Tuesday, March 20, 2018

Off topic: Rail service complaints

Despite the optimistic picture CSX painted at its recent daylong meeting with investment analysts, many of its customers continue to complain to the federal Surface Transportation Board about service issues. Now the STB wants to hear from all six Class I railroads about their service issues and how they plan to solve them.

The letters from the STB to CSX, Norfolk Southern, Union Pacific, Burlington Northern Santa Fe, Kansas City Southern, Canadian Pacific and Canadian National went out March 16. The situation with shippers is described in an article at freightwaves.com.

The STB’s website has links to each letter sent to the railroad CEOs.

If you go down this link, you’ll see letters sent recently to the STB from the American Chemistry Council listing complaints about CSX service.

“While CSX’s January 13 letter to the Board notes ‘a remarkable rate of positive change’ and cites selected service metrics that exceed 2016 levels, few benefits of CSX’s operational changes have actually been realized by its customers. In fact, the vast majority of ACC member responses indicate that current CSX service is worse than it was prior to the implementation of precision railroading,” the letter states.

It continues, “Adding to companies’ frustration, CSX has imposed a number of cost-shifting changes, including cancelling long-term leased track agreements and levying new demurrage and switching fees. … Sadly, many companies fear that paying more for less reflects a ‘new normal’ for CSX service.”

In its own letter to the STB, the Alliance of Automobile Manufacturers detailed its members' complaints with service from all railroads.

“As a consequence of these service declines, Alliance members have experienced substantial delays getting vehicles to customers. They also they have incurred significant costs to transport to, and store vehicles at, off-site locations, as vehicle inventory has exceeded assembly plant capacity. Certain assembly plants even run the risk of shut down due to lack of plant yard and off-site space. In addition, Alliance members have paid premium freight costs to divert vehicles to alternative transportation modes where possible,” its letter said.

Railroads keep telling analysts that they want to take business away from long-haul trucks, as that is where the long-term market growth is likely to come from. That’s in part because the trucking market is supposed to be tight. But the STB action indicates railroads have their own problems with delivering on their promises.

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