US Shippers call for Railroad Reform...

[TOM4CWB]

Our Canadian Shippers review... is sparking a US review as well!!!

"Manufacturers, Agriculture and Energy Producers Call For Updated Rail Policie
Have formed the Rail Customer Coalition

WASHINGTON (March 25, 2015) – A large group of national trade associations representing manufacturers, farmers and energy producers today announced they have formed the Rail Customer Coalition. The Coalition is calling on Congress and the Surface Transportation Board (STB) to modernize the nation’s freight rail polices to better serve shippers, their customers, railroads and American consumers. Specifically, the Coalition strongly supports the “Surface Transportation Board Reauthorization Act of 2015” that was drafted under the leadership of the U.S. Senate Committee on Commerce, Science & Transportation Chairman John Thune (R-S.D.) and Ranking Member Bill Nelson (D-Fla.).

The Coalition has also launched a new website highlighting the need for freight rail reform and released new research that found rising rail rates are taking a growing toll on American businesses.

“Our groups believe it is time to review key aspects of rail policy and adopt common-sense improvements to ensure that the U.S. is on course to meet the needs of rail carriers, shippers and the public,” said Bob Stallman, President of the American Farm Bureau Federation.

Momentum is growing on Capitol Hill to enact legislation that will increase rail-to-rail competition and improve how freight rail issues are resolved. The Coalition’s goals are to educate lawmakers on the growing problems that are impacting rail customers and to offer meaningful, reasonable and workable solutions.

“As the auto industry continues to rebound from the economic downturn, automakers have encountered persistent rail service issues, resulting in an unprecedented disruption in the ability to deliver vehicles to customers. These service problems are not unique to the auto industry. Together, our groups believe it is time to review key aspects of rail policy and adopt common-sense improvements to ensure that the U.S. is on course to meet the needs of rail carriers, shippers and the public,” said Shane Karr, Vice President of Federal Government Affairs at the Alliance of Automobile Manufacturers.

The STB Needs to Be Modernized

Congress has not revisited the nations’ freight rail policies since it created the STB. It’s clear the Board’s current policies have not been able to keep up with the massive changes in the freight rail industry or achieve the goals that Congress established in 1980 when it passed the Staggers Rail Act.

The “Surface Transportation Board Reauthorization Act of 2015” would reauthorize and make substantial changes to the STB, the only government entity responsible for handling commercial freight rail issues, and would modernize the Board for the first time since its creation. In addition to streamlining how the STB operates, the legislation would help improve how the Board handles rate and service issues.

“We’ve reached a tipping point where the lack of competitive rail service is having a serious impact on American businesses,” said Philip K. Bell, President of the Steel Manufacturers Association. “At the same time, the Surface Transportation Board’s slow and burdensome processes leave many shippers with no competitive options and no feasible way to challenge unreasonable rates.”

New Research Shows Rates Continue to Soar

The Coalition released new economic research that shows an all too familiar pattern—soaring freight rail rates. According to a new report, rates have doubled since 2001, which negatively impacts a broad spectrum of businesses and industries.

To determine the rate premium American producers pay on each shipment, Escalation

Consultants used publicly available data to calculate the railroads’ revenue-to-variable cost ratio (RVC) for millions of carloads of rail traffic. The report found the following:

• In 2013, two-thirds (67 percent) of all rail rates exceeded 180 percent RVC, making them subject to potential STB review for being unreasonably high.

• From 2005 to 2013, the total rate premium paid by commodity shippers increased 121 percent even though carload volume declined by 2.4 percent.

• As a result, the total rate premium paid by commodity shippers in 2013 was over $18 billion.

• The commodity groups with the largest total rate premiums were chemicals and plastics ($5.3 billion), coal ($4.1 billion) and automobiles and other transportation equipment ($1.7 billion).

• Many rates were far above the STB’s jurisdictional threshold of 180 percent RVC; for example, one quarter (25 percent) of rates exceeded 300 percent RVC, or three times the railroad’s variable cost.

“Chairman Thune and Ranking Member Nelson have carefully crafted a smart and significant proposal that reflects the input of numerous stakeholders and responds to the growing support for modernizing the STB,” said Cal Dooley, President and CEO of the American Chemistry Council. “The reasonable reforms in this bill will make many important changes, such as streamlining the STB’s overly burdensome rate review standards, providing reasonable arbitration procedures to resolve rate disputes, and allowing the STB to be more proactive in resolving freight rail issues. Moreover, the legislation will allow both railroads and shippers to thrive, while encouraging the growth of the U.S. economy.”

