Oregon’s Port of Portland Rescue Plan Calls for Doubling Container Volume

Portland Oregon presented its plan as part of the governor's aid package for the container operations (file photo)

Published Aug 27, 2024 6:40 PM by The Maritime Executive

 

The Port of Portland, Oregon’s only ocean-going seaport, submitted its revised comprehensive business plan to Governor Tina Kotek as part of the state’s promise to lead a rescue of the financially troubled container terminal operations. The operation is currently losing more than $12 million a year but with state aid, they envision doubling container volume over the next five to seven years as the operation reaches financial sustainability and provides a vital service to Oregon’s businesses.

Governor Kotek required the revised plan as part of her pledge to provide financial support to maintain the container service. With mounting financial losses and the collapse of negotiations for a private operator, port officials in April said they faced no choice but to suspend container operations as of October 1.  A month later, however, it reversed course after the governor promised to provide stop-gap funding and said she would include long-term investments and funding for channel maintenance in the state’s budget. In total, she is proposing $40 million in future support to the port for its container operations.

The port emphasizes the financial contribution it makes to the state and is a vital service to businesses primarily in the agricultural sector. Seafood, grain, animal feed, building supplies, tires, and more all move through the port. Many shippers prefer the nearby port versus sending their goods overroad to Washington state’s larger ports. However, like many smaller, regional ports, Portland found itself under pressure when the pandemic-induced shipping surge slowed.

The Port of Portland writes in its plan that it has sustained financial losses due to factors outside its control. It is more than 100 miles from the ocean and the Columbia River has limited depth to accommodate the largest vessels. In addition, it is a relatively small consumer market and port officials in the past said they were hurt by the loss of a rail service partner BNSF that had provided a connection to Seattle and Tacoma.

The port’s biggest problem however came from a long-running dispute between the International Longshore and Warehouse Union (ILWU) and then operator of T6 ICTSI. The operator ultimately ended its contract because of the jurisdictional labor dispute and the port assumed direct control of the terminal. The labor issues have been settled but it further chased away shippers.

The port calls for negotiating new rates with the container shipping companies and says it has negotiated labor efficiencies with ILWU and fee reductions with the terminal’s stevedores for containers. They are now working on a new marketing plan but admit that volume is the most critical factor. Next year they believe they can add 10 percent to the current volume of just around 600,000 TEU annually. That would contribute nearly $1 million to operating income. They project cutting losses to around $10 million annually.

The port however says it cannot sustain the operation without significant investment from the state. Governor Kotek promised $5 million in immediate operational support from the state’s Joint Emergency Board which is due to meet in September. The governor also promised $35 million in her budgets between 2025 and 2027 which would provide an additional $20 million in investment capital and $15 million for dredging and improvements in the river. However, the governor’s plan says as much as $70 million would be required for the river with the state seeking to renew grants from the federal government.

The port says it has subsidized the container operations despite significant financial losses over many years. The business plan addresses the governor’s concerns and they point out it has received strong support from the business community including importers and exporters and major businesses including supermarket operator Kroger and Columbia Sportswear. Labor representatives are also vowing to support the efforts to rescue the port’s container operations.

Terminal 6 has berths for five vessels and seven container cranes, including four Panamax cranes. The bulk of the port’s volume is in RoRo and bulk cargo which would not be impacted if the container operations do not continue. 

GUESS WHO?!

Roads reopened after train derails, destroys bridge in Boulder, Colo.

Boulder, Colo., police said Friday that roads closed by a BNSF train derailment Thursday night are open again. The cause of the derailment is under investigation. Initial reports erroneously said two trains had collided. Photo courtesy BNSF

Aug. 23 (UPI) -- Boulder, Colo., police Friday said all roads closed by a Thursday night' BNSF train derailment are reopened. Two crew members had minor injuries and a rail bridge was destroyed, according to police.

Initial reports that two trains had collided were inaccurate. Just one train derailed.

"Good news! ALL the roads are now reopened!, " Boulder Police said on X. "The BNSF Railway has now taken the lead on the train wreck that happened last night."

Police have not said what caused the train to derail close to 48th Street and Arapahoe Avenue north of Boulder Community health Hospital.

BNSF Railway is investigating the cause, which is expected to take at least several days.

Several roads were closed when the one-mile long train derailed. They were reopened Friday morning.

There was initial concern that fuel may have spilled and leaked into Boulder Creek, but officials later said they believed sand spilled in the derailment absorbed the fuel and it did not go into the water.

Xcel Energy worked to repair a power line hit by the train.

 

LA/Long Beach Rail Union Reaches Labor Agreement Far in Advance

TraPac rail terminal, Port of Los Angeles (File image courtesy Port of LA)

PUBLISHED JUL 14, 2024 2:16 PM BY THE MARITIME EXECUTIVE

 

 

In an era of contentious labor relations in the ports sector, news of an amicable and timely contract negotiation is a rarity - but the Brotherhood of Locomotive Engineers and Trainmen (BLET) and the rail line for the vital San Pedro Bay port complex have achieved it. The two sides have announced that they have ratified a three-year extension of their current collective bargaining agreement, far ahead of deadline. 

The extension is retroactive to May 1 and extends through September 2027. It includes a "fair" 13 percent raise over three years to offset inflation, and a continuation of the current employee contribution levels for health benefits.  The 145 employees of the Pacific Harbor Line (PHL) approved it by a margin of nine to one on Friday. The cooperative tone of the joint announcement was a departure from the combative note sounded by other port unions and employer bargaining associations, and it focused on the need to ensure the success of the twin ports of LA and Long Beach - collectively, the biggest container-freight gateway in the United States.

"This is a great win for the organization and our members," BLET General Chairman Brian Carr  said. "The contract contains no changes to our health and medical plan and provides 13 percent wage increases over two years. PHL and the organization have worked well together through this process to ensure no disruptions."

PHL provides carrier-neutral transportation, maintenance, and dispatching services to the Ports of Long Beach and Los Angeles, including dispatching for all BNSF and Union Pacific trains on the 100 miles of rail line in the port complex. The high-capacity trains are essential for the success of LA/Long Beach: they transport millions of containers a year from San Pedro Bay to inland markets, particularly in the Midwest. 

While BLET has had a contentious relationship with national Class 1 railroads, including a near-strike in 2022, PHL is a subsidiary of an independent regional/local rail holding company and has not been affected by previous disagreements. 

"Our employees are the backbone of our operations. This CBA extension ensures that they are fairly compensated and that we maintain a safe and reliable rail network," PHL President, Otis Cliatt II. "It also prevents any potential disruption to the Ports of Los Angeles and Long Beach operations, which are critical links to our economy."

