Shippers to Congress: Precision Scheduled Railroading is anything but

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WASHINGTON — The Class I railroads adopting Precision Scheduled Railroading operating models say they are providing better service as they become more efficient.

But disgruntled shippers tell a different story: They say they’re paying the price for cutbacks in people and motive power that make railroads more profitable as service suffers.

Railroad customers and their trade associations complained to Congress on Thursday during a shipper roundtable hosted by the U.S. House of Representatives' Subcommittee on Railroads, Pipelines, and Hazardous Materials. The two-hour forum was a one-sided affair, with no railroads invited to participate.

Shippers say they understand and support the rail industry’s need to become more efficient and more profitable in order to fund reinvestment in their networks. But PSR has gone too far, they say, and rewards investors to the detriment of customer service.

Shippers also were critical of what they say is the rail industry’s lack of collaboration and communication regarding PSR-related operational changes.

“A combination of poor service and rising costs over the last few years is not only unacceptable — it falls in the category of unimaginable,” says Mike Amick, a senior vice president at International Paper, the largest user of boxcars.

International Paper’s cars might be delivered on time to the local serving yard, Amick says, but reduced local service means delivery to the company’s mills is often delayed.

“So the cars are close enough to touch but we can’t really reach them or access them,” he says, a situation that creates bottlenecks at mills that run around the clock.

Ross Corthell, vice president of transportation at Packaging Corp. of America and head of the National Industrial Transportation League’s rail freight committee, says Class I first- and last-mile service leaves a lot to be desired. Railroads do a good job measuring the performance of road trains, but not local service.

“This is where railroads do a horrific job,” he says. “They’re very unpredictable, they make resource planning at our facilities almost impossible, and yet they don’t measure that service at all.”

At one mill, a railroad missed scheduled switches 22% of the time, Corthell says, and its local would show up at any hour of the day.

“Precision Scheduled Railroading is anything but precise at origin and destination,” he says.

Service for unit train customers is not immune.

“They may claim that PSR improves service but our experience, and that of many other shippers, has been the opposite,” says Emily Regis, fuels resource administrator the Arizona Electric Power Cooperative, which includes utilities in Arizona, California, and New Mexico.

Round-trip transit times from the coal mine to a New Mexico power plant used to average three to four days, but have doubled amid what Regis says are PSR-related power and crew shortages.

Much of the two-hour forum was a rehash of the arguments made in May at the Surface Transportation Board’s two-day oversight hearing on demurrage and accessorial charges.

Railroads say the policies are an incentive for customers to turn railcars more quickly, which reduces congestion and can result in better service. They also say the policies are designed to change customer behavior, not generate additional revenue.

Shippers complained that more restrictive demurrage and accessorial charges are one-sided, unavoidable, and lack reciprocity when a railroad doesn’t provide service as scheduled.

Another problem: Demurrage bills are often riddled with errors and challenging them is cumbersome at best.

“The entire burden of proof is on the shipper to prove the railroad’s invoice is inaccurate,” says Randall Gordon, head of the National Grain and Feed Association.

U.S. Rep. Dan Lipinski, D-Ill., said he convened the shipper forum as a follow-up to the Surface Transportation Board’s demurrage and accessorial hearing.

There’s no dispute that the Staggers Act of 1980, which partially deregulated freight railroads, has been a success, Lipinski says. But American companies need cost-effective and reliable rail service in order to compete in the global economy, he says.

U.S. Rep. Peter DeFazio, D-Ore., says he has “grave concerns” about Precision Scheduled Railroading.

The U.S. freight rail system is the envy of the world, he says, and it shouldn’t be threatened by Wall Street’s focus on short-term profits.
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