WASHINGTON (December 14, 2022) — In testimony to the Surface Transportation Board (STB), the American Chemistry Council (ACC) Senior Director of Regulatory Affairs, Jeff Sloan explained how a dramatic increase in rationing of freight rail service is disrupting U.S. chemical manufacturing and offered several solutions for the Board to pursue.
Growing Problem
The STB held a two-day hearing to find out why there has been a steep increase in the use of rail service embargoes, which has prevented the movement of goods and weakened the nation’s supply chain. According to the Board, the Union Pacific Railroad Company (UP) increased its use of embargoes “from a total of 5 in 2017 to more than 1,000 to date in 2022.”
“Embargoes disrupt operations, impose significant costs on rail customers, and prolong the nation’s supply chain problems,” said Sloan. “And they are yet another manifestation of the chronic service failures that have plagued the U.S. rail network for more than two years.”
Sloan cited a specific example of how embargoes threatened an ACC member company’s ability to supply a large refinery with the critical inputs needed to produce gasoline. He highlighted how providing access to a competing railroad through reciprocal switching could have helped mitigate the impact of the embargoes and maintained the flow of vital materials to the refinery.
Action Needed
The STB needs to get to the root of the problem and take action to prevent the increased use of service embargoes throughout the freight rail network.
“ACC is concerned that UP and potentially other railroads will increasingly turn to embargoes to manage long-term congestion problems,” Sloan continued. “It is particularly troubling that some of these underlying conditions were created or exasperated by the railroad’s own management decisions, including actions to cut jobs, mothball equipment, and delay infrastructure investments.”
In addition to establishing a clear STB policy to define embargoes as being unreasonable if they are a result of decisions that were intended to increase railroad profitability, Sloan urged the Board to adopt the following policy reforms to address the root causes of chronic rail service problems:
- Establish permanent reporting requirements to track how well major railroads are performing for their customers.
- Institute minimum standards for the delivery of efficient, timely, and reliable rail service.
- Finalize long-overdue rules to improve access to competitive rail service through reciprocal switching.