In January, PHL agreed to a bonus program that will pay its union employees up to $18,000 in retention bonuses if they stay with the rail line for the next two years - and if PHL is picked to carry on as the switching company for the Ports of LA and Long Beach from 2026 onward. 

BAD BNSF
Judge orders railway to pay Washington tribe nearly $400 million for trespassing with oil trains


This photo provided by the Washington Department of Ecology shows a derailed BNSF train on the Swinomish tribal reservation near Anacortes, Wash. on March 16, 2023. A federal judge on Monday, June 17, 2024 ordered BNSF Railway to pay nearly $400 million to a Native American tribe in Washington state after finding that the company intentionally trespassed when it repeatedly ran 100-car trains carrying crude oil across its reservation.

 (Washington Department of Ecology via AP)

BY GENE JOHNSON
June 17, 2024Share

SEATTLE (AP) — BNSF Railway must pay nearly $400 million to a Native American tribe in Washington state, a federal judge ordered Monday after finding that the company intentionally trespassed when it repeatedly ran 100-car trains carrying crude oil across the tribe’s reservation.

U.S. District Judge Robert Lasnik initially ruled last year that the railway deliberately violated the terms of a 1991 easement with the Swinomish Tribe north of Seattle that allows trains to carry no more than 25 cars per day. The judge held a trial earlier this month to determine how much in profits BNSF made through trespassing from 2012 to 2021 and how much it should be required to disgorge.

“We know that this is a large amount of money. But that just reflects the enormous wrongful profits that BNSF gained by using the Tribe’s land day after day, week after week, year after year over our objections,” Steve Edwards, chairman of the Swinomish Indian Tribal Community, said in a statement. “When there are these kinds of profits to be gained, the only way to deter future wrongdoing is to do exactly what the Court did today — make the trespasser give up the money it gained by trespassing.”

The company based in Fort Worth, Texas, said in an email it had no comment.

The tribe, which has about 1,400 members, sued in 2015 after BNSF dramatically increased, without the tribe’s consent, the number of cars it was running across the reservation so that it could ship crude oil from the Bakken Formation in and around North Dakota to a nearby refinery. The route crosses sensitive marine ecosystems along the coast, over water that connects with the Salish Sea, where the tribe has treaty-protected rights to fish.

Bakken oil is easier to refine into the fuels sold at the gas pump and ignites more easily. After train cars carrying Bakken crude oil exploded in Alabama, North Dakota and Quebec, a federal agency warned in 2014 that the oil has a higher degree of volatility than other crudes in the U.S.

Last year, two BNSF engines derailed on Swinomish land, leaking an estimated 3,100 gallons (11,700 liters) of diesel fuel near Padilla Bay.

AP correspondent Jackie Quinn reports on a massive damage award to a Native American tribe that accused a rail company of trespassing.

The tribe pointed out that a corporate predecessor of BNSF laid the tracks in the late 19th century over its objections. The tribe sued in the 1970s, alleging decades of trespassing, and only in 1991 was that litigation settled, when the tribe granted an easement allowing limited use of the tracks.

The easement limited rail traffic to one train of 25 cars per day in each direction. It required BNSF to tell the tribe about the “nature and identity of all cargo” transported across the reservation, and it said the tribe would not arbitrarily withhold permission to increase the number of trains or cars.

The tribe learned through a 2011 Skagit County planning document that a nearby refinery would start receiving crude oil trains. It wasn’t until the following year that the tribe received information from BNSF addressing current track usage, court documents show.

The tribe and BNSF discussed amending the agreement, but “at no point did the Tribe approve BNSF’s unilateral decision to transport unit trains across the Reservation, agree to increase the train or car limitations, or waive its contractual right of approval,” Lasnik said in his decision last year.

“BNSF failed to update the Tribe regarding the nature of the cargo that was crossing the Reservation and unilaterally increased the number of trains and the number of cars without the Tribe’s written agreement, thereby violating the conditions placed on BNSF’s permission to enter the property,” Lasnik said.

The four-day trial this month was designed to provide the court with details and expert testimony to guide the judge through complex calculations about how much in “ill-gotten” profit BNSF should have to disgorge. Lasnik put that figure at $362 million and added $32 million in post-tax profits such as investment income for a total of more than $394 million.

In reality, the judge wrote, BNSF made far more than $32 million in post-tax profits, but adding all of that up would have added hundreds of millions more to what was already a large judgment against the railway.

The tribe said it expects BNSF to appeal the ruling.

BNSF Railway says it didn’t know about asbestos that’s killed hundreds in Montana town

WARREN BUFFET'S CHOO CHOO


- In this April 27, 2011, file photo, the entrance to downtown Libby, Mont., is seen. BNSF Railway attorneys are expected to argue before jurors Friday, April 19, 2024, that the railroad should not be held liable for the lung cancer deaths of two former residents of the asbestos-contaminated Montana town, one of the deadliest sites in the federal Superfund pollution program. 

(AP Photo/Matthew Brown, File)

- Dr. Lee Morissette shows an image of lungs damaged by asbestos exposure, at the Center for Asbestos Related Disease, Thursday, April 4, 2024, in Libby, Mont. BNSF Railway attorneys are expected to argue before jurors Friday, April 19, 2024, that the railroad should not be held liable for the lung cancer deaths of two former residents of the asbestos-contaminated Montana town, one of the deadliest sites in the federal Superfund pollution program.

 (AP Photo/Matthew Brown, File)

- Environmental cleanup specialists work at one of the last remaining residential asbestos cleanup sites in Libby, Montana, in mid-September. BNSF Railway attorneys are expected to argue before jurors Friday, April 19, 2024, that the railroad should not be held liable for the lung cancer deaths of two former residents of the asbestos-contaminated Montana town, one of the deadliest sites in the federal Superfund pollution program.

 (Kurt Wilson/The Missoulian via AP, File)

BY MATTHEW BROWN AND AMY BETH HANSON
 April 18, 2024


HELENA, Mont. (AP) — BNSF Railway attorneys are expected to argue before jurors Friday that the railroad should not be held liable for the lung cancer deaths of two former residents of an asbestos-contaminated Montana town, one of the deadliest sites in the federal Superfund pollution program.

Attorneys for the Warren Buffett-owned company say the railroad’s corporate predecessors didn’t know the vermiculite it hauled over decades from a nearby mine was filled with hazardous microscopic asbestos fibers.

The case in federal civil court over the two deaths is the first of numerous lawsuits against the Texas-based railroad corporation to reach trial over its past operations in Libby, Montana. Current and former residents of the small town near the U.S.-Canada border want BNSF held accountable for its alleged role in asbestos exposure that health officials say has killed several hundred people and sickened thousands.

