during a time of unprecedented supply chain demand across the consumer packaged goods industry.”
John Bode, President & CEO, Corn Refiners Association:
“CRA and its members congratulate Mr. Robert Primus and Ms. Michelle Schultz for their confirmation by the Senate as members of the Surface Transportation Board. We also thank the Administration, as well as Majority Leader McConnell, Minority Leader Schumer, and the Senate for their work to fill these positions. CRA members are highly dependent upon reliable and economic rail transportation for their products, and we look forward to working with Mr. Primus and Ms. Schultz, along with the rest of the STB, on the reforms needed to ensure a reliable and efficient rail system.”
Shelley Sahling-Zart, President, Freight Rail Customer Alliance:
“The Freight Rail Customer Alliance (FRCA) congratulates Michelle Schultz and Robert Primus on being confirmed by the U.S. Senate to serve as Members of the Surface Transportation Board. We sincerely thank the White House, Senate Commerce Committee and the full Senate for seeing these two nominations through the process. As allowed for in the STB Reauthorization Act of 2015, the Board will have five Members resulting in enhanced efficiency and transparency for the Board benefiting all stakeholders – including shippers and rail carriers, and the communities we both serve.”
Steve DeHaan, President & CEO, International Warehouse Logistics Association:
“The International Warehouse Logistics Association thanks the Senate for confirming Michelle Schultz and Robert Primus to the Surface Transportation Board. With the Board now at full strength, we look forward to resolution of many of the challenges facing rail shippers. The US economy is dependent on a strong rail freight network, but it’s time to get the pendulum to swing back and give the shippers a break from unreasonable demurrage charges and rates.”
Eric Byer, President & CEO, National Association of Chemical Distributors:
“Having a fully staffed U.S. Surface Transportation Board is of paramount importance for chemical distributors. The STB makes critical decisions for rail customers that impact their daily operations and their bottom lines. The confirmation of Robert Primus and Michelle Schultz will go a long way in reaffirming the STB as the authority on rail issues, particularly as it relates to demurrage charges and rail service matters important to the chemical industry. We thank the Senate for confirming Primus and Schultz and look forward to working with them to ensure the Board can more effectively carry out its charge to protect the interests of rail customers and railroads.”
Jennifer Hedrick, Executive Director, National Industrial Transportation League:
“The National Industrial Transportation League (NITL) and its members congratulate Michelle Schultz and Robert Primus on their confirmation to the Surface Transportation Board. Having a fully staffed STB is long overdue, and their addition will allow the Board to increase its focus on issues that affect freight rail users, including access to reliable and competitive rail service.”
Dan Elliott, Legal Counsel, Private Railcar Food and Beverage Association:
“The Private Railcar Food and Beverage and its member companies strongly support the Senate’s vote to confirm Robert Primus and Michelle Schultz to become members of the Surface Transportation Board. As a former member of the Board and now counsel to PRFBA, I sincerely believe these individuals will be an exceptional addition to the STB.”
Philip K. Bell, President, Steel Manufacturers Association:
“SMA is pleased to see the U.S. Senate confirm Mr. Primus and Ms. Schulz to the Surface Transportation Board. These appointments will complete the staffing of the Board, and allow for its continuing efforts to implement good transportation policies for the American railroad system. Our members look forward to a more reliable and competitive freight rail system through the leadership of this Agency.”
Congress Supports a Closer Examination of the Impacts of Precision Scheduled Railroading
With so many priorities competing for the attention of Congress, it was encouraging to see the U.S. House of Representatives support a much needed study of a key issue plaguing the businesses that depend on freight rail.
As part of the INVEST in America Act that recently cleared the House, Chairman DeFazio (D-OR) of the U.S. House Committee on Transportation and Infrastructure included an important provision that calls for a federal study of the impacts of Precision Scheduled Railroading by the U.S. Government Accountability Office (GAO).
During railroad shipper roundtable last year, DeFazio along with the members of the committee heard firsthand accounts from many large and small business about how the drastic operational changes rashly enacted by the major railroads as part of their pursuit to implement Precision Scheduled Railroading (PSR) have threatened their operations. As part of their testimony, these companies provided detailed accounts of how these changes were often made with little advance notice or consultation and resulted in harmful service reductions and higher shipping costs.
The GAO study is a logical follow up to the roundtable and would provide a much needed examination of how these operational changes have impacted workforce safety, the quality and reliability of freight rail service, investments in railroad infrastructure, and additional fees charged to shippers.
A study will not make all of the problems that have come with PSR magically disappear, but the results could help guide future rail policy to promote a safe, strong, reliable, and competitive rail network and help drive the American economy forward.
STB Takes Action to Prevent Rail Carriers From Penalizing Shippers with Unreasonable, Excessive Demurrage Charges
When it took a proactive approach to addressing excessive and questionable demurrage charges, the Surface Transportation Board (STB) sent a clear message that business as usual was no longer acceptable. As Logistics Management observed, the Board’s new policies will promote greater “transparency, timeliness, and mutual accountability” when it comes to demurrage charges.
