Rail transportation service is deteriorating quickly, infuriating shippers of crude, grain and metals.
Knowing their costs could soar and fearing their businesses could be damaged irreparably, US shippers are complaining loudly. Delivery times are rising, and shippers worry some cargoes will not arrive at their destinations before customers opt to source from elsewhere. Shippers with options have been forced to pay millions of dollars to switch to trucks and barges.
Shippers say loaded trains are sitting for days before getting picked up. Loaded biofuel unit trains are waiting an average of 3-4 days and sometimes as many 12 days. Some flour and feed mills have been forced to shut, losing sales as await grain train deliveries. And railroads have temporarily embargoed deliveries to congested rail yards, delaying deliveries to nearby customers.
Congestion has gotten so bad at western carrier Union Pacific (UP) that the railroad is expected to begin limiting shipments on 19 April. The railroad has been working with major shippers to remove cars from its network and has cut back on use of its own railcars. UP today declined to comment further.
Western rival BNSF has been struggling with its own network and is working with customers to reduce railcar usage. But BNSF has no structural plan in place.
The service woes have caught the attention of the Surface Transportation Board (STB), which has scheduled a 26-27 April hearing to question the railroads and give shippers an opportunity to comment.
Complaints to the STB rose by 44pc in the first quarter compared with the same period in 2021 and by 37pc from the fourth quarter of 2021.
STB has hinted it may take some steps to try to turn things around, but the railroads may be unable to respond quickly. A change in operating models, intended to turn carriers into efficient and lean businesses, may have hurt flexibility.
As conditions worsen, shippers fear they will lose not just 2022 sales but future business opportunities as well.
