 |
Summary Comments and Recommendations:
|
Introduction
On May 5 and 6, 1998, Governor Ben Nelson, Co-Chairman of the WGA Transportation Futures Task Force, convened a roundtable of Western railroads, shippers, state officials, communities, federal regulatory agencies, and other affected parties to identify solutions to rail freight issues and to provide a framework for actions that will lead to a rail freight system which will meet the West's current and future economic needs. These draft recommendations summarize the advice of the Rail Freight Roundtable to be presented to the Western Governors at their June 1998 meeting.
The Roundtable made recommendations for the following issue areas:
- maintaining a successful partnership;
- communications;
- rail competition;
- rail investments;
- safety, wayside horns, and liability;
- education for shippers and railroads about business practices and business needs;
- grain shipments; and
- international trade.
These recommendations constitute an initial vision, which the Rail Freight Roundtable would like presented for the participating parties' review and comment. These recommendations will serve as the basis for a policy resolution to be considered by the Western governors at their June meeting.
Maintaining the Successful Partnership
The participants found that the partnership established during the WGA roundtable was an exceptionally valuable mechanism for facilitating a dialogue to address rail freight issues and develop a vision for the future Western railroad system. Participants recommend that the Rail Freight Roundtable reconvene as needed as a public-private partnership, to address issues in the cooperative spirit demonstrated in this roundtable. The public sector was judged to be a neutral and appropriate convener and/or facilitator for the partnership. Based on the results of the Surface Transportation Board's Ex Parte 575 actions to address the Western railroad congestion and operating issues, the roundtable partnership would like to consider a meeting in the fall of 1998.
Communications
The participants gave high priority to their recommendations regarding maintaining and enhancing communications between the railroads, shippers and regulators. The recommendations were divided into those addressing shipper, railroad, and elected/appointed official information needs. The one central thread is the need for those responding to have both the knowledge and authority to address the questions.
Shippers are requesting advance information from the railroads on car transit times, car availability, estimated car delivery times at the shipper's location, service characteristics, and emerging service problems. Railroads need advance information on shipper car needs by type of car, service needs and required car delivery dates.
Shippers requested that the railroads institute a more responsive process by which they can communicate their problems to railroads and for receiving responses to their inquiries. Shippers need responsive answers to their questions so that they can plan their shipments and provide advance notice to their receivers. A level of honesty and trust needs to be rebuilt as part of the "congestion crises" recovery process. The shippers are dependent on the railroads' success and the railroads' success depends on the shippers being able to meet delivery schedules. Shippers do not want to dictate potential solutions to the railroads, but want to be able to contact a responsible railroad official in a timely manner, and for that official to have authority to make decisions and provide honest answers, not marketing messages.
State and local officials expressed a need to contact responsible railroad officials to discuss issues related to noise, safety, service changes, and livability concerns. Decisions once made locally are now made at the railroads headquarters or regional office, often after a crisis has emerged. Regional representatives are often a good conduit for information, but are limited in their ability to make decisions and do not have the resources to meet with local officials on an ongoing basis. Prevention and early communication of railroad and/or local actions were cited as being the key to eliminating many of the conflicts currently experienced.
A suggestion is for the railroads to publish and distribute to the states and local officials a telephone/e-mail list of offices responsible for resolving railroad - community related issues. It was further suggested that the railroads periodically communicate with local elected and appointed leaders regarding plans which would have impact on railroad and community operations.
Rail Competition
The shippers placed a very high priority on maintaining as much competition in the Western railroad system as possible. Many short lines are restricted to switching with only one class 1 railroad. The short lines are critical to the overall success of the rail system and provide shippers with access to the national railroad system. Short lines, and the shippers they serve, should seek opportunities for multiple switching where competition between the two class 1 railroads can be achieved.
It was recommended that railroads and shippers explore issues of competitive access in accord with the directives set forth in the April 17 and May 4, 1998 decisions of the Surface Transportation Board Ex Parte 575. The partnership recommends that the results from that action be monitored and, if appropriate, another roundtable be held in the fall to address remaining issues. Specific competition issues relate to the short line dialogue, market dominance, competitive access and shipper railroad dialogue.
The participants did not supported reregulation as a first option for addressing the congestion, competitive access, dialogue or service problems. There was agreement that a railroad shipper dialogue with the involvement of public officials as a convener/facilitator would be the most productive process for identifying the path for returning the Western railroad system to a high operating standard and enhancing competition.
Shippers, in addition to the ExParte 575 actions, recommended the establishment of a less formal mediation process for resolving disputes prior to entering the expensive and legally encumbered Surface Transportation Board (STB) binding arbitration process. It was suggested that many disputes could be addressed and resolved at the informal mediation level.
Rail Investments
The roundtable concluded that the class 1 Western railroads must continue to make aggressive capital investments in locomotives, general and specialty freight cars, terminals, main and branch lines, and fleet management information systems. The analysts on Wall Street need to understand the fragile state of the Western railroad system and the need for large long-term capital investment in order to assure the financial viability and improvements in capacity. The Burlington Northern Santa Fe (BNSF) and Union Pacific (UP) railroads are each investing over $2.0 billion annually in capital assets. Both class 1 railroads stressed that achieving higher levels of service requires them to make even greater capital investments.
