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NATIONAL GRAIN AND FEED ASSOCIATION

2014 ANNUAL COUNTRY ELEVATOR CONFERENCE

INDIANAPOLIS, INDIANA

TOPIC: US RAIL SHIPPER SERVICE ISSUES

THOMAS BRUGMAN USRAILSHIPPER.COM

FIRST ISSUE: LEGAL RESTRICTIONS ON YOUR

SPEAKER

APPLICABLE FEDERAL STATUTES (2)

1 YEAR RESTRICTIONS

2 YEAR RESTRICTIONS

FOREVER RESTRICTIONS

2

SENSITIVE TOPICS TO AVOID

•STB FORMAL ACTIVITIES

•POSSIBLE STB ACTIONS WITH INVOLVEMENT

•CONFIDENTIAL INFORMAL ACTIVITIES

•ANYTHING THAT WOULD SUGGEST INFLUENCING THE BOARD

3

SO, AFTER ALL THAT…

What can shippers having service or other problems realistically expect from

the STB in terms of addressing their concerns?

4

SURFACE TRANSPORTATION BOARD

SHIPPERS HAVE THE OPTION OF: •FORMAL COMPLAINTS

•INFORMAL COMPLAINTS

•ARBITRATION & MEDIATION

•VISITS OR MEETINGS

•SENATE – CONGRESSIONAL - STATE

•LETTERS FROM CONGRESS OR STATE 5

WHAT ROLE CAN THE STB’S RAIL CUSTOMER AND PUBLIC

ASSISTANCE OFFICE PLAY?

•CONFIDENTIAL •INFORMAL •GET ANSWERS •COST EFFECTIVE •BEST FOR SERVICE ISSUES •RATES – NOT SO GOOD •EASY TO USE •SUCCESS RATE

6

OTHER AVENUES OPEN TO SHIPPERS

•CONGRESS •STATE GOVERNMENTS •BE HEARD •SILENCE IS INTERPRETED AS CONCURRANCE

7

SHIPPERS ARE PRECEIVING A LOSS OF SERVICE QUALITY FROM

SEVERAL OF THEIR RAILROADS

•WHAT IS CAUSING IT?

•WHAT HAS TO CHANGE TO IMPROVE THE SITUATION?

•HOW LONG WILL IT LAST?

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BNSF CN CPR CSX KCS NS UP

ALL CLASS ONE RAILROADS TRAIN SPEEDS OCT 2013 TO PRESENT

SOURCE: Public Data AR/RPM and CPR.CA

AV

ER

AG

E T

RA

IN S

PE

ED

IN

MP

H

9

15

20

25

30

35

40

10

/4/2

013

10

/18

/201

3

11

/1/2

013

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/15

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/29

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014

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Intermodal Manifest Multilevel Coal Unit Grain Unit All Trains

BNSF TRAIN SPEEDS OCTOBER 2013 TO PRESENT

SOURCE: Public Data AAR/RPM.COM

AV

ERA

GE

TRA

IN S

PEE

D IN

MP

H

10

14

16

18

20

22

24

26

28

30

3210

/4/2

013

10

/18

/201

3

11

/1/2

013

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/29

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/201

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1/1

0/2

014

1/2

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014

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/20

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1/2

014

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014

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Intermodal Manifest Multilevel Coal Unit Grain Unit All Trains

NS TRAIN SPEEDS OCTOBER 2013 TO PRESENT

SOURCE: Public Data AAR/RPM.COM

AV

ER

AG

E T

RA

IN S

PE

ED

IN

MP

H

11

0

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4010

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BNSF CN CPR CSX KCS NS UP

ALL CLASS ONE RAILROADS TERMINAL DWELL OCT 2013 TO PRESENT

SOURCE: Public Data AAR/RPM and CPR.CA

AV

ER

AG

E F

RE

IGH

T C

AR

DW

EL

L I

N H

OU

RS

12

40000

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100000

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3000001/3

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014

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BNSF CN CPR CSX KCS NS UP

ALL CLASS ONE RAILROADS CARS-ON-LINE OCT 2013 TO PRESENT

SOURCE: Public Data AAR/RPM and CPR.CA

NU

MB

ER

OF

CA

RS

ON

LIN

E

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BNSF Galesburg, IL BNSF Northtown, MN CN Markham Yard, IL CP Chicago, IL

