Tag Archives: Surface Transportation Board (STB)

Crude By Rail, Farming, Rail traffic

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.
AMTRAK, Bakken Crude, Coal, Crude By Rail, Massive increase in crude-by-rail, Rail traffic, Tar sands crude

Oil Trains Causing More Delays for Other Goods and Passengers; Amtrak now late 60% of the time

Repost from The New York Times

As Trains Move Oil Bonanza, Delays Mount for Other Goods and Passengers

By Ron Nixon, October 8, 2014
A Burlington Northern Santa Fe oil train outside Casselton, N.D. The company has committed $5 billion for rail expansion. Credit Dan Koeck for The New York Times

WASHINGTON — An energy boom that has created a sharp increase in rail freight traffic nationwide is causing major delays for Amtrak passenger trains and is holding up the transport of vital consumer and industrial goods, including chemicals, coal and hundreds of thousands of new American cars, rail officials and federal and state regulators say.

American rail lines now move more than a million barrels of oil a day, much of it from the Bakken shale oil field in North Dakota and Montana and from the oil sands of Alberta, Canada. Last year about 415,000 rail cars filled with crude oil moved through the United States, compared with 9,500 in 2008, according to the Surface Transportation Board, a bipartisan body with oversight of the nation’s railroads.

In large part as a result, long-distance Amtrak passenger trains are now late 60 percent of the time, Amtrak officials said, compared with a year ago, when the trains were late 35 percent of the time.

The problems are particularly acute on long-distance passenger lines like the Empire Builder, which shares tracks with freight traffic from Chicago to Portland, Ore., and is late nearly 70 percent of the time. Trains on the 47-hour trip typically run three to five hours behind. Revenue from the line has dropped 18 percent from last year, Amtrak officials said, as word about the sluggish service spread among passengers, most of whom use the Empire Builder for shorter trips between cities on the route.

“Clearly, we’re not getting the level of service that we want to give, or what our customers have been used to getting over the last decade,” said Edward R. Hamberger, president and chief executive of the Association of American Railroads, an industry trade group.

Delays are not as serious for rail service along the Northeast Corridor, where Amtrak owns most of the track between Washington and Boston and has more control over passenger service. On long-distance routes, Amtrak passenger trains run on tracks owned by the major freight railroads.

On the long-distance routes, aging tracks and a shortage of train cars, locomotives and crews have also caused delays, rail officials said. In addition, an improving economy has meant more goods shipped by rail over all. Rail accounts for 40 percent of all goods moved in the country as measured in ton-miles, derived by multiplying a cargo’s weight by the distance shipped. Trucks are second at 28 percent.

A proposed pipeline to move oil from Canada would alleviate some of the rail congestion but would not eliminate it, officials said.

Although North Dakota has been known within the industry for a surge in moving oil by rail, and resulting delays in grain shipments for farmers, rail officials say the congestion and late passenger trains have spread to many other states. On Wednesday, the Surface Transportation Board announced that the nation’s largest railroads must file public weekly reports about their performance, which the board said would give rail customers a better sense of the magnitude of the delays.

The problems are only expected to get worse. American coal exports to countries like China, which are picking up as domestic demand falls, will also compete for space on trains, as new coal export terminals are planned at several ports in the Pacific Northwest. (Increased Asian demand for coal reached record levels in 2012 and continues to be high.) In the United States, a record harvest of corn, soybeans and wheat is expected this year, adding to the stress on the nation’s rail network.

“It’s like having a fire hydrant hooked up to a garden hose,” said Mike Steenhoek, executive director of the Soybean Transportation Coalition in Iowa.

Railroad executives say they are working to unclog the congestion. Michael J. Trevino, a spokesman for the Burlington Northern Santa Fe line, owned by Warren Buffett, said the company had committed $5 billion for rail expansion and track maintenance to help improve its service.

The money includes about $300 million over the next three years to improve capacity and beef up the rail system in North Dakota, which Burlington Northern Santa Fe said would bring 300 more employees to the state and lead to smoother operations and faster deliveries. Mr. Trevino said B.N.S.F. was also making improvements to its tracks in Missouri that carry coal trains coming from Montana and Wyoming.

Thomas L. Lange, a spokesman for Union Pacific Railroad, said the company was buying about 229 new locomotives and hiring about 3,200 additional train crews to help deal with the increase in demand for service.