Looming over the proceedings is W.R. Grace & Co., a chemical company that operated a mountaintop vermiculite mine 7 miles (11 kilometers) outside of Libby until it was closed 1990. The Maryland-based company played a central role in Libby’s tragedy and has paid significant settlements to victims.

Asbestos victims in Montana want Buffett’s railroad company held responsible

U.S. District Court Judge Brian Morris has referred to the mining company as “the elephant in the room” in the BNSF trial. He reminded jurors several times that the case was about the railroad’s conduct, not W.R. Grace’s separate liability.

Federal prosecutors in 2005 indicted W. R. Grace and executives from the company on criminal charges over the contamination in Libby. A jury acquitted them following a 2009 trial.

How much W.R. Grace revealed about the asbestos dangers to Texas-based BNSF and its corporate predecessors has been sharply disputed.

The railroad said it was obliged under law to ship the vermiculite, which was used in insulation and for other commercial purposes, and that W.R. Grace employees had concealed the health hazards from the railroad.

Former railroad workers said during testimony and in depositions that they knew nothing about the risks of asbestos. They said Grace employees were responsible for loading the hopper cars, plugging the holes of any cars leaking vermiculite and occasionally cleaned up material that spilled in the rail yard.

Former rail yard worker John Swing said in previously recorded testimony that he didn’t know asbestos was an issue in Libby until a 1999 newspaper story reporting deaths and illnesses among mine workers and their families.

Swing also said he didn’t think the rail yard was dusty. His testimony was at odds with people who grew up in Libby and recall dust getting kicked up whenever the wind blew or a train rolled through the yard.

The estates of the two deceased plaintiffs have argued that the W.R. Grace’s actions don’t absolve BNSF of its responsibility for knowingly exposing people to asbestos at its railyard in the heart of the community.

Their attorneys said BNSF should have known about the dangers because Grace put signs on rail cars carrying vermiculite warning of potential health risks. They showed jurors an image of a warning label allegedly attached to rail cars in the late 1970s that advised against inhaling the asbestos dust because it could cause bodily harm.

BNSF higher-ups also should have been aware of the dangers because they attended conferences that discussed dust diseases like asbestosis in the 1930s, attorneys for the plaintiffs argued.

The Environmental Protection Agency descended on Libby after the 1999 news reports. In 2009 it declared in Libby the nation’s first ever public health emergency under the federal Superfund cleanup program.

The pollution in Libby has been cleaned up, largely at public expense. Yet the long timeframe over which asbestos-related diseases can develop means people previously exposed are likely to continue getting sick and dying for years to come, health officials say.

Family members of Tom Wells and Joyce Walder testified that their lives ended soon after they were diagnosed with mesothelioma. The families said the dust blowing from the rail yard sickened and killed them.

In a March 2020 video of Wells played for jurors and recorded the day before he died, he lay in a home hospital bed, struggling to breathe.

“I’ve been placed in a horrible spot here, and the best chance I see at release — relief for everybody — is to just get it over with,” he said. “It’s just not something I want to try and play hero through because I don’t think that there’s a miracle waiting.”
___

Brown reported from Billings, Mont.

 

Oregon’s Port of Portland to Suspend Container Operations as Losses Grow

Portland will suspend container operations due to mounting financial losses (file photo)

PUBLISHED APR 16, 2024 7:01 PM BY THE MARITIME EXECUTIVE

 

 

Oregon’s only ocean seaport, the Port of Portland, informed shippers yesterday that it plans to suspend container operations as of October 1. Like many smaller, regional ports, volumes increased during the pandemic as they provided an alternative to the congested major seaports but as the industry returned to normal volumes, Portland has seen its financial losses grow.

Port executive Keith Leavitt wrote to shippers saying they had decided to suspend the operation after negotiations with a potential third-party operator collapsed last week. He said they had not expected this outcome but without the prospects of an operator, mounting financial losses, and the lack of financial support from the state, they needed to suspend container operations. The port will continue to handle its RoRo car and vehicle operations as well as break bulk and heavy cargo.

The port cited its fixed costs saying that it had made it difficult to expand the container service and more costly for shippers using the port. They had hoped to have a larger operator that could spread the costs over broader operations. They said while volumes had steadily increased since 2019, the port has lost more than $30 million from the container operations over the past three years, including a projected $14 million shortfall this year.

While Terminal 6 has berths for five vessels and seven container cranes, including four Panamax cranes, port officials acknowledged the facility “faces a number of unique challenges.” It is more than 100 miles from the ocean and the Columbia River has limited depth to accommodate the largest vessels. In addition, they said it is a relatively small consumer market and they were further hurt by the loss of a rail service partner BNSF that had provided a connection to Seattle and Tacoma.

Suspending the container operation will be especially difficult they said for the agricultural and seafood sectors which use the port. They will have to truck goods through other ports, raising costs. Container operations also supported as many as 1,500 jobs in the region.

As late as last month, port executives were holding out hope that they could maintain the container operation. They had asked the state for $10 million in support but lowered the request to $8 million after meeting with carriers who committed to helping with the operation. The goal however was a long-term lease with a third-party terminal operator.

It is not the first time the port has had problems with its container operations. In 2010, it made a deal with ICTSI to operate the container terminal but the company became embroiled in a labor dispute that dragged on for years. The labor slowdown began in 2012 and by 2015 carriers were leaving the port. ICTSI pulled out of Portland in 2017. The International Longshore and Warehouse Union (ILWU) filed for bankruptcy in 2023 due to the dispute but finally reached a settlement agreement with ICTSI in 2024.

The port became its own manager for container operations. In 2020, they marked the return of container service including an agreement with SM Line.

Lawmakers failed to include the financial support in the state’s new budget but left open the possibility of future discussions. Port officials said they were still looking for future alternatives but currently, they do not have the funding necessary to maintain the operations.

BNSF

Asbestos victim's dying words aired in wrongful death case against Buffet's railroad

AMY BETH HANSON and MATTHEW BROWN
 Mon, April 15, 2024 


 Environmental cleanup specialists work at an asbestos cleanup site in Libby, Montana, on Sept. 13, 2018. A lawsuit being tried in federal court alleges BNSF Railway knew the vermiculite it was hauling through Libby from a nearby mine was tainted with asbestos. The railroad denies the allegations. 

(Kurt Wilson/The Missoulian via AP, File)

HELENA, Mont. (AP) — Thomas Wells ran a half-marathon at age 60 and played recreational volleyball until he was 63. At 65 years old, doctors diagnosed him with mesothelioma, a rare and aggressive lung cancer linked to asbestos exposure.

“I’m in great pain and alls I see is this getting worse,” the retired middle school teacher from Oregon said in a video deposition recorded in March 2020, four months after his cancer diagnosis. He died a day later.