CP St Paul, MN CSX Chicago, IL CSX Cincinnati, OH CSX Selkirk, NY

NS Bellevue, OH NS Conway, PA NS Elkhart, IN UP Chicago (Proviso), IL

UP North Platte East, NE UP North Platte West, NE

CHICAGO CENTRIC YARD DWELL TIMES OCT 2013 TO PRESENT

SOURCE: Public Data AAR/RPM and CPR.CA

AV

ER

AG

E H

OU

RS

YA

RD

DW

EL

L

14

COMMON CARRIER OBLIGATION

• LEGALLY – SERVICE UPON REASONABLE REQUEST

• REALITY – SIGNIFICANTLY DILUTED BY EXEMPTIONS, AND PAST DECISIONS

• RAILROADS CAN PILE ON COSTS TO INHIBIT REQUESTS FOR SERVICE

15

REGIONAL DUOPOLIES

•FAIT ACCOMPLI •ON THE VERGE OF NATIONAL DUOPOLY

•WSTB WILL TRY TO MAKE IT HAPPEN •NO ONE CAN PREDICT HOW THE STB WOULD TREAT SUCH AN APPLICATION

16

COMPOSITION OF THE BOARD

•BOARD MEMBERS PAST AND PRESENT HAVE BEEN DEDICATED, HARDWORKING PEOPLE

•CURRENT APPOINTEES PRIDE THEMSELVES ON BEING FAIR AND BALANCED

•STATUTES AND PAST DECISIONS UNFORTUNATELY PLACE THE BURDEN OF PROOF ON SHIPPERS

•NO ONE CAN PREDICT HOW ANY BOARD MEMBER WILL SEE A PARTICULAR ISSUE

17

CONGRESS

•IS CONGRESS A DEAD END? •ROCKEFELLER-THUNE RAIL BILL •PAST POWER OF THE FARM LOBBY

•ECONOMIC IMPACT OF POOR RAIL SERVICE ON AGRICULTURE

18

THE FUTURE

•GRAIN PRODUCING STATES NEED TO EXPLORE GRAIN CAR OWNERSHIP TO ASSIST SHIPPERS

•MERGER MAY OFFER WIDER MARKET ACCESS, BUT CAR SUPPLY POLICIES AND COMMON CARRIER OBLIGATION MATTERS WILL BECOME EVEN MORE IMPORTANT

•SMALLER GRAIN SHIPPERS NEED TO BE TREATED FAIRLY WITH LARGER SHIPPERS

19

STRATEGIES FOR SHIPPERS

•KEEP THE PRESSURE ON CONGRESS TO LEGISLATE CHANGES

•CHANGE LEGISLATIVE MARCHING ORDERS FOR THE BOARD

•MAKE THE BOARD MORE PROACTIVE AND LESS REACTIVE

•INCREASE PAY FOR BOARD MEMBERS AND STAFF

•END TERM LIMITS FOR BOARD MEMBERS •THE IMPORTANCE OF RAILROAD DATA

20

THANK YOU FOR LISTENING

• THOMAS BRUGMAN

• INDEPENDENT CONSULTANT

• WEBSITE: USRAILSHIPPER.COM

• CONTACT: 540 798-5856

• TOM@USRAILSHIPPER.COM

21

NGFA 2014 Country Elevator Conference

Jon Samson

Executive Director

Agricultural and Food Transporters Conference

of the American Trucking Associations (ATA)

23

Founded in 1995, is the national

organization representing motor

carrier and allied members of the

American Trucking Associations

(ATA) on critical issues affecting

agricultural commodity and food

transportation.

Overview of Challenges for Trucking 24

Capacity issues

Safety

HOS

34 hr restart

30 min livestock exemption

Ag Exemption from HOS rules

Food (FSMA)

Other issues of importance

Upcoming Highway Bill

Key to success - Funding

Distribution of Tonnage by Mode: 2013 vs 2025

Source: U.S. Freight Transportation Forecast to 2025

2013 2025

Total Trucking: 69.1% Total Trucking: 71.4%

2012 Competitive Freight Among Truck and Rail Tonnage

Billions of Tons

Note: Maximum competitive

freight is less than 1 billion

tons in a total market (truck

and rail only) of 11.4 billion

tons, or less than 10%.

Competitive freight includes all

freight traveling at least 500

miles, but excludes coal

tonnage. There is a significant

amount of time definite freight

in this category that really isn’t

competitive, but it is included.

So in reality, the competitive

market is even smaller than

suggested here.

Trucks and Trains Compete on a Very Limited Basis

Sources: Commodity Flow Survey (US Census Bureau) and ATA

Capacity

Rail issues impact on trucking

Extra supply ≠ extra capacity

Size and Weight

88k lbs on 5 axles and 97k lbs on 6 axles

MAP-21 study delayed until 2015

Driver Shortage

Housing starts/construction

Driver pay

Hiring Vets – 100k in 2 years

27

Safety

HOS

Recent changes made in July 2013

34 restart provision (2 night rest periods) & 30 min rest break

34 hour changes being questioned in Congress

Included in Senate Approps

To be included IF Congress chooses Omnibus package

Livestock exemption to 30 min rest break

July 2013 – 90 day waiver

June 2014 – 1 year exemption for “livestock”

Extension likely

28

Agriculture exemption to HOS rule

Exemption within 150 air miles of farm, ranch, retail

or wholesale/distribution point

All commodities, livestock and farm supplies; prior to being

processed

Significant positive changes made in MAP-21

States must adopt and are allowed to modify rule (planting and

harvesting season)

29

Food Safety Modernization Act

Main focus – Sanitary transportation of human and

animal food (STF)

Broad coalition working with FDA

Key Concerns

Understated Cost estimates w/out the benefit

Use of “Adulteration” leading to increased cargo claims

Recordkeeping requirements

Crucial Messaging – Shipper communication with

carrier and receiver

30

Other Issues

ELD Mandate

FMCSA projecting October 2017

Minimum Insurance Requirements

ANPRM released on Thanksgiving

FMCSA looking to increase and index

Cargo Securement

Exception for agriculture products (tub, bins, bales, etc.)

Horse Trailer Ban

Proposed for any trailer with 2 or more levels

31

Highway Bill

Timing

Current extension expires May 2015

Funding

Increase in the fuel tax and index to inflation

ATA task force backs menu of other options

Indexing based on price, CPI

Per-barrel tax on oil

Annual “highway access fee”

32

Questions? 33

Contact Info 34

Jon Samson

American Trucking Associations

Agricultural and Food Transporters Conference

950 N. Glebe Road

Suite 210

Arlington, VA 22203

(703) 838 - 7955

jsamson@trucking.org

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