The Coalition is urging Congress to pass the “Surface Transportation Board Reauthorization Act of 2015” and also urging the STB to follow through on reforms that will increase access to competitive service and will allow the Board to operate more efficiently and effectively.

More information on making freight rail more affordable and reliable can be found at the Rail Customer Coalition’s new website, www.freightrailreform.com."

[bucket]

And lucky for us in canada we have just been told everything is great.

Nothing a few brown bags of cash can't solve.

[TOM4CWB]

Bucket,

Nothing could be further from the truth! Take the time, Please ,to read this:

From Alberta Gov...For instance:

"October 31, 2014
Honourable David L. Emerson, P.C., O.B.C. Chair, Canada Transportation Act Review Canada Transportation Act Review Secretariat 350 Albert Street, Suite 330
Ottawa, ON K1A 0N5

Dear Mr. Emerson:
Congratulations on your appointment as Chair of the Canada Transportation Act (CTA) Review. You and your team have an important task ahead given the highly publicized rail freight service issues (i.e. grain shipment bottlenecks and the Fair Rail Service for Grain Farmers Act), the increasingly complex global supply chains, and growing commodity exports in Western Canada.

Alberta’s economy relies on a safe, efficient, and reliable rail transportation system to move its goods and access international markets. Rail is the linchpin of Western Canada’s transportation system for exports. The majority of rail shippers in Alberta have access to only one railway, and have no economically-viable alternatives to rail. This gives the Class 1 railways significant market power. Recent grain backlogs have drawn attention to capacity and efficiency issues throughout the system. Grain shippers suffered considerable financial losses from contract penalties and demurrage on waiting vessels due to inadequate rail service during the past grain shipping season. While the Class 1 railways charge penalties for late car loading and other performance failures by shippers, rail shippers have no ability to recoup losses due to performance failures by the Class 1 railways. The Government of Alberta (GOA) believes that reciprocal accountability is an essential feature of a properly functioning rail supply chain, and it will expand on it in its full submission of the CTA.
In response to the Review’s request for early input on the grain-specific elements of the CTA, the GOA wishes to offer the following comments.

The Maximum Revenue Entitlement
Alberta officials recently met with grain industry stakeholders – including industry associations, individual shippers and farm organizations – to discuss rail freight service. There is wide agreement among grain shippers that rail service is inadequate, both in terms of capacity and reliability. Grain shippers also note that service does not appear to be better on routes that are not covered by the Maximum Revenue Entitlement (MRE). Reports for the Grain Monitor program support this contention and clearly show that rail service on movements outside of the MRE does not differ from service on movements under the MRE.
.../2
Deputy Minister’s Office
#300, 7000 – 113 Street Edmonton, Alberta T6H 5T6 Canada
Telephone: 780-427-4175 www.agriculture.alberta.ca
AR-48271

Feedback from rail shippers of other commodities, such as coal and forestry products, indicates that rail service for industries whose rates are entirely unregulated is not superior to rail service received by the grain industry.

Grain is a bulky, but relatively low value product, and is not able to bear the type of rail rate that a higher-value product can. Given that much of Canada’s grain crop is produced at a considerable distance from ports, mills, and other users, rail freight comprises a large portion of the cost of bringing Canadian grain to market.
There may be some features of the MRE that need further examination. Representatives of the Class 1 railways have claimed that the MRE provides a disincentive to invest in capacity to move grain. Producer organizations, such as the Western Canadian Wheat Growers Association, have also suggested that the current structure of the MRE does not reward railways for moving the maximum amount of grain possible during the peak shipping season. The GOA also notes that the cost calculations used in determining the MRE have not been reviewed for a significant period of time.
Given the evidence that rail service is not superior for entirely unregulated commodities or for grain movements outside of the MRE, the GOA recommends that the MRE be retained in the CTA.
The GOA supports an examination of the MRE to remove any disincentives to investment in rail capacity or to expand capacity during the peak shipping season. Given the market power of the Class 1 railways, it is also advisable to review the MRE to ensure that gains in efficiency are shared across the entire grain supply chain.
The Grain Dependent Branch Line Abandonment

Process
It is the GOA’s opinion that the required process for Class 1 railways to abandon grain dependent branch lines works reasonably well. The process should be maintained in the CTA.
During its engagement with grain industry stakeholders, the GOA learned that Class 1 railways have entered into highly restrictive sales agreements with the purchasers of some branch lines. These agreements may bind the purchaser to receive all of its railcars in the future from the seller and prohibit the purchaser from obtaining cars by any other means (e.g. leasing cars itself), even if the seller fails to supply the purchaser with the number of cars it requires.