Portions of Wells' deposition were replayed Monday in a federal courtroom for a jury hearing a wrongful death case against Warren Buffett’s BNSF Railway.

The estates of Wells and a second mesothelioma victim accuse the railroad and its corporate predecessors in a lawsuit of polluting Libby, Montana, with asbestos-contaminated vermiculite from a nearby mine that was transported through the remote town’s rail yard in boxcars for much of last century.

BNSF attorneys have denied the claims and are scheduled to lay out their defense beginning Tuesday. They've said that railroad officials were unaware the shipments were hazardous.

A cleanup of the contaminated rail yard in downtown Libby was largely completed in 2022.

The trial is the first alleging BNSF exposed community members in Libby to asbestos fibers that can cause lung scarring and mesothelioma. It comes almost 25 years after federal authorities arrived in the community not far from the U.S.-Canada border following news reports about toxic asbestos dust causing widespread deaths and illnesses among mine workers and their families.

Numerous other lawsuits from asbestos victims have been filed against BNSF.

The W.R. Grace & Co. mine that operated on a mountaintop outside Libby produced contaminated vermiculite that health officials say has sickened more than 3,000 people and led to several hundred deaths.

The U.S. Environmental Protection Agency in 2009 declared the first-ever public health emergency during a Superfund cleanup in Libby. It’s one of the deadliest sites under the federal pollution program. The agency banned remaining industrial uses of asbestos last month.

Wells said in the 2020 deposition that he believed he was sickened while working for the U.S. Forest Service in the Libby area for about six months each in 1976-78 and again in 1981. He never went to the vermiculite mine, he said, but described wind kicking up dust along the railroad tracks at the rail yard.

“It was dusty. You know, you’d wash the car and pretty soon you have to wash the car again,” Wells said.

The second plaintiff, Joyce Walder, played in the same area in her youth before dying of mesothelioma at 66.

Mine operator W.R. Grace repeatedly told the railroad’s corporate predecessors that the product it was shipping through Libby was safe, according to BNSF attorney Chad Knight. Local officials also believed the vermiculite was safe, and the railroad couldn’t legally reject the loads, he said.

“You have to go back and look at what the information was at the time,” Knight told jurors during opening statements last week. “The materials coming from the mine were being used all over town. No one suspected there was anything unsafe about the products.”

Knight has also sought to cast doubt on whether the BNSF rail yard was the source of the plaintiffs’ medical problems, since asbestos dust was prevalent in the Libby area when the mine was operating.

Tainted vermiculite was used in Libby's high school track, a baseball field next to the rail yard, as a soil amendment in home gardens and as insulating material in homes across the U.S.

The plaintiffs’ attorneys showed jurors several insurance claims for tons of asbestos that leaked out of rail cars in the 1970s and did not make it to its destination, and an example of a placard that was put on a rail car in the late 1970s saying it contained asbestos fibers and to avoid creating dust.

Residents of Libby have described encountering vermiculite along BNSF tracks where children in the community often played.

When kicked up by wind or a passing trains, asbestos fibers from that vermiculite “can remain airborne for hours if not days depending on conditions,” said plaintiffs expert Steven Compton, who directs the private laboratory MVA Scientific Consultants in Georgia.

Thomas Wells' son Sean Wells described his father during Friday testimony as a “wonderful teacher” and “just the best dad,” who he could talk to about anything and coached their sports teams.

“There’s not a day that goes by that I don’t think about my dad and wish I could pick up the phone and call him,” Sean Wells said. “He wasn’t only our dad. ... He was our best friend. We did everything together.”

Walder died in October 2020 — less than a month after her diagnosis.

She grew up in Libby and could have been exposed to the microscopic, needle-shaped asbestos fibers while fishing and floating on a river that traveled past a spot where a conveyor belt loaded vermiculite onto train cars, according to court records. Additional exposure may have also come from playing around a baseball field near the rail yard, walking along the railroad tracks and spending time at the home of a friend who lived near the rail yard. She also returned to Libby to visit family.

After her diagnosis Walder underwent chemotherapy and surgery. In a follow-up appointment Walder's family was told the cancer had come back even worse.

“I hope no one has to see the light of hope pass from a parent’s or loved one’s eyes, because that is something you will never forget,” Walder’s daughter, Chandra Zechmeister, testified Monday.

___

Brown reported from Billings, Mont.

 Commentary

BNSF Desperate for an Inflection

Written by Rick Paterson, Managing Director, Loop Capital Markets

• March 15, 2024
 
• Class I

• 
  

The Smokehouse Creek wildfire in Texas, which severed BNSF’s Transcon route on February 27, was the latest in a series of problems that have significantly slowed BNSF’s network and impacted service. After running well as recently as December, BNSF now finds itself in a hole.

We were hoping for an inflection in network velocity in the week following the wildfire effect, ending March 8, but instead we saw another sequential deterioration, from 25.1 to 24.8 mph. Within this number, Manifest service average speed fell from 22.3 to 21.7 mph, and Intermodal from 30.1 to 29.5 mph. All these speeds are materially lower than where they bottomed during the Arctic Blast in the third week of January, and except for Manifest you need to go back to June 2022—in the depths of the service crisis—to find comparable numbers.

Just as worrisome is the recent increase in cars on line. From a weekly average of 248,000 in 2023, it rose to 256,000 in January, 261,000 in February, and hit 263,326 the week of March 4, which is a high we haven’t seen since November 2019. Part of this is simply due to higher volumes as BNSF handily leads the industry in terms of YTD volume growth (+5.5%), but there’s also no doubt a worrying congestion element that threatens the speed at which the network can get back in sync.

A good way to adjust for volumes and sanity check car congestion is to look at “cars per carload,” which is basically a ratio of rolling stock relative to the loads they’re transporting. In the chart below, we’ve divided weekly intermodal units by two to account for double-stacking, and added that count to non-intermodal loads to get total “carloads.” We then divide cars on line by this number to generate cars per carload, with the lower the ratio the better. If we look at BNSF’s recent history, this averaged 1.6 in 2017 and 2018, then between 1.8-1.9 in each year between 2019 through 2023. You can see by the green columns that it sometimes spikes above two times, and it was 2.1 the week of March 4 (red circle). So even after adjusting for the current strength in intermodal volumes, there’s still some evidence of car congestion. Our assumption of a two-week bounce back from the wildfire effect now looks too optimistic, and it may be more of a slower grind higher.