Demurrage charges are supposed to create incentives to keep the rail network running efficiently. But in practice, it has recently become just another revenue stream and profit center for rail carriers. In 2019 alone, shippers paid nearly $1.5 Billion in demurrage and related fees. That’s on top of all the other costs shippers pay to move goods and products.
Last year during a hearing before the STB, many customers testified that “they have no option but to pay the fees.” The CEO of a Pennsylvania scrap recycler said at the hearing that his company saw a 560 percent increase in demurrage fees in 2018 and through April of 2019, those fees had already tripled. The supply chain director for a food processing giant said railroads told him their terms were “the price of admission for you to be on our railroad.” A vice president of the world’s largest chlorine manufacturer said his company has seen “no benefit and only added costs” from demurrage fees. And the head of the nation’s Corn Refiners Association said current charges only “create new revenue streams for the railroads.”
It wasn’t just shippers who were critical of the railroad practices. Board member Martin Oberman wondered aloud, “I’m trying to understand if this makes sense for each shipper.”
The existence of demurrage charges is not inherently bad. These charges can provide legitimate compensation to carriers when shippers fail to unload rail cars when they’re supposed to. The problem arises when well-intended rail customers are subjected to unreasonable and excessive charges that penalize them for circumstances beyond their control.
In April, the STB issued a Policy Statement outlining the principles it will consider in evaluating the reasonableness of demurrage and accessorial rules and charges. The statement emphasizes that charges generally should not be assessed in circumstances beyond the shipper’s reasonable control. The Board’s action should help keep the rail network running efficiently while at the same time preventing the abuse of demurrage charges.
Freight Rail Customers Urge Senate to Confirm White House Nominees
WASHINGTON (August 1, 2018) – The Rail Customer Coalition (RCC) applauds today’s vote by the U.S. Senate Committee on Commerce, Science and Transportation to approve the nomination of Martin Oberman to serve on the Surface Transportation Board (STB). For more than two years several vacancies on the Board have remained open, which has hampered the STB’s ability to address ongoing freight rail issues and advance regulatory reforms.
The coalition stressed the importance to the economy of filling these open positions and voiced its support of Oberman earlier this year in a letter to President Trump. Mr. Oberman has an impressive track record of resolving complex rail issues and along with his fellow nominees Patrick Fuchs and Michelle Schultz, the RCC believes he will be a good addition to the Board.
In addition to a fully staffed Board, the coalition supports practical regulatory reforms that would allow greater access to competitive freight rail service and that would make the STB operate more efficiently and effectively for all stakeholders.
More than 70 groups belong to the RCC, which represent some of the largest users of freight rail. Coalition members account for more than half of the total volume of cargo shipped by rail and generate more than three quarters of the revenues collected by the railroads.
The following member organizations provided statements regarding today’s important bipartisan vote:
“Americans depend on a fully staffed Surface Transportation Board to ensure that bakers and other manufacturers can remain competitive in the face of ongoing rail and trucking freight challenges. ABA applauds the Senate Commerce, Science, and Transportation Committee for their diligent work in advancing three qualified candidates to fill these crucial positions. ABA urges the Senate to take quick action in confirming these appointees to protect our nation’s businesses and infrastructure.”
- Lee Sanders, Senior Vice President of Government Relations & Public Affairs, American Bakers Association
“A fully functioning STB committed to adopting sensible freight rail reforms is critical to supporting the tremendous ongoing growth of chemical manufacturing in the United States. We urge the full Senate to confirm the three well-qualified nominees approved by the Commerce, Science and Transportation Committee without further delay so the STB can complete its deregulatory efforts and open up greater access to competitive and reliable freight rail service.”
- Mike Walls, Vice President Regulatory & Technical Affairs, American Chemistry Council
“As one of the largest manufacturing sectors in the nation, the paper and wood products industry deserves access to effective, streamlined and competitive rail service, which is essential to move millions of tons of materials to production mills and final markets. Revoking the outdated commodity exemption policy and addressing harmful service failures are long-overdue steps that a fully-staffed Surface Transportation Board can take to help meet that goal. We thank the committee for approving the nominations of Patrick Fuchs, Michelle Schultz and Martin Oberman to the board and urge the full Senate to swiftly confirm them so that ALL industries across the country have access to the tools they need to grow the economy and create jobs.”
- Donna Harman, President & CEO, American Forest & Paper Association
“Promoting our nation’s energy infrastructure is a $1.3 trillion proposition that could support 1 million jobs per year through 2035 and is critical to ensuring that Americans have the energy they demand every day. We appreciate Chairman Thune and Ranking Member Nelson’s work to advance Mr. Oberman’s nomination through the committee process and hope the full senate will act swiftly to approve this well qualified nominee. With its new leadership, we hope that the Surface Transportation Board will advance meaningful regulatory reforms aimed at improving the U.S. rail infrastructure, and providing the regulatory certainty needed for shippers to invest in modern tank cars so that Americans across the country can keep benefitting from U.S. energy resources.”
