OMAHA, Neb. – Some grain elevators are so full that farmers trying to sell their crops are turned away. But at the same time, flour mills and feed mills stop production because they can’t get the grain they need.
The problem? Lack of trains to move grain.
Federal regulators are holding hearings later this month to examine the causes of the rail capacity shortage, which the railroads largely attribute to factors beyond their control, such as broader chain problems. supply and general labor shortages.
But shippers, regulators and rail worker groups say they believe the heart of the problem is that the railroads cut too much when they cut nearly a third of their workforce in recent years. years in the name of efficiency.
“The cuts were too severe,” said Max Fisher, chief economist for the National Grain and Feed Association. “Now there is no buffer capacity to respond to increases in demand or weather problems or train derailments etc. This buffer capacity that was in place is no longer there.
Union Pacific, BNSF and other major railroads say they are tackling problems by aggressively hiring and asking customers to reduce the number of cars they ship to ease congestion along the rail network .
“Railroads are not immune to challenges felt across the economy,” said Ted Greener, spokesman for the Association of American Railroads trade group. “The railways continue to take active steps to address these challenges, including labor shortages.”
Companies across the country are reporting shipping problems, but trade groups say some of the worst rail problems are in the western United States right now.
In addition to problems for farmers and grain processors, some ethanol plants have had to cut production while waiting for empty railcars to arrive. A spokesperson for the American Chemistry Council said Tuesday that more than half of the companies it represents have reported rail service issues this year.
Agriculture Secretary Tom Vilsack recently joined trade groups NGFA and Growth Energy in filing formal complaints with the Surface Transportation Board which oversees rail service. Labor groups, including the Transport Division of the International Association of Sheet Metal, Air, Rail and Transport Unions and the Transport Trades Department Labor Coalition, have also raised concerns about how job cuts hurt railway capacity.
Surface Transportation Board Chairman Martin Oberman says major freight railroads place too much emphasis on cost-cutting and shareholder satisfaction as they cut 45,000 jobs in the past six years and reduced “their workforce to the essentials”. The council will hold a hearing on April 26 and 27.
“All of this has directly contributed to where we are today – rail users suffer severe deterioration in rail service because on too many parts of their networks the railways simply do not have a sufficient number of employees,” Oberman said.
Shipper groups say they hope the council will order the railways to provide better service and consider asking them to open up their networks to allow competing railways to bid on carrying shipments from companies that are currently only served by one railway. Freight railways oppose the proposal because they say it would complicate shipments and slow deliveries.
The railways defend the big operational changes they have made in recent years, including relying on longer and longer trains running on a tighter schedule, so they need fewer locomotives and of crews to deliver millions of tons of cargo.
“What we are seeing now and have been seeing for some time is the impact of disruptive events,” Union Pacific spokeswoman Kristen South said. “We have always hired based on volume.
Norfolk Southern said it has adjusted its workforce to meet demand where possible, but “a tight labor market continues to contribute to service challenges, while demand across our national supply chain remains unprecedented.”
BNSF CEO Katie Farmer acknowledged to customers in a letter that its recent service did not meet their expectations, but the railway is working to improve this.
“However, restoring our network and meeting our customers’ service expectations will not happen overnight,” Farmer said.
The railroads have been hiring steadily since the economy rebounded strongly from the depths of the pandemic, and they have stepped up those efforts this year to help address service issues and prepare for more volume.
Union Pacific said it has hired 450 additional workers since January and BNSF says it is on track to hire 1,000 people this year. Norfolk Southern is offering $5,000 bonuses to new hires as it ramps up hiring efforts. CSX has also been hiring aggressively. But hiring takes time to take effect due to the time it takes to train new employees.
The railroads have also pulled hundreds of locomotives from storage since the winter to help them handle additional demand, and BNSF and Union Pacific have also imposed stricter attendance rules to ensure they have crews available. they need to run these trains.
Union Pacific just started asking customers to reduce their shipments this week. This Omaha, Nebraska-based railroad said it would place hard limits on shipments for some customers starting next week if companies do not voluntarily reduce. The BNSF said late last month it had started trying to reduce the number of cars it hauls by about 2% to help ease congestion.
The traffic limits these railways are imposing are similar to steps they took last year to temporarily reduce container shipments of imported goods when warehouses and ports struggled to move them due to ongoing problems. of the supply chain.
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