In terms of critical resources, trains holding for crews and power also both deteriorated sequentially the week of March 4: crews from 31 to 39 per day, and power from 13 to 17 per day. To put this in perspective, these topped out at 167 (crews) and 38 (power) during the service crisis, so thankfully we’re nowhere near those levels. Also notice we haven’t yet used the “M word” (meltdown) because BNSF has ample crews; albeit there are some crew districts with too few and others with too many, so there are imbalances to iron out. This, of course, isn’t unique to BNSF.

The bottom line is that BNSF needs to be careful here, because after what we all went through in 2022 there will be no tolerance from its stakeholders and Washington D.C. for another bout of extended service failures from a major railroad. We’re at least assured that BNSF is a quality organization that fully understands the urgency of the situation.

Tags: BNSF, Loop Capital Markets, Opinion

Oberman calls out UP, BNSF for cutting jobs when they should focus on growth

March 5, 2024

Home - SMART Union (smart-union.org)

Surface Transportation Board Chairman Martin Oberman has seen some rail carriers cut jobs and neglect their infrastructure in pursuit of short-term profit, and he says there’s nothing to like about it.

Oberman spoke last week before the Southeast Association of Rail Shippers’ conference, and the “cult of the operating ratio” (OR) could be rising again with BNSF and Union Pacific cutting workers and a hedge fund looking to seize Norfolk Southern.

“These low OR — which could only be achieved rapidly — as the activists demanded — by cutting payroll — have meant lots of free cash which the Class Is have not been shy about paying out in stock buybacks, dividends, and in BNSF’s case, returns to its owner,” Oberman said. “The total in the last decade or so is over $250 billion — money which was not invested in retaining workers or building new infrastructure to increase a railroad’s reach and serve more customers.”

Billionaire Warren Buffett said as much in his recent letter to shareholders, expressing disappointment in BNSF’s latest returns. Union Pacific ousted a CEO in 2023 and the new one is doubling down on squeezing workers in the name of shareholder return.

SMART-TD members and rail workers have been coping with the consequences through job cuts, irresponsibly long trains and inhumane work schedules. For our members, “PSR” stands for “punishing and sadistic railroading.”

Starting in about 2014, more than 45,000 rail workers lost their jobs because of the quest for increased efficiency.

“Railroads are a regulated monopoly. They have a common carrier obligation to the public interest and to the nation’s economy,” Oberman said. “Unlike other businesses, railroad management and owners are not just free to manipulate the business by draining the company’s resources for short-term gain.”

Too often, the pro-free market crowd, overseeing spreadsheets from the comfort of their railroad offices, think that “free market” means “we can run our business however we want and do to workers and the communities we affect whatever we want. We’re here to make money, and they should be happy about it. They’re lucky we’re here.”

That mentality’s brought longer trains, fewer inspections and less emphasis on safety, as much as industry executives and mouthpieces like the Association of American Railroads and Railway Age claim the railroads are working in everyone’s best interests. PSR is only good for everyone who owns stock.

The industry’s shareholders cruised through the initial wave of PSR with fatter wallets and bigger dividends, Oberman noted in his speech. Contrast that with the thousands of workers who were sent home for the last time as service to their former customers suffered.

Investor neglect drew attention of federal regulators, including Oberman’s STB, after a post-COVID national supply chain meltdown. The STB held hearings on carrier performance in 2022 and has kept a close eye on carrier personnel levels since.

Recent events indicate carrier leadership is being guided back to its shortsighted ways. Investors demand quick profits at the exclusion of all else. Hundreds of jobs have been cut from BNSF and Union Pacific over the past weeks and months.

So when leaders such as Oberman and Federal Railroad Administrator Amit Bose decide to oversee the industry through a more skeptical lens, along with the workers and the members of the media, those folks in the comfortable offices get less comfortable.

Oberman also expressed his doubts about activist investor group Ancora’s plan to replace Norfolk Southern’s leadership with a who’s who of exploitative executives.

“Several weeks ago, Ancora wrote me a letter. The essence of their message was that they had taken a $1 billion dollar stake in NS in order for it — quote — ‘to become a safer railroad,’ ” Oberman said. “Really? What hedge fund raises $1 billion to promote safety anywhere? The measure of Ancora’s disingenuous pitch to improve safety is that its slide deck completely omits reference to FRA data which shows that, in the last year, NS has been an industry leader in reducing mainline rail accidents and derailments.”

SMART-TD members — the people who do the work — have lived through PSR. Oberman has gone through PSR, as has Bose. It was a failure for workers, shippers and catastrophic for the national supply chain. It’s not wanted by anyone or good for anyone except for those who would reap the most by doing the least.

The watchdogs of the industry — Oberman, Bose and SMART-TD — all recognize this. We do not want to go through it again.

UP and BNSF executives — you’ll need to get to work, because PSR doesn’t.

Read Oberman’s speech

Mass furloughs reported at BNSF Railway operations in 4 states

Noi Mahoney
Fri, March 1, 2024 

BNSF Railway has reportedly furloughed 362 employees across the U.S. in a cost-cutting measure, according to the Transportation Trades Department with the AFL-CIO, the transportation labor federation representing U.S. rail unions and workers. (Photo: Jim Allen/FreightWaves)

BNSF Railway, one of the largest freight railroads in the U.S., has reportedly furloughed hundreds of employees in Kansas, Montana, Nebraska and Texas.

The furloughs were announced Tuesday, with 362 workers reportedly losing their jobs, according to the Transportation Trades Department (TTD) with the AFL-CIO, the transportation labor federation representing U.S. rail unions and workers.

“BNSF Railway callously announced it has furloughed over 362 mechanical department positions at numerous locations across their system,” Greg Regan, president of the TTD AFL-CIO, said in a letter obtained by FreightWaves. “BNSF has said that the slashing of these positions was necessary to realign with their business operations and to respond to business decline.”

Workers at BNSF terminals were reportedly furloughed at rail terminals in Kansas, Montana, Nebraska and Texas, according to posts on social media. While TTD AFL-CIO said the furloughs were in the mechanical department, social media posts indicated positions such as clerks, carmen, pipe fitters and laborers were also affected.

Fort Worth, Texas-based BNSF, whose total revenue in 2023 declined 8% year over year to $23.8 billion, said it is offering transfers and retraining for affected workers.

BNSF representatives issued a statement to FreightWaves about the furloughs:

“While the underlying economy currently lacks clarity, BNSF is pursuing and capturing growth in several areas. We have an imbalance of employees where growth is occurring among some of our mechanical work groups.

“We have team members in locations on the network where there isn’t sufficient work and simultaneously not enough team members where the growth is occurring. Work groups must be readjusted to ensure we have the right people in the right place at the right time to best serve our customers’ current transportation needs and be positioned for future growth.

