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Peak season ahead: Will railroads be prepared? Southwest Association of Rail Shippers, San Diego, California

Todd Tranausky US transportation editor 9 October


Argus Publications

• Argus covers all aspects of transportation

• Argus Rail Business focuses on policy and regulation

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Copyright © 2014 Argus Media Ltd. All rights reserved.

Peak season plans


Why is it a peak season?

Why are regulators concerned?

Will the railroads be ready?

Peak season plans and railroad readiness



• Board has asked for annual reports on rail service plans for the last decade

• Annual exercise more exhaustive in 2014, with more detailed responses from carriers

• Tied to intermodal “peak season,” but can provide general network insights

Peak Season: Some background



• Regulators focused on fall peak because of service complaints

• Shippers concerned about railroads’ ability to meet demand over winter

• Potential regulatory remedies could cause more harm than good

Focus on service issues

• Legislation introduced in House and Senate will be moved in some form during 2015

• Unlikely to gain traction this year barring a major accident



• Slower trains lead to congestion, stressing crew and locomotive resources

• Asset shortfalls and congestion create longer turn times for shippers

• Some railroads taking as long as 50 days to turn a tank car for customers

Train speeds decline


20

22

24

26

28

30

May 07 Mar 09 Jan 11 Nov 12 Sep 14

mph

BNSF UP

18

20

22

24

26

May 07 Mar 09 Jan 11 Nov 12 Sep 14

mph

CSX NS


• Board focused not just on freight, but on passenger service as well

• STB unlikely to use emergency service order powers; focused on transparency and data reporting

• Disproportionate commodity or Amtrak focus could degrade the entire system

Freight and passenger problems


The road ahead


• Railroads struggling to cope with traffic gains as geographic shifts cause complications

• Unpredictable cycle times make shipper and network planning difficult

• Winter looms on the horizon and not much has been done to prevent further service meltdowns

• Service has ‘stabilized at unacceptable levels’ in recent weeks

Volumes gaining, trains slowing



Western rails


BNSF capital spending to double-track main route through the oil fields

Glasgow subdivision double-track segment completed this summer; more to come

Congestion causes carriers to look at stronger routing protocols around the city

Tower 55 project work causes significant work windows, re-routes

BNSF, CP look for solutions to joint infrastructure in the city


Eastern rails


As carriers seek alternative interchange points, smaller yards take on more volume

Congestion ripples into this complicated interchange terminal

Winter snarls interchange, never fully recovered

Track and signal projects over summer on primary route for loaded crude and ethanol for CSX

CSX and NS struggle on routes from Toledo to Chicago


National rails


Are the railroads ready and will winter cooperate?


• Railroad officials have said spring 2015 is the earliest shippers can hope for recovery

• Delays have not been solved, even with some high-profile projects coming online

• We will see the effects of routing protocols this winter and whether efforts to shift traffic were successful

Railroads simply not prepared for peak, winter



• Additional traffic volumes would complicate service recovery

• Railroads have aggressively staffed ahead of winter, but are facing locomotive shortages

• There will be only one locomotive builder starting in 2014 and several railroads are heard to be significantly short of power

Another winter like 2013-14 would be a disaster



• Locomotive and crew planning requires long lead times that cannot be addressed overnight, esp. given constraints

• UP said earlier this year it has no surge/spare capacity left

• Sources said privately CSX was about 350 locomotives short of what it needed

No easy answers



• Trains are not able to get through yards in the northern tier

• Weather would deepen these issues

• Utilities already scrambling for coal

Terminal dwell


20

30

40

50

60

70

Sep 10 Sep 11 Sep 12 Sep 13 Sep 14

hour

s

BNSF Galesburg UP Chicago

20

30

40

50

60

Sep 10 Sep 11 Sep 12 Sep 13 Sep 14

hour

s

CSX Toledo NS Bellevue


Service issues cloud regulatory picture


Railroads

Captive, bulk

shippers

Regulators and

legislators


• Next year, Congress will act on at least one, possibly two pieces of legislation affecting railroads and shippers

• Ag interests can wield power if Republicans take control in the Senate

• Could bring change to the STB using service as a rationale

Service woes could strengthen Congressional resolve



• Two of three STB board members are relatively new, bringing new experience and ideas

• Could lead to more willingness to examine or try new alternatives to disputes, service woes

• Not yet certain that chairman will be renominated when term expires at year end

Board changes lead to potential action



Railroads face challenges meeting demand

Winter will exacerbate those issues

Problems could linger well into 2015, if not beyond

Conclusions


Any questions?

Todd Tranausky US transportation editor [email protected] 202-349-2894 Washington, DC https://www.argusmedia.com

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