“We’ve had some delays in our system because demand for freight rail transportation for Union Pacific surged in 2014 to unexpected levels, which we have not seen since 2006,” Mr. Lange said. “We’re upgrading and expanding our system to make sure that at the end of the day, we get the goods delivered.”

A major speed bump in the nation’s rail congestion is Chicago, a transit point for six of the nation’s seven biggest railroads. Nearly half of what is known as intermodal rail traffic — the big steel boxes that can be carried aboard ships, trains or trucks — travels through the city. The congestion in Chicago is also caused by track sharing among freight, Amtrak and commuter trains.

The railroads and local, state and federal officials have committed $3.2 billion for 70 construction projects to replace rail intersections with overpasses and underpasses, in an effort to smooth the flow of traffic for the 1,300 freight and passenger trains that travel through Chicago each day. The project will also separate tracks now shared by freight and passenger trains at critical spots. Officials said about 22 of the projects had been completed.

In total, railroads will spend about $26 billion this year to upgrade the rail network and hire new workers, said Mr. Hamberger of the Association of American Railroads.

Despite the improvements, many industries say they still suffer delays. In April, the auto industry said it had more than 200,000 new cars in storage because of a shortage of trains to move the vehicles.

“Since the summer, we are seeing progress, but automakers are entering the fall with a backlog of new cars to transport by rail,” said Gloria Bergquist, vice president of communications for the Alliance of Automobile Manufacturers, the auto trade group. About 70 percent of new vehicles are moved by rail, according to the group. Industry officials say they are moving more cars by truck as a result of the rail congestion. But trucks are a more expensive method of moving the cars, a cost that may eventually be passed on to customers.

Crude By Rail, Federal Rail Administration, Hazmat notification, Local Regulation, Massive increase in crude-by-rail, Rail accidents, Rail Safety, Surface Transportation Board, Tank car design, Traffic, Train speed

Chicago Area Mayors Meet with Feds, Call For Improved Safety Measures For Oil Trains

Repost from CBS2 Chicago

Mayors Call For Improved Safety Measures For Oil Trains

August 20, 2014
Firefighters douse a blaze after a freight train loaded with oil derailed in Lac Megantic in Canada's Quebec province on July 6, 2013, sparking explosions that engulfed about 30 buildings in fire. More than 40 people were killed as a result of the crash and fire. (Photo redit: François Laplante-Delagrave/AFP/Getty Images)
Firefighters douse a blaze after a freight train loaded with oil derailed in Lac Megantic in Canada’s Quebec province on July 6, 2013, sparking explosions that engulfed about 30 buildings in fire. More than 40 people were killed as a result of the crash and fire. (Photo redit: François Laplante-Delagrave/AFP/Getty Images)

CHICAGO (CBS) – Federal railroad officials got an earful Wednesday from the mayors of several Chicago area towns that have been affected by a growing number of increasingly long trains hauling crude oil and other volatile materials.

WBBM Newsradio’s John Cody reports the mayors expressed concerns about traffic congestion and public safety from freight trains that they said have been getting longer and more dangerous, due to larger amounts of flammable crude oil they haul in outdated tanker cars.

The mayors spoke directly to Federal Railroad Administrator Joe Szabo and Surface Transportation Board Chairman Dan Elliott III, at a meeting arranged by U.S. Sen. Dick Durbin.

The senator said approximately 25 percent of all freight train traffic travels through the Chicago area each day, including 40 trains hauling crude oil.

Barrington Village President Karen Darch said the village has seen a stark increase in the number of completely full freight trains hauling 100 or more carloads of crude oil or ethanol along the Elgin, Joliet and Eastern Railway.

“Before, half of the community didn’t even know where the EJ&E Line was. There were a couple of trains at night. Now, several times a day, traffic – all traffic – comes to a halt as the train passes through town, and these can be hundred-car trains,” she said.

quebec derailment 1 Mayors Call For Improved Safety Measures For Oil Trains

 

Darch and other Chicago area mayors said their constituents have been plagued by frequent traffic jams caused by long trains rolling through the area, and are constantly worried that a fire or worse could erupt on old tankers carrying volatile liquids.

They mayors expressed concerns about a repeat of a July 2013 freight train derailment in Quebec that killed 47 people and destroyed dozens of buildings when multiple tanker cars filled with crude oil caught fire and exploded.

Aurora Mayor Tom Weisner said safe passage is mandatory.

“About a third of the rail accidents that do occur are related to failures of the rail infrastructure itself, and so our position is basically twofold: one, improve the tank cars and get rid of the ones that aren’t safe; and second, make the rails safe.”

