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Freight Rail Shipping Bill Targets ‘Appalling’ Service

Bad customer service isn’t a conversation unique to ocean shipping, with some lawmakers now looking to address delays and other issues within the rail industry.

A group of House lawmakers on Tuesday introduced the Freight Rail Shipping Fair Market Act (FRSFMA), which would arm the Surface Transportation Board (STB) with greater oversight power to assist in complaint resolution, create efficiencies in the movement of goods by rail and more closely regulate service contracts.

“The freight rail companies have focused on profits instead of performance and it has led to delays and problems in how we transport commodities to farms, factories and stores across the country,” U.S. Representative Donald M. Payne Jr. (D-N.J.), chair of the Subcommittee on Railroads, Pipelines and Hazardous Materials, said.

Payne, along with Peter DeFazio (D-Ore.), David Scott (D-Ga.) and Jim Costa (D-Calif.) introduced the bill.

Payne went on to say the measure would offer shippers greater service reliability and, in cases of rail emergencies, stop carriers from increasing rates and give the STB the power to step in.

DeFazio, who serves as chair of the House Committee on Transportation and Infrastructure, called the freight industry’s service “appalling” and said the FRSFMA also aimed to address the higher prices that have been passed down to consumers as a result of increased transportation costs.

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“It is imperative that our rail network is reliable, and yet consolidation and Wall Street pressures on railroads to cut costs and increase profits have made that near impossible,” DeFazio said. “This bill will level the playing field and provide railroad customers—many of which are transporting key food and energy products—the service they deserve.”

The pitch in support of the FRSFMA echoes similar sentiment made in support of the Ocean Shipping Reform Act of 2022 (OSRA), which was signed into law in June. The increased regulation of the ocean freight industry was introduced amid record carrier profits at a time of significant turmoil within the global goods movement system. Proponents of OSRA said it addressed soaring inflation, unfair practices around fees billed to shippers and capacity on ships, particularly for U.S. exporters.

Much like what’s proposed for rail, OSRA arms a federal body with more power to enforce the regulations. In the case of OSRA, that would be the Federal Maritime Commission, which has been moving quickly to implement the law and meet rollout deadlines set out by Congress.

The proposed rail shipping legislation comes off the backs of hearings held by the Railroad Subcommittee earlier this year, the most recent of which took place in May, to further analyze service. Lawmakers ultimately concluded the poor service was tied to a lack of system investment.

The proposed increase in regulation, much like OSRA, is seen differently by the rail carriers.

The Association of American Railroads said what’s being proposed would give the STB “overreaching authority to place unnecessary regulations on freight railroads.”

Some shippers, however, view the FRSFMA as a way of modernizing the rules governing the rail industry by increasing cargo visibility and creating standards for carrier delivery service.

Members of the Agricultural Transportation Working Group (ATWG) expressed their support of a draft of the bill last week, pointing out “the status quo is not working for agricultural shippers and consumers,” in writing in favor of the proposed law.

Rail carriers have been hampered with labor shortages and have now become a source of bottlenecks within the U.S. supply chain.

The Pacific Merchant Shipping Association, which tracks container dwell times at the ports of Los Angeles and Long Beach, said rail containers sat at terminals 13.3 days on average in June. That’s up from 11.3 days in May for the San Pedro Bay ports.

The proposed rail legislation comes as carriers and unions have yet to agree on a new contract for some 115,000 rail workers after about two-and-a-half years of negotiating.

The Presidential Emergency Board (PEB), established by President Biden last month to aid in talks and avert a strike, wrapped its hearings last week.

The PEB will now make its recommendations based on the information from those hearings, offering another chance for employers and labor to come to a consensus on a new contract.