Shippers and short line railroads also need to make substantial investments in more efficient loading/unloading facilities and rail access/staging improvements. Railroads give the most favorable service priority to unit trains which can make up to 36 round trips per year versus 15 round trips for cars in other service categories. Based on this service level, railroads price their service to encourage unit trains through deep discounts. In order for shippers to even access this service they must make the investments necessary to enable them to rapidly load and unload the longer heavier unit trains. To secure the capital, grain shippers recommended that the states partner with them through favorable tax incentives and loan guarantees. In addition, assistance may be necessary to keep smaller grain elevators in service and to assure that some short lines can continue to provide service.
The railroads also indicated that states can influence both the priority and location of discretionary capital investments through tax incentives. The issue with the railroads is one of cost/benefit when analyzing non-safety related projects.
Safety, Wayside Horns and Livability
The roundtable recommended expanding the use of wayside horns as an alternative to train whistles. The horns limit the area of noise exposure just to those areas adjacent to the rail-highway crossing. The horns are being tested under a Federal Railroad Administration program in Nebraska, Kansas and Oregon. The participants encourage FRA to expand the test to include additional sites, such as Arizona, and to begin the regulatory process for setting standards.
Participants also recommend that safety and livability enhancements along high density traffic railroad corridors be recognized as a national issue. Improvements along these corridors should be funded jointly from national, railroad, state and local resources. This is parallel to the use of federal aid highway funds to mitigate noise and traffic problems. Initial actions must include the continued funding of the railroad highway safety and crossing programs as part of the reauthorization of Intermodal Surface Transportation Efficiency Act (ISTEA). In addition, other sources of assistance need to be identified to deal with other environmental impacts, e.g. noise and air pollution.
Grain Shipments
Specific recommendations related to communications and education focused on railroads providing timely advance notice on the estimated times for delivery of rail cars. A longer lead time is needed to allow grain elevator operators to schedule personnel to take advantage of the 15 hour loading incentives. The railroads in response to questions regarding potential solutions to the current grain car shortage stated that the answer is not to throw more cars onto the system. The system is overcrowded with cars and the answer is to increase the velocity at which those cars move on the system.
Complicating the car shortage problem is the backup at gulf ports. The problem is created by the way grain is assigned for unloading at the ports and the lack of high capacity equipment to increase the rate at which the cars are unloaded and cleared from the terminal. The problems with exporting to Mexico are addressed under a separate section.
Education
The roundtable recommended that states and the shipper organizations take the lead in educating shippers on the best ways to take advantage of rail services, rate structures, and business practices. Individual railroads would only speak to their specific programs and the shippers would not be able to compare services and rates between providers. The railroads would provide the information and/or conduct their own briefings, but this has been a very inefficient method for educating shippers.
This information could enable more shippers to compare rates and effectively plan their business strategies to secure the type of rail service which best meets their specific shipping requirements. Each railroad markets several levels of pricing, and priorities for allocating car fleets and shippers need this type of information in order to enable them to match these variations to their needs.
Third parties were also suggested as a source for objective information about all the carriers marketing and rate plans within the West, including short lines. College professors, shipping consultants and shipper organizations were suggested as potential third parties.
The education recommendation also addressed the need to educate the railroads regarding shipper needs and conditions. Specific areas discussed included the scale of grain harvests and available storage capacity, and speciality cars for forest and paper products. The grain stockpile situation is critical in Nebraska and other Western states. Storage space in the grain elevators is at or near capacity from the 1997 harvest, and little storage remains if there is another bumper crop in 1998. In addition, much of the 1997 crop was withheld from market due to depressed prices and subsidized foreign competition.
The railroads in comments received after the roundtable expressed that the railroads also need to educate shippers regarding their operating constraints, investment decision making, and factors related to capacity problems (e.g. car supply and car velocity). It was agreed that discussions between shippers and railroads must be ongoing and that they need to move the level of discussion to include such areas as addressing logistical problems posed by abrupt changes in international markets, conflicting needs of various classes of shippers requesting service at the same time, and how shippers and the railroads can assign priority to shippers placing car orders to move the large surpluses of grain currently in storage, as well as what is expected to be a bumper 1998 harvests.
The Nebraska grain representatives proposed a survey of their members to determine the amount of storage capacity which is available in the elevators and on the farms, and to try and get a handle on the amount producers plan to send to market in 1998. They propose to use a report from the Upper Great Plains Transportation Institute as a model for this survey. In addition, Western states will share their information about projected harvests and storage capacities. This information will be shared with the railroads for planning purposes. The railroads welcomed the help.
International Trade
The roundtable recommended that Nebraska Governor Ben Nelson contact his fellow western governors to support the funding of the "Market Access Program." This program would assist the grain shippers open closed foreign markets or expand current markets. The "Freedom to Farm Act" places a greater burden on the farmers for their success or failure, but the international market for grain has become flooded with new (and sometimes subsidized) grain; at the same time access is being denied to other markets to protect either local farmers or as an exclusionary national policy.
The roundtable recommended that the Border Governors Conference address the issues of rail congestion and clearance problems on the U.S.-Mexican border. They encouraged WGA and the Border Governors Conference to actively work with the railroads, states and federal officials to increase both the capacity and velocity for moving trains through the border. This effort should be coordinated with the WGA Environmental Protection Agency's "Border Congestion Study."
# # # #