“BNSF has offered location transfers with incentives targeted to those locations where there are open positions. BNSF has also offered craft transfers for mechanical employees to be retrained for other open positions on the BNSF network. There are currently several hundred open mechanical and engineering positions on our network. Our hope is that we can reallocate personnel through these incentive programs, so BNSF continues to grow with our customers.”

Regan said BNSF has notified the union that 150 mechanical jobs will be made available across the country for furloughed workers to reapply but could require workers to relocate and accept lower pay.

“If mechanical employees were to switch crafts they would be forfeiting their established seniority … by transferring to new locations, different mechanical crafts or the maintenance of way department positions,” Regan said. “They would be effectively starting their railroad careers over, as seniority is the cornerstone of work opportunities within the railroad industry.”

In the wake of the furloughs, the TTD AFL-CIO demanded immediate federal inspections of BNSF locomotives and rail cars.

“We urge the Federal Railroad Administration to immediately conduct unannounced focused inspections of all BNSF owned and leased locomotives and rail cars … and further issue non-compliance orders requiring BNSF to repair any defects before being permitted to utilize their locomotives and rail cars,” Regan wrote. “We have long-held concerns about numerous defects that are intentionally being ignored and neglected by BNSF because managers … are under pressure to perform work with an inadequate number of workers. These problems will only be exacerbated by the extreme mechanical department cuts that were carried out by BNSF.”

BNSF has over 40,000 employees and operates 32,500 miles of rail across the U.S.

Two days, two railroads in the spotlight: Missives flying over Norfolk Southern, Union Pacific


John Kingston
Fri, March 1, 2024 

The fur was flying Thursday and Friday over two class 1 railroads.

 (Photo: Jim Allen/FreightWaves)

Charges, countercharges and the missives were flying back and forth over the future of two Class 1 railroads as February came to an end, with leading government officials that regulate the rails leveling heavy criticism at two distinct players.

In the proxy battle roiling Norfolk Southern (NYSE: NSC), the activist investor group Ancora is recommending the replacement of eight new directors to the Norfolk Southern board. It also wants to replace CEO Alan Shaw with former UPS executive Jim Barber and name Jamie Boychuk, a former executive at CSX, to replace current COO Paul Duncan.

The scorecard for the criticism and the responses over a mere two days went like this:

— Martin Oberman, chairman of the Surface Transportation Board, ripped into Ancora Associates for its proxy battle over Norfolk Southern (NYSE: NSC) railroad. Oberman spoke to the Southeast Association of Rail Shippers 2024 Spring Meeting in Atlanta on Thursday, where he said Ancora “has nothing to say about what it could do better” than current management in running Norfolk Southern, adding, “I think we can assume that if Ancora succeeds in its bid to control NS, its next move will be to put the Brooklyn Bridge on the market.”

— Ancora didn’t have any public response to Oberman’s comments, but on Friday, it sent a letter to the Norfolk Southern board, just a few days after the railroad released its 2024 proxy statement. The proxy revealed that in 2023 — the year when Norfolk Southern labored under the fallout from the derailment in East Palestine, Ohio — NS CEO Alan Shaw had total compensation of $13.41 million, compared to $9.78 million a year before.

— The second blast from a government official aimed at a railroad came from Amit Bose, the administrator of the Federal Railroad Administration. In a letter addressed to UP CEO Jim Vena,

Bose criticized recent furloughs implemented at Union Pacific (NYSE: UNP). “It is imperative that UP prioritizes safety above all else and takes immediate steps to address this issue, an issue disproportionately 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.” Bose wrote.

— Union Pacific quickly responded to Bose’s comments with a letter from Vena, which said the FRA head was portraying an “inaccurate correlation between natural workforce fluctuations and safety.”

Oberman was harsh in his assessment of Ancora’s motives. “Several weeks ago, Ancora wrote me a letter,” Oberman said, according to a transcript released by the STB. “The essence of their message was that they had taken a $1 billion dollar stake in NS in order for it — quote — ‘to become a safer railroad.’ Really? What hedge fund raises $1 billion to promote safety anywhere?”

Oberman, as he has done before, criticized railroad focus on its operating ratio (OR), with the STB head expressing concern that a goal to reduce OR can come at the expense of both safety and performance.

“Ancora principally and repeatedly focuses on a rapid lowering of the OR to drive cash payouts and raise its stock price, harshly criticizing present NS management for not making a lower OR the objective,” Oberman said. “We now know that this is wrong-headed thinking. Making OR the corporate objective is what led to elimination of thousands of workers which caused the service crisis.”

The reference to the service crisis was from earlier in his speech when he recapped STB actions to force service improvements during the enormous system backups of 2022.

Ancora’s Friday letter was addressed to Amy Miles, the non-executive chair of the NS board. The letter said that Ancora — which as an activist investor has previously trained its sights on Forward Air (NASDAQ: FWRD) and C.H. Robinson (NASDAQ: CHRW) — said Shaw has “presided over industry-worst operating results, sustained share price underperformance and an ineffective and tone-deaf response to the preventable derailment in East Palestine.” It said Anchor had “offered viable solutions in the form of exceptional people with a strategic vision.”

Norfolk Southern’s stock price in the last 52 weeks is up about 14%. During that time, its fierce rival for business east of the Mississippi, CSX (NASDAQ: CSX), is up about 23.7% while Union Pacific is up 21.5%.

Focusing in on Shaw’s pay package from 2023

On the issue of Shaw’s pay, the Ancora letter said shareholders were “baffled” at the decision to give the CEO a raise in the same year as the East Palestine derailment and the fallout from it.

“We challenge the Board’s determination that it had to adjust executive compensation in 2023 to ‘retain key talent,’” Ancora said, quoting a board statement. “We do not see how the Board could have actually viewed Mr. Shaw as a flight risk. In addition to being a more than 30-year insider at Norfolk Southern, he was a relatively new, unproven CEO off to an extremely rocky start. The fact that this decision was made suggests deference to management and a lack of respect for shareholders and stakeholders.”

UP furloughs at issue

In the back-and-forth surrounding Union Pacific, Bose said UP’s decision to furlough some worker is a sign that the railroad “has again chosen to prioritize cost-cutting measures over ensuring safe operations, jeopardizing the well-being of both UP’s workers and the public.”

“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,” Bose wrote.

In a letter signed by Vena, UP responded to Bose’s criticism with several key rebuttals.

— It cited several statistical points about derailments, that “serious” derailments were down 26% in 2023 from 2019 levels, track-related derailments had declined 28% in the past 10 years, and that UP had recorded an 8.7% improvement in mainline derailments in 2023 versus 2021.

— The Vena letter said “fluctuations in workforce needs are a natural component of operating the railroad … normal, cyclical and vary from year to year based on business needs, capital projects and weather.”