Given the market power of the Class 1 railways, the GOA doubts that such a restrictive agreement is reached through a balanced negotiation, or that it serves the best interests of both parties. The GOA recommends that the Canadian Transportation Agency monitor such sales agreements to ensure they do not represent a misuse of market power by the Class 1 railways. If the Agency does not currently have such a mandate, the GOA recommends that the CTA Review consider an expansion of the Agency’s mandate to include abuse of market power. The GOA intends to expand on this recommendation in further submissions to the CTA Review.

Grain Movement Targets
The record grain harvest of 2013 led to the passing of the Fair Rail for Grain Farmers Act, which amended the CTA to grant the federal Minister of Transport the power to mandate minimum grain movement levels for the Class 1 railways. The Government of Canada has exercised this power and set a weekly movement level of approximately one million metric tonnes. The GOA regards the grain shipping targets as a blunt, but necessary instrument.
Page 2

A weekly target expressed in tonnes or railcars appears to provide incentives for the Class 1 railways to emphasize some grain movements over others. In order to meet the target, rapid and high volume movements are desirable. This means that movements of large trains on main lines to export ports present the Class 1 railways with the best means to meet the mandated movement level.
Movements from farther away, slower movements, and smaller trains are less desirable for the Class 1 railways to meet the shipping levels. These movements, however, can represent high value sales or important ongoing commercial relationships for grain shippers. It appears that the mandated movement levels provide an incentive for the Class 1 railways to emphasize routes and train sizes that may not be in the best interest of grain shippers or grain users. During the past six months, this has manifested itself as railway concentration on high volume moves to Thunder Bay, Prince Rupert, and Vancouver, and a continued inadequate level of rail service on domestic and United States movements.
The GOA recommends that the ability to mandate movement levels remain in the CTA as an extraordinary measure, and that consideration be given to making it apply to any commodity. The GOA also recommends that the minimum movement targets be set in a way that does not favour one type of rail movement over another.
The GOA appreciated meeting with you on October 21, 2014, to share information, build a working relationship, and better understand initial positions on the CTA Review. The GOA also appreciates the opportunity to make this, and other submissions, to the CTA Review. We look forward to a continued dialogue on Canada’s transportation needs in the next decades.
Sincerely,
Jason Krips Deputy Minister"

[Hopalong]

Sounds like a good time for Canada to work more closely with US regulators on continent wide rail policy.
Our CTA review process and US review of STB are an opportunity for co-operation.

[bucket]

Tom

Why don't ritz and Raitt recognize these issues and act as quickly as when they send troops and equipment to the middle east to a no win battle?

They just gave the green light for railways and graincos to do as they please.

No regulator for those two industry partners.

[TOM4CWB]

Bucket,

Did you read Jason Krips letter?

Clearly the 'imposed' grain freight targets were not working to actually improve rail service to grain shippers and grain farmers... as Shipments to the US... and off easy shipping rail-line corridors ... got short changed by the Railways...

This just proves we need better regulation... not more of the same! Too bad that was not included together with the anouncement!

[farmaholic]

Bucket, because capitalism needs to be installed in those countries so everything can run as smooth as a Swiss watch, like at home....

No win is absolutely right, better be prepared to stay forever...

[FarmRanger]

For the most part, Americans are a lot less tolerant of monopolies. Fix the rail monopoly, you've fixed most of the problems we're facing right now.

[bucket]

Tom

I will read his letter but it's ritz and Raitt that have to read and act on it.

I am just a blowhard that taps alot.

My opinion doesn't matter because I can't change shit anyways but politicians can.

MP David Anderson said railways and graincos are doing a better job so I must be full of shit. But I can't load up empty alberta elevators economically. But I would sure like to dump a load or 2 at an elevator 16 miles away on spot delivery.