Cash Market Moves

Recent layoffs by Class 1 railroads Union Pacific (UP) and the Burlington Northern Santa Fe (BNSF) have not only raised alarms that safety may be compromised but shippers are complaining service has been poor. The Federal Railroad Administration (FRA) recently weighed in.

"The FRA has previously communicated our concerns to UP regarding the potential risks of reducing staffing levels in critical departments such as mechanical operations. Despite FRA's warnings and recommendations, and at a time when Class I freights should be prioritizing ways to improve a decade-long record of stagnant safety performance, it is disappointing to see that UP is actively disregarding the federal government's concerns," said FRA Administrator Amit Bose in a letter to UP CEO Jim Vena on Feb. 29, 2024.

"The safety of railroad operations is paramount, and any decisions that compromise this fundamental principle are unacceptable. Furloughing maintenance of equipment workers puts a strain on workers across the railroad, leading to fatigue and potential errors that could have severe ramifications for both workers and the public. Further, you must ensure that the most highly trained and experienced personnel are performing these critical inspections and repairs to your locomotives and freight cars," Bose said.

"It is imperative that UP prioritizes safety above all else and takes immediate steps to address this issue, an issue disproportionally affecting UP workers since your railroad continues to furlough employees at a rate, based on available data, far outpacing that of any of your Class I peers," he added.

On Oct. 27, 2023, Tony D. Cardwell, president of the Brotherhood of Maintenance of Way Employes Division of the International Brotherhood of Teamsters (BMWED-IBT), wrote a letter to the Surface Transportation Board (STB) expressing concern for pending UP layoffs of Maintenance of Way employees.

"We are bringing your attention to an urgent matter that will seriously put the safety and reliability of our nation's railroad network at risk. Union Pacific Railroad, one of the largest railroad networks in the United States, is preparing to lay off approximately 1,350 Maintenance of Way employees, said Cardwell. "Over the past several years Union Pacific management has recklessly reduced the number of its Maintenance of Way workers far below the minimum needed to operate a safe and reliable railroad. It has done this with little regard for reliability, safety, or longevity. Now, Union Pacific is showing more disregard for reliability, safety, and longevity by flying in the face of the STB's emphasis on the importance of hiring and retaining enough personnel to properly maintain the nation's railroad right of way, tracks, buildings and bridges."

BNSF LAYOFFS

In a March 1 press release, the Shop Craft Unions at BNSF are urgently calling for the FRA to initiate unannounced focus inspections on all locomotives and rail cars owned and leased by BNSF Railway and immediately issue non-compliance orders requiring BNSF to fix all found defects before being permitted to use such equipment, citing concerns over numerous defects that are allegedly being ignored and neglected by BNSF management.

In a letter addressed to FRA Administrator Bose, the Shop Craft Unions at BNSF highlighted their "ongoing efforts to address safety and maintenance issues within the railroad industry." The letter referenced a meeting held on Dec. 19, 2023, during which the Shop Craft Unions presented evidence of significant workforce reductions within the mechanical departments of Class I freight railroads, including a staggering 41% decrease in employees since 2015. The letter comes on the heels of BNSF's recent announcement of over 362 furloughs in the Shop Craft Unions, further exacerbating concerns over safety and maintenance practices. The defects and recent extreme cuts to the workforce pose serious safety risks to railroad operations and personnel. Many furloughed employees may be forced to accept positions with lower pay and fewer benefits, potentially disrupting their lives and livelihoods."

In a March 7 press release, the Brotherhood of Locomotive Engineers, and Trainmen (BLET) said they backed a bill currently making its way through the U.S. Senate, which would restore full unemployment and sickness benefits to all railroad workers. For more than 10 years now, individual railroad workers have unfairly had these benefits reduced by about $200 per month, according to the press release.

The bipartisan Railroad Employee Equity and Fairness Act (S. 1274) was unanimously passed by the Senate Budget Committee on March 6. Known as the REEF Act, the bill would restore full unemployment and sickness benefits to railroad workers by removing the harmful sequester that was implemented in 2013. The REEF Act was introduced in the Senate by Senators Deb Fischer, R-Neb., Amy Klobuchar, D-Minn., and Sherrod Brown, D-Ohio.

The BLET and its members performed a significant amount of lobbying heading into the March 6 hearing. More than 200 locomotive engineers and Teamster members traveled from across the country to Washington, D.C., to visit with members of Congress to lobby for swift passage of the REEF Act. Countless more have called, emailed, and visited district offices according to the BLET.

"The REEF Act will right the wrong of unfair cuts, ensuring that the people who keep our trains moving receive the benefits they've earned," testified Fischer at the March 6 hearing. "I am grateful this legislation will be considered at today's markup. This is a common-sense bipartisan legislative change that is long overdue. Railroad workers need the support we can provide through passing this bill, and I look forward to following through for them soon."

The bill was passed by the Senate Budget Committee unanimously and now advanced to the full Senate. "This common-sense, bipartisan bill would eliminate sequester cuts to railroad unemployment and sickness benefits that have unfairly short-changed railroad workers and their families for over a decade," wrote the American Short Line and Regional Railroad Association (ASLRRA); Association of American Railroads (AAR); International Brotherhood of Teamsters (IBT); Transportation Trades Department, AFL-CIO (TTD); and Amtrak in their March 4 letter to Budget Committee Chairman Sen. Sheldon Whitehouse, D-R.I., and Senior Republican Sen. Chuck Grassley of Iowa.

SHIPPERS WEIGH IN

Shippers who rely on BNSF rail cars have told me that shipments to the Pacific Northwest especially have been delayed not only in the placing of empty cars but also removal of loaded cars that have already been billed and released by the shipper. More than one shipper said their local agent says lack of enough crew is mainly to blame.

In addition to the slow service, secondary shuttle freight has soared higher. On Friday, March 8, BNSF returns and the first half of March were bid plus $1700 per car over tariff against no offers. That means if that bid were accepted by the seller, a 110-car shuttle train would cost $187,000. On top of that, the shipper still must pay the tariff rate set by the BNSF to the intended destination. The bid for UP shuttles was plus $1200 for returns and the first half of March against no offers.

In the weekly rail service data sent to the STB, the BNSF reported that the number of car orders that are one to ten days past due as of March 6 is 1,797 with 1,128 of that due in North Dakota. The report also showed that the number of car orders 11-plus days past due is 4,362 with 1,983 of that due in North Dakota.

As of this writing, STB has not yet responded to the current layoffs and service issues. That may change given the increasing complaints by shippers that service has been poor.

FRA letter to UP CEO: https://www.stb.gov/…

Brotherhood of Maintenance of Way Employes Division of the

International Brotherhood of Teamsters (BMWED-IBT)letter to the STB: https://www.stb.gov/…

Press release by Transportation Trades Department on BNSF layoffs: https://ttd.org/…

Link to the STB weekly rail service reports: https://www.stb.gov/…

Mary Kennedy can be reached at mary.kennedy@dtn.com

Follow her on X, formerly known as Twitter, @MaryCKenn

Mary Kennedy can be reached at mary.kennedy@dtn.com.

Follow her on X, formerly known as Twitter, @MaryCKenn.

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