Market Matters Blog

STB Chairman Oberman Addresses Current Rail Issues at NGFA Annual Meeting

Mary Kennedy
By  Mary Kennedy , DTN Basis Analyst
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During a transportation forum on June 2 at the NGFA annual meeting, attendees heard from current Surface Transportation Board Chairman, Martin J. Oberman, discussing the status of many issues still before the Board. (DTN photo by Mary Kennedy)

The National Grain and Feed Association (NGFA) celebrated its anniversary year with nearly 400 attendees gathered at its 125th annual convention at The Broadmoor in Colorado Springs on June 2-4. The convention focused on the "noble purpose NGFA's member companies perform in transforming the American farmer's bounty into safe, nutritious, sustainable and affordable human and animal food." Founded in 1896, NGFA has been proud to represent and provide services for grain, feed and related commercial businesses for 125 years.

The convention's program on day 1 featured a Transportation and Technology Open Forum, featuring Surface Transportation Board (STB) Chairman, Martin J. Oberman, who spoke on the challenges and opportunities of the national rail network in 2021. Oberman noted that Republican Ann Begeman's replacement on the STB is expected to be Democrat Karen J. Hedlund, current Vice President and National Rail Strategy Advisor at WSP USA, and former Federal Railroad Administration Deputy Administrator, having been nominated by President Joe Biden on April 29. Begeman has served two five-year terms on the STB and was acting chair until she was replaced in that position by Democrat Martin Oberman last January. STB members are limited to two five-year terms by statute. Hedlund will need to be confirmed by the U.S. Senate before replacing Begeman on the board.

Oberman talked about the current priorities of the STB, saying that the "real focus of our job is maintaining a strong national rail network. Everything we do -- mergers decision, rulemaking, case decisions -- in my view should be guided by the principal of what makes the strongest national network."

One current issue on everyone's mind is the tug of war between the Canadian Pacific and Canadian National railroads for acquisition of Kansas City Southern. Oberman said that he was unable to talk about specifics since it was still pending.

Oberman did say that the status of the Final Offer Rate Review Rule and voluntary rate proposal were "inherently inter-related" and very much on the top of the STB's priority and that there will hopefully be some action taken on this in the near future.

He said that one issue "near and dear to me is 711." Ex Parte 711 is a proceeding on reciprocal switching as a means to increase competition and address rate and service issues. Oberman said that he is very hopeful that the STB will be doing "some action" in the area covered by 711 and he couldn't say what, except that it is "not dead and is very much alive" on his agenda.

Just to give a little more background on this, 711 has been brewing since 2011 and is perhaps the most contentious item among the industry. Reciprocal switching refers to situations in which a Class I railroad that has physical access to a specific shipper's facility that switches traffic from the facility to another railroad and does not have physical access, in exchange for compensation in the form of an access fee/switch charge.

"One other area that we had a request last fall for was some way to measure first mile/last mile performance. It turns out how to measure first mile/last mile performance is fairly complicated because there are many different ways to look at it," said Oberman. "But this is something of high interest to me and the rest of the Board and I am hopeful we will some activity by the Board in the very near future."

Oberman also mentioned that at the end of May, the STB sent letters to all Class I railroads requesting that they continue to provide quarterly information about their revenues from demurrage and accessorial charges. This information was first requested in 2018 and has allowed the STB to closely monitor trends in revenues from demurrage and accessorial charges, which remain important as shippers add volume back to the freight rail network with the rebound from the COVID-19 pandemic.

In addition, at the end of May, Oberman sent letters to all Class I railroads requesting that they provide an update on their preparedness to meet the demand for rail service as the nation continues its economic recovery from the COVID-19 pandemic.

Here is a link to the press release containing that letter: https://prod.stb.gov/…

Oberman said that the thing that has most impressed him about the rail industry since he joined the STB is that "we are dealing with, in most parts of the country, a monopolistic, and in some cases, a duopolistic industry. For that reason, I think it has been essential for the Board to focus on using every possible means to enhance and ensure competitive landscape. To me, it's crucial if you are going to have a healthy freight industry for us to, where possible, ensure that competition exists."

Here is a link to Docket Actions of EP 711 RECIPROCAL SWITCHING: https://prod.stb.gov/…

Here is a link to Docket Actions of EP 755 FINAL OFFER RATE REVIEW: https://prod.stb.gov/…

Here is a link to Docket Actions of EP 765 JOINT PETITION FOR RULEMAKING TO ESTABLISH A VOLUNTARY ARBITRATION PROGRAM FOR SMALL RATE DISPUTES: https://prod.stb.gov/…

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

Follow her on Twitter @MaryCKenn

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