Durbin said the issue requires some time to address.

“I’ve talked to the tank car manufacturers, and they understand that they have two responsibilities: build a safer car, but in the meantime retrofit existing cars,” he said.

The senator said there is no way to immediately and completely ban older style oil tanker cars, but said federal railroad officials are aware of the danger they pose, and that they must be upgraded or replaced as soon as possible.

Darch urged federal authorities to institute increased safety controls and reduced speed limits for even small trains hauling crude oil.

“A huge concern for us is what about all the trains that come through that have 19 cars or less of hazmat,” she said.

Federal railroad officials said proposed federal regulations would require increased testing to keep crude oil out of older style tankers. Railroads also would be required to notify local officials when crude oil trains will roll through, and impose a 40 mph speed limit on such trains.

Farming, Massive increase in crude-by-rail, Rail industry

Rail Logjams Are Putting The Whole US Economic Recovery At Risk

Repost from Business Insider
[Editor: Significant quote: “Many experts blame an incomplete recovery from last winter’s freight backlogs, coupled with record crops and rising competition with crude oil tankers for track space amid an economic recovery.”  – RS] 

Rail Logjams Are Putting The Whole US Economic Recovery At Risk

Susan Taylor and Solarina Ho, Reuters, Aug. 15, 2014

TORONTO (Reuters) – More than eight months after an extreme winter began snarling North American rail traffic, a Reuters analysis of industry data shows delays lingering, raising the risk of a second winter of chaos on the rails.

Across the continent’s seven largest operators, trains ran almost 8 percent slower on average and sat idle at key terminals for nearly three hours longer in the second quarter than a year earlier, data from the main railroads, known as Class 1, show.

While Canada’s rail operators have nearly recovered, many U.S. operators lag far behind.

The concerns are sharpest in the U.S. Farm Belt, with lawmakers fearful that the biggest crops on record may be slow to reach markets or could even rot.

Rail logjams contributed to the economic slowdown early in the year, rippling across corporate America and affecting everything from car makers to ethanol producers.

Many experts blame an incomplete recovery from last winter’s freight backlogs, coupled with record crops and rising competition with crude oil tankers for track space amid an economic recovery.

“It’s like a sinking ship – you’re bailing out at one end, but it’s coming in the other end just as fast, if not faster,” said Citigroup Global Markets transportation analyst Christian Wetherbee.

Performance fell behind as loads grew: between April and June, U.S. rail carload volumes grew 5.4 percent and intermodal traffic, which include shipments partly by rail, rose 8 percent, Association of American Railroads (AAR) data shows.

At the same time, the industry is producing “tremendous” margins, profit and cash flow, with some companies setting records, said rail analyst Tony Hatch.

The largest operators plan to spend about 18 to 20 percent of annual revenue this year on new terminals, track, sidings and equipment to help boost capacity and efficiency, according to Thomson Reuters data. That is slightly higher than recent average annual spending.

Some shippers complain that spending hasn’t been sufficient to meet demand, especially in bad weather. Still, many investment projects are multi-year improvements that can’t quickly fix traffic jams.

“We’re criticized … because we haven’t put infrastructure in to handle the growth. But then when you try to put infrastructure in, the not-in-my-backyard lobby kicks in and says: We don’t want you here,” Canadian Pacific Railway Ltd Chief Executive Hunter Harrison said on a recent earnings conference call.

Over the four decades to 2000, the nation’s major track system shrank by about half, in terms of miles of rails, according to the U.S. Federal Highway Administration.

Although Berkshire Hathaway’s BNSF Railway Co is spending a record $5 billion this year, its performance lagged those of competitors last quarter.  BNSF trains traveled 11 percent slower than year-ago speeds, and stayed at terminals for 18 percent longer.

Fadi Chamoun, an analyst at BMO Capital Markets, said BNSF is unlikely to recover until mid- to late-2015 due to the amount of work it must do.

In recent years, BNSF accounted for some 50 percent of the entire rail industry’s volume growth, analysts said. The company says it handles up to 15 percent of U.S. intercity freight.

BNSF declined to respond to Reuters’ questions about its performance metrics. The Fort Worth, Texas-based railway has said it is working closely with shippers to clear backlogs and adding track, locomotives and crews.

The other four U.S. Class 1 railroads are CSX Corp, Kansas City Southern, Norfolk Southern Corp and Union Pacific Corp.

