As multi-modal hubs, tank terminals partner with rail, trucking, barge, maritime and pipeline providers to support complex supply chains for a wide variety of liquid commodities.
ILTA shares the goal of helping supply chains become more efficient and cost-effective overall, and we recognize this as the ambition of Precision Scheduled Railroading (PSR). Unfortunately, in recent years, tank terminal facilities have been unfairly forced to shoulder increasing burdens as railroads have moved to implement PSR. We believe these inequities can be successfully addressed through a commitment by all parties, including railroads, to greater transparency and accountability.
Delays and processing errors of railcars en route to destinations can have cascading consequences with profound impacts on shippers and receiving facilities. In the PSR era, it is common to have missed switches, partial switches or incorrectly performed switches, which have both immediate impacts and cascading ripple effects.
Over the past six years, the Class I railroads have collectively reduced their workforce by 29 percent -- that is about 45,000 employees cut from payrolls. By trimming their workforce to such bare-bones levels, the railroads eliminated reserve capacity just prior to the labor challenges created by the COVID-19 pandemic and the Great Resignation. Notably, other transport sectors -- trucking, barge and maritime -- have faced recent hiring and retention challenges, and yet their service levels to tank terminals have not declined overall. The most plausible explanation is that the single-minded focus on PSR has eclipsed attention by the railroads on both the level of their service and the resilience of their systems.
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Under PSR, railroads have not only cut staff, but also closed railyards and limited locomotive availability, leaving railroads with significantly reduced capacity to allow them to respond and ameliorate disruptions. ILTA members have also seen a decrease in last-mile services from railroads, including cessation of blocking and spotting of railcars without explanation for the changes in service. Railroads now report higher efficiencies and increased operating ratios when, in fact, they have merely shifted a portion of their operational burdens and costs to terminal operators and shippers.
ILTA has requested the Surface Transportation Board (STB) to require railroads to report quantifiable performance metrics. At the same hearing, several railroad representatives expressed the belief that PSR will yield useful results given more time for full implementation. Mandatory reporting of standardized performance metrics are essential to help the railroads, their partners and their regulators assess the ways that PSR is and is not working well.
Fortunately, policymakers are listening. ILTA applauds the quick and decisive action taken by the STB under Chairman Marty Oberman's leadership. In early May, the STB instructed four U.S.-based Class I railroads to report on their plans to improve rail service. The board is also requiring Class I railroads to submit data on operations and employment, including weekly service performance metrics that the STB intends to be comprehensive and customer centric. This is an important and welcome step forward.
Congress is also watching closely. At a recent congressional hearing, Chairman Peter DeFazio and Ranking Member Rick Crawford of the House Subcommittee on Railroads, Pipelines, and Hazardous Materials noted their concerns with the deteriorating conditions of freight rail service and encouraged further action by the STB. Oberman used his testimony at the hearing to again stress the importance of maintaining quality service to shippers and receivers.
As railroads continue to seek enhanced operating ratios and increase profitability, the terminal industry urgently needs leaders like Oberman, DeFazio and Crawford to continue driving greater accountability and transparency by the railroads. We look forward to continuing the conversation with policymakers, our railroad partners and other industry stakeholders to bring greater accountability, transparency and increased functionality to our supply chain operations overall.
For more information, visit www.ilta.org.