To support its criticism that Bose was not making distinctions among types of workers and railroad needs, Vena’s response said the Bose letter “combines different types of workers (Mechanical employees and Engineering employees) and work done on the railroad (equipment maintenance and capital projects), and therefore paints an incorrect and incomplete picture of the natural role workforce fluctuations play in operating a railroad year-round.”

“We’ve already begun seeing an increase in demand and have more employees working in January and February of this year,” Vena wrote.

The letter also said workers impacted by furloughs and layoffs can apply for other positions at Union Pacific.

Public Ownership of Rail Is on the Agenda. Here’s What It Could Look Like.

Last year’s catastrophic East Palestine train derailment has spurred calls from a rank-and-file labor group for public ownership of rail infrastructure. We spoke to an expert about what that could look like in the US, which is dominated by for-profit rail.

By Maddock Thomas, Alex N. Press

 January 8, 2024

Source: Jacobin

Nearly one year ago, on the night of February 3, 2023, a Norfolk Southern freight train carrying hazardous materials derailed in East Palestine, Ohio. Videos of the smoke and fire released by the nearly two-mile-long train went viral, and residents in the community reported severe health effects.

The rail disaster triggered an outcry: Why did this happen, and what can any of us do about it? Soon, there were articles detailing the alarming state into which the country’s railroads have fallen: accidents are up, and oversight is hard to come by. Plus, there is a severe squeeze on rail workers, many of whom lack sick days of any kind and are effectively always on call.

Railroad Workers United (RWU), a caucus of rank-and-file workers spanning all thirteen national rail unions, recently released a video offering one answer to the rotten state of US rail. “Putting America Back on Track: The Case for Public Rail Ownership” opens in East Palestine, with a resident of the area showing the viewer photos he took the night of the Norfolk Southern derailment. The video goes on to make the case for public ownership of rail, which has been a focus for RWU over the past year.

As Ross Grooters, RWU cochair and a union locomotive engineer, told Jacobin, the workers came out with the demand amid their ugly contract fight in 2022, which ended with Joe Biden intervening to quash a potential rail strike.

“It became really clear between the contract negotiations and the fact that the railroad companies are making obscene amounts of money operating the railroads purely for the purpose of extracting wealth from what should be critical infrastructure, that the only way for rail to work would be outside the for-profit model that it exists in currently,” said Grooters.

So RWU passed a resolution endorsing the campaign. The case has been articulated by RWU members in several publications, from Jacobin to In These Times to FreightWaves, but with the release of RWU’s film, I wanted to hear more about the models under debate, so I called up Maddock Thomas, who is writing a policy paper on public rail ownership for RWU. We spoke about the current structure of rail ownership, alternative public models, and which country has the most functional rail system. Our conversation has been lightly edited for length and clarity.

The Consequences of Private Ownership

ALEX N. PRESS

RWU’s video lists some of the antisocial consequences of private rail ownership: problems for communities, issues for the economy, and of course, rail disasters like we saw in East Palestine. As the film puts it, “some industries are just too important to be kept in private hands.” Can you list some of the consequences that follow from private ownership of rail?

MADDOCK THOMAS

Safety is on a lot of people’s minds now, post–East Palestine. The number of railroad accidents per millions of miles traveled has been trending down over the larger time scale of the past fifty years, in part because we don’t have as many trains or as many train lines running. But since 2013, we’ve gone from 2.4 rail accidents per million miles for Class One railroad to just over 3 accidents per million miles. That’s almost a 30 percent increase in the accident rate.

That can largely be traced to the advent of precision scheduled railroading (PSR), which is neither precise nor scheduled nor really railroading, as people like to joke. The focus is on longer trains at all costs and cutting crews, cutting maintenance. Union Pacific recently announced furloughs of 1,350 maintenance workers, saying that for financial reasons, they are moving all their maintenance to 2024. That’s something you don’t want to hear when a rail line goes through your community.

The role of PSR is really evident when you look at the accident rate. Norfolk Southern has gone from 2 to 4.5 accidents per million miles between 2013 and 2022; the rates for CSX and Union Pacific have also risen. BNSF, the only rail operator not to adopt PSR, didn’t see that same increase. They’ve had around 2.25 accidents fairly consistently for the past decade. So there’s a clear change in railroading that has led to the decrease in safety.

There’s also the issue of service and how workers are being treated. The idea of the railroad as a good job is fading as the treatment of rail workers has gotten worse and worse. The Federal Railroad Administration conducted a study on fatigue which found that nearly 40 percent of locomotive engineers and conductors are highly fatigued and almost 90 percent of engineers and conductors reported that it is the irregular work hours that contribute to fatigue. You can receive a call at any time in the night and be told that you have two hours to get on the train. That’s disastrous for someone’s ability to see their family and to have a life outside of work.

The total rail employment has also cratered. One of the ways that rail companies try to make more money is by laying off workers. We went from a peak in 2015 of around 210,000 rail workers to around 150,000 now. They laid off a ton of people during COVID and haven’t been able to hire them back, which has put a strain on everyone that remains on the rail.

The State of Rail in the United States

ALEX N. PRESS

What is the current structure of ownership in rail, and how has it changed over time?

MADDOCK THOMAS

We’ve seen massive consolidation throughout the twentieth century. We functionally have a duopoly on the East Coast and the West Coast. In the east, we have Norfolk Southern and CSX. In the west, we have BNSF and Union Pacific. All of those are publicly traded corporations save for BNSF, which is owned by Warren Buffett’s Berkshire Hathaway.

The Class One railroads are the really big railroads that most of the interstate traffic in the United States travels on. They’re privately owned and operated, but “for profit” doesn’t do it justice, because the railroad companies will refuse profitable traffic if it is not as profitable as it could be. So there are those major four corporations in the United States.

Then you have Class Two and Three railroads. Those are smaller, and a lot of them are owned now by conglomerates, the largest of which is Genesee & Wyoming, which owns dozens of railroads across the United States. Those that aren’t owned by conglomerates are generally owned by local businesspeople or municipalities. These lines were sold off after the deregulation that followed the Staggers Rail Act in 1980, when it became much easier to sell off Class One lines that weren’t as profitable and weren’t main lines.

There’s more public rail ownership in the United States already than you’d think, because as a result of deregulation, a lot of the Class Ones started trying to cut service and sell off some of these smaller lines — which, though not immensely profitable, were critical to a lot of communities, especially rural communities, and for agriculture. Every state except Hawaii has some sort of publicly owned rail line.

Those are rarely operated by the state, but they’re owned by the state and contracted out to be operated or leased to one of those other Class Two or Three short-line operators to continue to provide service. The state provides funding for the infrastructure and improvements so that you still have real service to this community that otherwise would have been cut off.