Kansas City Southern and Norfolk Southern did not respond to requests for comment. CSX said it was investing in strategic capacity additions and was adding train crews and locomotives to restore performance and support growth. Union Pacific CEO Jack Koraleski told Reuters that the railroad’s performance has been improving even as volumes have been increasing, adding that it has worked hard to address disruptions and customer issues.

Cowen & Co analyst Jason Seidl said winter exacerbated problems for the industry. “As they were trying to dig out, the volumes took off,” he said.

ECONOMIC FALLOUT

In the United States, more than 40 percent of goods, valued at more than $550 billion, are shipped by railroad each year on some 140,000 miles of track. Canada’s 30,100 miles of track carry half of the country’s export goods.

Frozen transportation links contributed to a nearly 3 percent contraction in the U.S. economy during the first quarter, the New York Federal Reserve said last week.

Lawmakers and the $395 billion agricultural industry fear that trains may fail to clear last year’s record-breaking crops in the Midwestern U.S. Farm Belt, which could strand part of this summer’s grain harvest.

“We’re sounding the alarms right now,” North Dakota Senator Heidi Heitkamp told Reuters. “We believe the 2014 crop could be taken off the fields and there won’t be any place to store it, because of the lack of ability to move product by rail.”

BNSF and Canada’s CP Rail operate the main rail networks in North Dakota, where farmers vie for space with some 700,000 barrels per day of crude oil shipped by rail from the state’s Bakken Shale.

“You can’t see these massive increases in crude-by-rail and not appreciate that they are creating problems for moving agricultural products,” Heitkamp said.

Members of Congress, utility companies, the United States Department of Agriculture and others are asking the U.S. rail regulator, the Surface Transportation Board, for help.

“With remaining grain in storage due to the backlog, grain elevators in some locations, such as South Dakota and Minnesota, could run out of storage capacity during the upcoming harvest, requiring grain be stored on the ground and running the risk of spoiling. The projected size of the upcoming harvest creates a high potential for loss,” USDA Under Secretary Edward Avalos wrote to the regulator this month.

Utility Xcel Energy said coal deliveries to a key Midwest facility were behind schedule.

“When we run out of coal, the plant can’t produce electricity. We are right in the middle of summer when air-conditioning load creates our highest levels of electric demand,” Xcel Chief Executive Ben Fowke wrote in a letter to the STB at the end of July.

Since an April 10 hearing on rail service, the STB has issued several orders, primarily involving CP and BNSF. The most recent directive, issued in June, required the two railways to publicly file their plans to resolve their backlog on grain orders and provide a weekly update on grain car service. It declined to comment on complaints or its plans.

Earlier this month, the Canadian government ordered Canadian National Railway Co and CP to further boost regulated grain shipments, in an effort to prevent a repeat of last season’s backlog.

Recent University of Minnesota data showed that transportation bottlenecks cost the state’s soybean, corn and spring wheat farmers nearly $100 million between March and May.

United Parcel Service Inc, the world’s largest courier company, said that “very poor” railroad performance last quarter raised its costs. Even passenger service Amtrak has been affected, with some of the trains it runs on Class 1 tracks falling far behind schedule.

Canada’s biggest rails, CN and CP, operated their trains at speeds 4.7 percent and 3 percent slower in the second quarter than year-ago levels respectively, better than most U.S. rivals.

CN said its ability to avoid Chicago, a hub notorious for bottlenecks, helped its sector-leading recovery. In 2009, CN bought a rail network that encircles Chicago, the Elgin, Joliet and Eastern Railway Co.

CHICAGO BLUES

Chicago’s third-snowiest winter on record severely tangled traffic at a hub that handles one quarter of the nation’s freight-by-rail and has recently become a major conduit for Bakken crude.

Data from Union Pacific shows its trains idled in Chicago for an average 65 hours in February, around double the typical time for much of 2013.

Following a severe 1999 blizzard that paralyzed trains for days, government and railroads launched a $3.8 billion plan to improve the Chicago system.

That’s not a quick solution for the industry’s woes.

“It takes a long time for new lines and new terminals to get built, and additional locomotives to be delivered and additional crews to be trained,” said Steve Ditmeyer, an adjunct professor at Michigan State University’s Railway Management Program.

“There’s a time lag that the railroads cannot snap their finger and, all of a sudden, get out of the current problem.”

(With additional reporting by Joshua Schneyer and Jonathan Leff in New York, and Sagarika Jaisinghani in Bangalore; editing by Joshua Schneyer and Peter Henderson)