3 US Class I railroads must keep giving STB service improvement updates

Three of the four U.S. Class I railroads must continue submitting biweekly rail service progress reports to federal regulators through the end of the year as proof of improving rail service because they have not fully met their service targets.

The requirement by the Surface Transportation Board applies to Union Pacific (NYSE: UNP), BNSF (NYSE: BRK.B) and Norfolk Southern (NYSE: NSC). CSX (NASDAQ: CSX) will no longer be required to do so because it has met nearly all of its one-year service targets, according to a Monday decision from the STB.

The board also said NS is currently not meeting its one-year targets for service improvment, while UP and BNSF are meeting some of their one-year targets.

“While data submitted in recent weeks show some improvement for some performance indicators, these carriers generally are not meeting their service performance targets on average,” STB said in its decision. “Therefore, and because service issues continue to affect the network, the Board finds that it must continue to monitor service performance and hiring efforts.”

CSX as well as the other three railroads are still being asked to submit weekly performance data and monthly employment data through Dec. 31 of this year since “the U.S. rail system is an interconnected network and problems in one geographic area or with respect to one carrier can quickly spread elsewhere,” STB said. “The application of certain reporting requirements to all Class I carriers allows the Board to assess the current service issues across the entire rail network.”

The railroads have been submitting data on service performance metrics and targets for trip plan compliance — a measure that compares the estimated time of arrival for a rail car to reach its destination with the actual time  — and for the first mile and the last mile, among other targets. Other data collected include velocity and terminal dwell. The railroads must also provide employment headcount targets for three categories: train and engine, maintenance of way and structures, and maintenance of equipment and stores. 

The four U.S. Class I railroads had been submitting to STB since last spring in response to STB’s April 2022 hearing at which it heard testimony about deteriorating rail service and crew shortages. The board decided in May that all four must submit service recovery plans and progress reports, provide customer-centric performance data, and participate in biweekly conference calls.

While STB determined in mid-October that the four railroads were meeting some of their six-month targets for service improvements, it maintained its data reporting requirement through the remainder of 2022 and into 2023 since there seemed to still be lingering widespread service issues.

STB’s analysis of the service performance data provided by the Class I railroads is available here

In a footnote toward the end of the eight-page decision, STB noted: “Nothing in this decision should be construed to suggest that the Board finds that the six-month or one-year targets set by any of the Four Carriers are sufficient to resolve the problems currently plaguing the national rail system.

“These targets were meant to be interim goals, not ultimate goals. Significantly more progress will be needed from each of the carriers to abate the rail service issues that prompted the Board to open this proceeding.”

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