One of the better-known and best-operated railroads is the municipally owned Madison Railroad in Madison, Indiana. They took an abandoned rail line from Conrail and have revitalized their local community and brought a good number of industries to town because they have a publicly owned and operated railroad.

Looking back at US history, federal land grants led to a lot of the transcontinental railroads. We gave free land to different railroad corporations with the condition that they just build the railroad. According to some estimates, 10 percent of the land mass of the United States was given away for free to rail corporations along with federally backed debt to fund the construction.

ALEX N. PRESS

You mentioned the Staggers Rail Act of 1980, which deregulated rail. What’s the story behind that?

MADDOCK THOMAS

After World War II we had the advent of the highway system, which was a huge public investment. It was essentially an enormous subsidy for trucking companies because suddenly they had excellent infrastructure systems that they didn’t have to pay for themselves. It was very cheap for them to operate and compete with railroads, whereas the rail lines were privately operated and had to pay for all their own infrastructure.

Railroads started going bankrupt as industry declined by the 1950s, particularly in the northeastern United States. The most famous and controversial example is the New York Central and the Pennsylvania Railroad, which were for a long time considered the two greatest railroads in the world.

By the 1950s, the United States was going to lose a lot of passenger rail services, commuter rail services, and freight service to a lot of communities in the Northeast and in other parts of the country if something wasn’t done. Though there are a lot of downsides to deregulation, the regulation that was happening on the railroad was in a number of ways antiquated and suffocating them.

After the Penn Central merger went through and Penn Central went bankrupt, Conrail was created by the federal government to take over its remnants plus the New Haven and a number of other rail lines from Pennsylvania up to New England, even stretching out to Chicago. Conrail was an enormous conglomerate and it was really successful at what it did, even though it required cutting some lines, which were then turned into short lines. It saved railroading in the Northeast and eventually became profitable, which was their goal.

The moment it became profitable, Congress sold it off because it was never intended to be a long-term solution but rather a stopgap measure to save the railroads. But in order to make Conrail viable — and fulfill something that the other railroads had been asking for for a long time — they got rid of the powers of the Interstate Commerce Commission (ICC), which was one of the most important federal bodies for the better part of a century.

The Staggers Act essentially eliminated the ICC and allowed railroads and their customers to negotiate freight rates themselves. Supposedly this allowed for competition in the rail industry, but it also allowed for massive consolidation. That’s how we get two railroads on each coast now.

The Public Ownership Option

ALEX N. PRESS

What would public ownership look like in the United States?

MADDOCK THOMAS

There are different perspectives on this, but a publicly owned railroad would have to be a service-first railroad: for passengers but also businesses across the United States, from rural agriculture to factories near port cities. Doing so would require a massive shift.

The plan put forth by railroad workers about a century ago entails having the federal government buy out the railroads, and then having a railroad corporation governed by a board composed of one-third appointed for the public interest by the president, a third by management, and a third by union employees.

The rates charged would be a certain amount of the operating cost plus a percentage of the capital costs: the maintenance and the bonds. But if they were able to reduce the operating costs, rather than keeping that money and buying back shares or giving dividends to shareholders, as we see now, those cost saving would be distributed to the public in the form of decreasing freight rates — making it cheaper to transport things by rail, which would then attract customers off of the roads, which would be better for congestion, for the environment, for smog, etc.

It could also be used for further improvements for service, perhaps to fund electrification, as well as faster rail service for passengers by improving track quality. The first priority would be improving the infrastructure and service. We just don’t see that happening with today’s railroads.

There’s also the model of open access, which is very popular right now. Internationally, it comes along with the neoliberal trend towards everything needing to be a market, but it’s popular in the United States, including among a number of people in RWU. This model is of the railways as a steel highway in that it would be publicly owned infrastructure, with access based on different levels of access charges to different rail operators to provide competition for service.

I think a public rail system that would work for the United States is somewhere in the middle of those two models. From the research I’ve done on New Zealand, on British rail, and on the current liberalization, which is what they’re calling this open-access movement in the European Union, I’m skeptical that open access alone can be a model for the United States. The rail corporations would love not having to pay for the maintenance on the railroads and just operate trains on the few lines that are super profitable.

If we allow open access, you’re only going to have competition on the few lines that are super profitable, which are primarily bulk commodities — coal, stone, and the like — and intermodal containers. You’re not going to see service to any of the industry that’s less profitable and predominantly located in rural communities.

You’re going to need a public operator, not as an operator of last resort but as a guaranteed competitor in the model of public service first, and if you want to compete with that, you’re welcome to try and put your service forward. But we need to have a guarantee that rail service will be available on our national network and can’t just come and go as different operators enter and exit the market, which has been a problem with privatization in the UK.

The other issue there is that historically, when you separate infrastructure from operations, a number of studies have concluded that you get much worse maintenance. So that is a concern if we have a federally owned infrastructure that is not also in some way affiliated with an operator that operates over those rail lines. It may be slightly different if we have publicly owned infrastructure, because a lot of times that separation has happened through privatization, such as in Europe or the UK or New Zealand, but it is something that we have to be concerned with.

ALEX N. PRESS

You’ve mentioned the UK, Europe, and New Zealand. What is the most functional rail system in the world?

MADDOCK THOMAS

A lot of people would point to Switzerland, which has SBB [Swiss Federal Railways], a large state operator that provides a superb service to both passengers and freight operators. They also have regional rail lines that might be owned in some cases by private enterprises but predominantly by regional governments.

Switzerland is excellent in passenger service, with some of the most punctual and frequent service in the world. It’s very highly electrified, which has benefits for the environment, but it’s also just way better operationally: it’s cheaper to operate, it accelerates faster, it uses less energy, and the vehicles themselves last way longer because there aren’t explosions happening every few seconds inside of your motor.

There are a number of other railways that are fairly well operated. The Chinese national railway is pretty well operated. India’s national railway is doing an incredible job investing in infrastructure: they’ve gone from very minimally electrified, with a goal of being 100 percent electrified by 2025. Right now, they’re at over 80 percent. One of the most common criticisms of electrification in the United States is that you can’t fit double-stacked containers, but India has electrified, dedicated, double-stacked container corridors, and they work. So India is a good model of a successful naturally integrated plan for both passenger and freight rail.

All of these countries have issues and of course, India and the United States are at different points developmentally — so you’d think with the wealth of our nation and the amount of infrastructure we’ve built in other areas like our highways, we could have done that decades ago.

But we don’t have the national coordination or foresight that comes from that publicly owned system. Instead, we have a bunch of separate rail operators who don’t want to make those investments unless they’re subsidized.