Cash Market Moves

U.S. Senators Tammy Baldwin, D-Wis., and Roger Marshall, R-Kan., reintroduced the Reliable Rail Service Act on June 28 to help address the unreliable service and high costs of rail shipping for American businesses. The legislation is supported by members of the agriculture industry, labor organizations, energy producers and manufacturers. The original bill debuted in September 2022 but did not move forward.

Rail shippers, including farmers, energy producers and manufacturers, continue to face poor service, significant service disruptions and sky-high prices that are impacting communities and consumers, all while the nation's largest railroads' profits are at record highs, noted the news release from Baldwin.

"Wisconsin farmers, producers and manufacturers rely on rail service to get their 'Made in Wisconsin' products to market, and they shouldn't have to pay sky-high prices for subpar rail service," said Baldwin. "Ensuring our agriculture, energy and manufacturing businesses have reliable rail service will be crucial in leveling the playing field for Wisconsin businesses who depend on rail service and helping cut costs for working families. I'm proud to reintroduce my Reliable Rail Service Act to keep our 'Made in Wisconsin' economy moving forward."

"I frequently hear from Kansans that the service of Class 1 railroads is not living up to the expectations," said Marshall. "These service failures hurt our shippers who use the rail to deliver their products to key export facilities, that's why the Staggers Act of 1980 must be modernized to clearly define railroad's common carrier obligations. The multitude of organizations supporting this bill is a testament to how dire this situation truly is. I'm happy to explore bipartisan solutions with my colleague Senator Baldwin."

This certainly is not a new issue as shippers have been very loud in their frustrations with the U.S railroads for quite some time. In March 2022, the National Grain and Feed Association (NGFA) urged the Surface Transportation Board (STB) to address the "significant rail service disruptions" negatively affecting the nation's supply chains. NGFA asked STB to request plans from these rail carriers to bring rail service up to an acceptable level and to request weekly rail service updates on this issue.

In late April 2022, the STB summoned four Class 1 railroads to Washington to appear before the Board at a two-day public hearing about the poor rail service. The board directed executive level officials, including operating and human resources officials, of BNSF Railway Company, CSX Transportation, Inc., Norfolk Southern Railway Company, and Union Pacific Railroad Company to appear in person.

After testimonies from shippers and rail unions, the board required all seven Class 1 railroads to send regular progress reports on service, operations and employment and said they would assess the need for further action to help resolve the current problems at that time.

Fast forward to June 28, 2023, and the Reliable Rail Service Act reintroduced by Baldwin and Marshall. In the press release, it was noted the proposed bill "takes a commonsense approach to addressing high costs and unreliable service by clarifying the common carrier obligation, which under current law requires rail carriers to serve the wider shipping public on reasonable request. Current ambiguity around this principle has contributed to insufficient rail services and exorbitant costs for American products to get to market. Clearly defining the common carrier obligation has taken on greater importance as the railroad industry faces consolidation and has undertaken Wall Street practices that reduce capacity on the rail network."

The bill establishes specific criteria for the STB to consider when evaluating whether carriers are meeting their common carrier obligation to give shippers much-needed certainty that is currently lacking.

The Reliable Rail Service Act has earned widespread industry support, including 50 agricultural, labor, manufacturing and transportation organizations.

"The Wisconsin Farm Bureau appreciates the work of Sen. Baldwin to address the definition of common carrier service obligation and increase the authority of the Surface Transportation Board to address agricultural rail needs," said Kevin Krentz, president of the Wisconsin Farm Bureau Federation. "Wisconsin farmers are dependent on the movement of agricultural goods by rail, and we hope this increased authority will lead to greater efficiency within the rail industry."

"Clarification of the common carrier obligation has been needed for decades and this bipartisan bill provides STB with clear oversight rules to help address our nation's freight railroad supply chain challenges and improve rail service for agricultural shippers," said Mike Seyfert, president and CEO of the National Grain and Feed Association.

"NGFA members appreciate Senator Baldwin and Senator Marshall's leadership in responding to rail service issues and for cosponsoring this legislation, which will help regulators respond to service disruptions that cause hardship for livestock producers, grain exporters and grain processing facilities," added Seyfert.

"We applaud Senators Baldwin and Marshall for introducing the Reliable Rail Service Act to improve our nation's freight rail network," said President Greg Regan, president of the Transportation Trades Department, AFL-CIO.

"Unfortunately, America's freight rail companies too often fail to provide the equal, timely, and affordable service required of them by federal law. Let's hold railroads accountable and better serve the small businesses, farmers, and other customers who rely on freight rail to transport their goods," added Regan.

A full list of endorsing organizations and more quotes of support can be found here: https://www.baldwin.senate.gov/…

Link to Reliable Rail Service Act: https://www.baldwin.senate.gov/…

Link to STB rail service data: https://www.stb.gov/…

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

Follow her on Twitter @MaryCKenn

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

Follow her on Twitter @MaryCKenn

(c) Copyright 2023 DTN, LLC. All rights reserved.