- Robin Rorick, Midstream Group Director, American Petroleum Institute
“The Auto Alliance and our members applaud the Senate Commerce Committee for favorably reporting Martin Oberman’s nomination that will assist the Surface Transportation Board in addressing a number of key regulatory reforms. Automakers have been especially challenged by rail service declines in recent years. That’s not only a challenge for getting vehicles to customers and dealerships across the country, but rail service declines also add transport and storage costs at off-site locations when inventory exceeds plant capacity. We look forward to working with Patrick Fuchs, Michelle Schultz, and Martin Oberman once they are formally confirmed by the U.S. Senate, which will provide the STB with full slate of five board members.”
- David Schwietert, Executive Vice President, Alliance of Automobile Manufacturers
“The fertilizer industry depends on safe, reliable and cost-effective rail transportation to deliver fertilizer year-round, which is essential to U.S. food production. We urge the Senate to act quickly in confirming STB nominee Martin Oberman so that the Board can become fully operational and enact reforms necessary to help farmers, agribusinesses and manufacturers be more competitive in the global marketplace.”
- Chris Jahn, President & CEO, The Fertilizer Institute
“FRCA appreciates the Senate Commerce Committee’s continued leadership and commitment in realizing a full complement of Members to the STB. Approving Mr. Oberman’s nomination to the U.S. Senate is another important step in this critical effort. FRCA looks forward to the STB moving on major proceedings pending before the Board, some going back decades, involving the most substantive issues of great importance to the Board, shippers, railroads, and the general public.”
- Ann Warner, Freight Rail Customer Alliance
“The Senate Commerce Committee has taken an important step in the nomination process. The country’s glass container manufacturing industry, along with its supplier partners of raw materials, depend on fair and competitive rail service. A full complement of Commissioners at the Surface Transportation Board will enable the agency to act on important shipper issues.”
- Lynn M. Bragg, President, Glass Packaging Institute
“We applaud Chairman Thune, Ranking Member Nelson and their colleagues on the Committee for taking up the nomination of Martin Oberman to the Surface Transportation Board so swiftly. It is vital that the STB have a full board in place as quickly as possible so that they may address the serious issues facing shippers across the economy. Our members produce the feedstock minerals used by the manufacturing sector. Reliable and affordable rail service are vital for our members to be able to compete in the global market and ensure competitive U.S. manufacturing overall.”
- Mark Ellis, President, Industrial Minerals Association – North America and National Industrial Sand Association.
“There are a number of critical rail issues facing the recycling industry. ISRI looks forward to having a full STB board in place so that it may address the industry’s needs and ensure reliable freight transportation for scrap commodities across the country. We commend the Committee for advancing the nomination of Mr. Oberman in an effort to fill out the Board.”
- Billy Johnson, Chief Lobbyist, Institute of Scrap Recycling Industries, Inc.
“Two years is too long to go without a fully-staffed Surface Transportation Board, especially given the struggles small businesses like chemical distributors have faced in getting the Class I railroads to deliver product to their facilities in a timely and cost-effective fashion. Along with the approval of Patrick Fuchs and Michelle Schultz earlier this year, we’re pleased the Senate Commerce, Science and Transportation Committee again took action today to approve Martin Oberman as the last outstanding Board nominee. We now urge the entire Senate to swiftly confirm all three nominees to enable the STB to return to the work it was mandated by Congress to do.”
- Eric R. Byer, President, National Association of Chemical Distributors
“At a time when America’s shippers are facing the most challenging freight transportation environment in decades, a fair and competitive freight rail system has never been more vital to the efficient functioning of the U.S. economy. The members of the National Industrial Transportation League thank the Senate Commerce, Science, and Transportation Committee, and especially Chairman Thune and Ranking Member Nelson, for their commitment to filling all of the vacancies on the Surface Transportation Board. We look forward to working with the Board to increase access to competitive freight rail service for all shippers.”
- Jennifer Hedrick, Executive Director, National Industrial Transportation League
“Our members and many other shippers, have been waiting a long time for the STB to be staffed with the full complement of five Directors, that has been a requirement of the Re-authorization Act from 2015. We support a fully functioning STB and look to the new Board to consider and enforce fair shipper rail reforms that are essential in supporting the growth of railcar freight in the USA. We support the three nominees approved by the Commerce, Science and Transportation Committee and are eager to see the full Senate confirm these individuals before the end of this summer. We need the STB to be fully equipped and staffed to deal with the critical rail issues at hand and to make positive changes within the rail industry for all shippers.”
- Herman Haksteen, President and Board of Director, Private Railcar Food and Beverage Association (PRFBA)
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The Rail Customer Coalition (RCC) is a large collection of trade associations representing a broad cross section of manufacturing, agricultural, and energy industries that depend on the railroads to deliver reliable and affordable service in order to remain competitive in a global market. Their members are essential to a healthy U.S. economy with operations and employees throughout the country – collectively they provide more than 7 million jobs and produce more than $4.8 trillion in economic output.
THE RAIL CUSTOMER COALITION
The coalition is a large collection of trade associations representing a broad cross section of manufacturing, agricultural, and energy industries with operations and employees throughout the United States, including: