New reports on freight backlogs – railroads accused of oil favoritism

Repost from The Minneapolis StarTribune

New reports on backlogs bring renewed criticism of railroads

By: Tom Meersman and Jim Spencer, October 24, 2014
Critics say they prove oil favoritism; railroads say numbers are misleading.
Grain elevators seen from a passing train. With continued delays and backlogs for grain shipments, railroads have been accused of playing favorites. Photo: GLEN STUBBE , Star Tribune

Farming groups and other businesses blasted railroads for poor service and favoritism Thursday after seeing new reports about backlogs and waiting times for rail cars.

Rail critics say new data that the federal Surface Transportation Board has begun collecting suggests that the railroads are giving preference to oil shipments, creating long delays for other freight.

A table from BNSF Railway Co., the region’s dominant railway for grain shipments, reported 747 loaded grain cars that had not moved in more than five days during the week of Oct. 12-18, and only six crude oil cars that had delays of that length.

Gary Wertish, vice president of the Minnesota Farmers Union, said the numbers confirm what many farmers and grain elevators have witnessed all year: oil trains on the move constantly, and grain trains few and far between.

“This is the source of our complaints all along,” Wertish said. “Obviously they’re playing favorites with crude oil.”

The regulators early this month ordered the railroads to assemble and submit weekly reports about their performance, following months of complaints from grain shippers, coal suppliers and utilities, ethanol dealers, taconite processors, and Amtrak executives.

The businesses have claimed that delays in rail service over the past year have cost them and their customers hundreds of millions of dollars in lost time, late supplies and higher prices.

In submitting the first reports, railroads cautioned against drawing quick conclusions from the data.

Canadian Pacific Railway’s president and chief operating officer, Keith Creel, urged regulators in a letter “to step back and consult with all the stakeholders” before continuing the process.

The federal order “imposes a significant regulatory burden without articulating how providing this information will improve the overall rail supply chain in the United States,” Creel wrote. Canadian Pacific serves Minnesota, North Dakota and other northern states.

Sens. Al Franken and Amy Klobuchar of Minnesota and Sen. Heidi Heitkamp of North Dakota have followed the issue closely, and all three issued statements Thursday. Klobuchar said the railroad data are needed to understand the problems and “guide decisions” that will reduce delays.

“More transparency in rail operations hardly seems like a tough burden to bear considering what rail shippers in Minnesota are going through,” Franken said.

Canadian Pacific and other railroads filed the reports with the Surface Transportation Board, which regulates the industry. After months of complaints and several hearings, the Board issued an order on Oct. 8 for large railroads to report performance details each week.

The reports cover such things as train speeds, dwell times at terminals, weekly cars on line by car type, weekly total number of loaded and empty cars that have not moved in more than 5 days, coal unit train loadings, grain cars by state and cargo, and number of days late for all outstanding grain car orders.

Bob Zelenka, executive director of the Minnesota Grain and Feed Association, said the report is “unfortunate news” because BNSF pledged weeks ago that it would catch up with its backlogs before harvest, but has not done so.

“It looks like it’s business as usual,” Zelenka said. “The numbers seem to indicate that for whatever reason, the railroads have an easier time moving oil on this congested system than anything else, and I wonder why.”

A study last July estimated that transportation problems between March and May cost Minnesota corn, soybean and wheat farmers more than $100 million in increased freight rates, higher storage costs, lost sales and penalties for products not delivered on time.

Several utilities have also had trouble with delayed and irregular coal deliveries and some have dialed back their power plants and taken other steps to conserve coal stockpiles.

Xcel Energy’s director of fuel supply operations, Craig Romer, said Xcel’s power plants served by BNSF are far behind in the amount of coal they store on site. “Our inventories are in terrible shape,” he said, referring to Xcel’s large Sherco plant in Minnesota and four other coal-burning plants in Colorado and Texas.

“In July, August and September, the railroad actually performed worse than it did in the polar vortex in the middle of the winter,” Romer said. The winter rail problems were related to weather, he said, and the summer disruptions were caused by BNSF track maintenance.

Romer expects regular service to resume when rail construction projects end in a few weeks. “But there’s such a backlog of volume to deliver, it will be several months before they [BNSF] actually turn this thing around,” he said.

BNSF officials have said repeatedly that the company does not give preference to oil shipments over other commodities, and that the railroad is moving more agricultural products than ever before in the region. In a statement late Thursday, the company said that fewer oil cars have delays because oil is moved mainly in unit trains built for speed and efficiency and headed for a single destination.

About half of BNSF’s 27,000 rail cars are also used for 110-car unit trains, the statement said, but the other half are on trains that are broken up as they move across the country and put in rail yards where they are mixed with other cars with different cargoes and sent to various destinations.

“With such a large number of single cars in ag service, the number of cars held [waiting] will always be higher than a commodity traveling almost exclusively in unit trains,” the company said.

In its report, BNSF also noted that if a rail car is held “for more than 48 hours or even 120 hours, it does not necessarily mean that the car will not be delivered in a timely manner or even within the initial service plan.”

Because the weekly reporting system is new and needs to be refined, the company said, “we caution against drawing firm conclusions based upon the absolute values reported in BNSF’s report.”

Staff writer David Shaffer contributed to this report.
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