Class I railroads slammed over gaps in rail service recovery plans

A freight train weaves trough a desert.

The Surface Transportation Board is criticizing the four major U.S. Class I railroads for not providing enough pertinent information on their rail service recovery plans, and it is asking the railroads to supplement what they have already provided.

BNSF (NYSE: BRK.B), CSX (NASDAQ: CSX), Norfolk Southern (NYSE: NSC) and Union Pacific (NYSE: UNP) “submitted plans that were perfunctory and lacked the level of detail that was mandated” by STB’s May 6 order requiring the four railroads to submit rail service recovery plans, the board said in a release late Monday.

STB required the four railroads each to draft rail service recovery plans in response to rail shippers’ concerns about deteriorating rail service in recent months. Those concerns were raised to STB in letters to the board and during a late April hearing.

“The plans generally omitted important information needed to assure the board and rail industry stakeholders that the largest railroads are addressing their deficiencies and have a clear and measurable trajectory for doing so,” STB said.

STB was also critical of UP’s and NS’ plans, saying that they “flatly refused” to provide the six-month targets for achieving their performance goals as required in the board’s order.

The board is giving the railroads until June 23 to respond with the requested supplemental information and data. The information includes what actions the railroads are taking to improve service and communications with their customers, as well as data on headcount increases. Monday’s decision outlines what each railroad individually must provide to STB. Failure to provide that information could lead to monetary penalties, according to the decision.

In Monday’s release, STB Chairman Marty Oberman noted that the board is still receiving reports about “persistent, acute and dramatic problems in rail transportation,” which are resulting in the disruption of supply chains and potential shutdown of companies.

“The freight rail industry is currently struggling to provide adequate rail service, yet the service recovery plans we received are woefully deficient and do not comport with the spirit or the letter of the board’s order,” Oberman said. “The plans simply failed to instill confidence that the carriers have a serious approach to fixing a problem caused by their own lack of preparedness to respond to external shocks and fluctuations in demand, including especially short-sighted management of labor forces and other resources.

“While the railroads must always comply with board orders, it is particularly disturbing that the railroads failed to comply with the order requiring them to file adequate service recovery plans. Under circumstances where service is not meeting customers’ needs, this is not too much to ask from highly sophisticated companies with important public responsibilities. I had expected a better response from the carriers to the board’s previous order, and now with more explicit instructions, which should not have been needed, there will be no excuse for continued lack of compliance,” he said.

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