ILMA Compoundings – February 2019 - 33

WASHINGTON LANDSCAPE

Keeping the Trains Moving
By Jeff Leiter

T

he Surface Transportation Board
(STB) has begun examining
the new fees imposed by freight
railroads, including Norfolk Southern
Corp. and Union Pacific Corp., as part
of the spread of "precision railroading,"
originally implemented several years by
CSX Corp. The railroads are using the
fees to get their customers to buy into
their efforts to streamline the movement of locomotives and railcars across
their rail networks.
The fees are imposed when shippers take too long to unload railcars,
are not ready to pick up shipments
or cause other slowdowns on the
railroad's network.
The Surface Transportation Board
(STB), the federal regulatory agency
that oversees freight rail service and
rates in the U.S., is questioning the
fairness of the fees, particularly if the
railroad's service is below customers'
expectations. The railroads say they
offer credits to customers when they
are the cause of the shipping delays.
The STB has asked the railroad operators to provide quarterly reports on the
fees they have charged and collected.
"ILMA members are transporting their
raw materials and products every day on
the nation's railroads, and these new fees
are on top of increasing shipping rates
and chronic service issues," said ILMA
CEO Holly Alfano. "The Association is a
member of the Rail Customer Coalition,
and the group has asked the STB to
ensure that the fees are used to improve
service, not the railroads' bottom lines for
Wall Street investors."
ILMA and the coalition previously
submitted complaints to the STB

when CSX began implementing
precision railroading in 2017. The
Association said that CSX's abrupt
changes along its East Coast tracks
caused gridlock across its network that
delayed deliveries and disrupted ILMA
members' operations.
The STB investigated and took
action on these service complaints
with CSX. While ILMA members say
that CSX's service has improved over
the past year, they add that the other
railroads are struggling with additional
freight volumes and crew shortages as
they implement precision railroading.
"We are glad to see the STB is
looking into the railroads' fees," said
Alfano. "It's one thing if shippers,
including ILMA members, were
paying less for substandard service, but

prices are rising while service improvements are slow to follow."
The STB's investigation has been
hampered by the partial government
shutdown that began in late December. The agency remained largely
shuttered as this article went to press.
As a member of the Rail Customer
Coalition, ILMA advocacy priorities are
reasonableness standards and reciprocal
switching. As customers, ILMA members
believe reciprocal switching will lead to
greater competition in the freight rail
industry and more competitive pricing.
Leiter serves as general
counsel to ILMA, representing
the Association since 1981.
He may be reached at
202-466-6502 or jleiter@bmalaw.net.

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