WASHINGTON, DC, US — Randy Gordon, chief executive officer of the National Grain and Feed Association (NGFA), testified before the US Senate Committee on Commerce, Science and Transportation on improving the rail regulatory framework to address limited rail-to-rail competition.
During his Oct. 21 testimony, Gordon spoke about two factors impacting the US agriculture’s ability to expect reliable and cost-effective rail service.
He specifically cited the lack of rail-to-rail competition, with Class I railroad duopolies now operating in the East and West that haul 80% of grain and oilseed traffic, with many grain facilities captive to a single carrier; and railroads’ adoption of an operating model in which carriers drive their operating ratios to potentially unsustainably low levels to reward shareholders at the expense of customers.
“In looking to the near-term future this fall and winter, there is nervous apprehension within our industry about whether railroads will be able to keep pace with what we all hope will be a very robust demand for rail service given strong grain and soybean sales and a rebounding economy, complicated by the vagaries of winter weather,” Gordon said.
He did note there is also a longer-term concern about “the potential effect on service of the implementation of the so-called ‘precision scheduled railroad’ (PSR) operating model by six of the seven Class I carriers.”
Gordon said the implementation of the PSR operating model has created unexpected, disorderly operation plans, service schedules and the type of rail service offered.
“Further, by reducing crews and customer service personnel, and idling locomotives — both more quickly and sharply than before — PSR has raised questions about whether railroads have enough surge capacity to respond quickly to increased demand for service,” Gordon said.
The NGFA has urged the US Senate Committee on Commerce, Science and Transportation and the US Surface Transportation Board to address and explore to policy matters in future rail regulatory framework, including:
• Clarify common-carrier obligation of railroads
• Reprioritizing the importance of rail-to-rail competition in the US Rail Transportation policy
The association also pointed out the hesitancy of rail customers to attempt to address issues on fear of retaliation and lack of options to utilize another rail service or competitive transportation mode.
“This again underscores the need for more competition as part of an effectively functioning regulatory framework,” Gordon said.