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‘Self-Inflicted’ Rail Congestion Under Regulatory Review

A two-day hearing before the Surface Transportation Board (STB) looking into Union Pacific shipping embargoes begins Tuesday and continues long-standing complaints among shippers and workers about rail service issues. 

The hearing underscores the broader challenges of staffing and its implications to service. It’s a point central to the national rail shutdown the country faced earlier this month, although much of the focus on the possible strike revolved around union demands for paid sick time off

The interlocking issues was a point made by the National Association of Chemical Distributors (NACD) after the Senate passed legislation this month forcing workers to take up the tentative labor agreements struck earlier this year. The bill, which was signed off by President Biden, ended a nearly three-year long impasse in the now recently concluded collective bargaining round. 

“I raised the issue of sick time in an op-ed after hearing directly from NACD members about the challenges they have faced due to declining service in the rail industry brought on by reductions in the workforce,” NACD president and CEO Eric Byer said following the Senate vote on the labor agreement. “I continue to believe that freight rail service will continue to deteriorate until some wholesale changes take place in the industry….”

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The STB, the federal agency regulating mostly the railroads, will use this week’s hearing to investigate what it described as a “substantial increase” of shipping embargoes by Union Pacific over the past few years. 

Railroads use embargoes, or temporary stops on certain shipments, when there are worker shortages, congestion, weather or other issues. With Union Pacific moving nearly 30 percent of the goods traveling on rail, its activity impacts a broad swath of shippers and the overall supply chain

Union Pacific issued 886 embargoes in the first 10 months of this year, according to the STB. In 2017, it implemented 27 embargoes, with the numbers ticking up in the years following. Between 2018 and 2021, embargoes issued totaled 140, 413, 251 and 662, respectively, with congestion often cited as the reason.  

“The Board understands that embargoes may vary in scope and that all carriers do not report and use embargoes in the same way,” the STB said in its notice on the hearing. “Nevertheless, the use of embargoes by all other Class 1 carriers, combined, pales in comparison to the number of embargoes issued by UP.”

STB chair Marty Oberman pointed to “serious concerns” in how Union Pacific addressed the board’s request for supporting documents ahead of the hearing in a letter sent late last week to the railroad’s president and CEO Lantz Fritz.  

Union Pacific was sent a set of topics the STB expected the carrier to be prepared to address during the hearing and requested supporting documents for those explanations.  

The railroad sent a seven-page PDF in response, with two of those pages consisting of introductory comments and an opening title page. 

“While the PowerPoint addressed in general terms some of the topics listed in the Board’s notice, it failed to provide any detail on those topics, and it failed to provide any information or discussion of other topics,” Oberman told Fritz. 

Oberman went on to say the PowerPoint only “partially responds” to the STB Board’s order for Union Pacific to explain the reason for the rise of embargoes since 2017. 

Instead, he said, the set of slides “is silent on most of the topics listed in the Nov. 22 order.”  

The finger wagging continued as Oberman made it clear the railroad would still be required to explain itself during the hearing. 

“Unfortunately, UP’s failure to fully respond to the order has hindered the Board in its efforts to understand this increase in the use of embargoes, and their causes and impacts,” Oberman said. “Because of the limited time before the hearing … UP will not be required to provide additional information or documents prior to the hearing, although UP remains obligated to respond to the Board’s order.” 

Matthew Parker, a locomotive engineer in Nevada, filed a comment to the STB Monday pointing out the railroad’s issue of congestion may very well be “self-inflicted.” Parker pointed to trains running at “excessive” lengths, locomotives in a “poor state of repair” and questioned the carrier’s employee recruiting and retention efforts. 

Parker added his experiences “provide ample evidence that Union Pacific itself, through its current management and operating practices, is a contributor to the problem of congestion and delays on its own network; perhaps, even, the largest contributor.” 

Michael Paul Lindsey, an Idaho-based locomotive engineer, submitted similar sentiments to the STB last week, pointing to several examples in this year alone where “supply chain pollution” was “externalized onto consumers.” 

Those examples included a nearly 12,000-foot grain train in Wyoming, with the length so long it required several hours of inspections and created further delays. There was also a train running west through Idaho that Lindsey said was found to consist of 15 percent misrouted cars he said were “thrown carelessly throughout the train, causing at least a week of delay to many customer’s [sic] loads and wasting vital capacity and manpower resources along our system.” 

The STB hearing begins the same day railroad workers are set to hold a rally at the Capitol to highlight rail safety, paid sick leave and precision scheduled railroading (PSR). 

PSR, an operational strategy aimed at squeezing out efficiencies in the movement of rail cargo, sits at the intersection of the conversations around worker safety and service issues. The concept has been criticized by some, including the unions, as sacrificing worker safety and service in favor of carrier profits and shareholder interests.

While the main rally is set to take place in Washington D.C., a number of local demonstrations are also planned for Tuesday in Ohio, Wyoming, Utah, Colorado, Illinois, Iowa, Michigan, Minnesota, New Mexico and Nevada.