Tag Archives: STB

STB poised to decide reciprocal switching rules as shippers, railroads remain at odds

I think this time around all the good arguments are on the side of the shippers. Since moving to various forms of precision scheduled railroading (PSR), railroads have been passing longer delays on to customers. They don’t have the cover of good servi8ce right now, and I bet they lose on this one.

It seems clear that the major rails have leaned out their systems so much that they can’t respond to anyone’s exceptional needs. A shift to reciprocal shipping for a larger group of customers would help that out, and foster more price competition as well as simple competition for cargoes.

Rails can’t argue that they are making investments in new lines to serve more customers. What investment there is in rail infrastructure is on maintenance, and on expanding trunk and yard lines where great congestion has occurred. It’s almost impossible for a new business to get a rail spur, let alone service at a spur. Rails don’t see themselves providing this kind of service anymore, though they continue to support those who have it. Letting other rails use the rail lines via reciprocal switching would help the shippers a lot. It would induce competition where there isn’t any now.

The rails have lots of ways to react to new rules. All the schemes contemplated would allow fair compensation for the use by other lines. And I bet there will be some limitations in who can negotiate shipper reciprocal switching rights. So big rails will continue to have enough leverage to make it a business option.

Big rails need to staff up and get more rolling stock anyway. They have cut too close to the bone to provide good service today, and everyone from ag shippers to container shippers knows it. they should make the system and infrastructure work for the customers.

Sarah Zimmerman Editor

STB poised to decide reciprocal switching rules as shippers, railroads remain at odds | Supply Chain Dive

STB chairman wants Norfolk Southern to explain deteriorating service

On the heels of a letter to CSX rail seeking explanations for poor service, the chair of the STB wants explanations from NSR. Why have rails in the East been letting their service level decline?

One explanation that’s been offered is a shortage of labor. While it’s true that rail labor is skilled and highly paid work, in the current situation there are plenty of people looking for better jobs. Rail offers those. And with unions to help, training should be available. So some effort should produce more workers, well trained. It doesn’t seem like a good explanation to me.

Perhaps the rail managements are thinking, “If everything else is congested, no one will notice if we have a little congestion too.” Another way to put it: lack of attention, and no desire to take action.

One interesting item in the article is the possibility of reciprocal switching in the US. Canada has had it for years, but the number of rails in Canada is smaller. The generic name for the practice is open switching.

The idea is that a shipper could take advantage of competition between rails if it were allowed to transfer shipments from one rail to another at specific locations where the rails met. There would be charges for the interchange to be sure, but the result might be a lower total cost of shipment.

There are significant hurdles to implement open switching. Workers have to be trained, and there would be multiple inspections required for safety and compatibility. And equipment would be needed to support interchange. Who would pay for it? These are bigger concerns in the US where there are six Class I rails, any pair of whom might be candidates for open switching practice at certain locations.

It’s not clear that allowing open switching or reciprocal switching as the STB calls it would really foster much competitive increase. However, there could be times, such as when there is severe congestion at an origin or destination, that open switching capability would save the day for many shippers.

It’s an example of meeting the need for resilience in our rail-using supply chains. I think the competitiveness aspect is fine, but the overall resilience is a much greater factor. It would put rails in a position to challenge trucking if switching could be done smoothly, even with charges.

Another view of reciprocal switching is presented in the final article below. It’s from the American Association of Railroads President, via Logistics Management magazine. He gives a positive view of rails’ contributions to the great supply chain jam-up of 2021, and talks more extensively about the ongoing discussion about reciprocal switching. It seems rails are not enthused about it.

Joanna Marsh Friday, November 26, 2021

STB chairman wants Norfolk Southern to explain deteriorating service – FreightWaves

Joanna Marsh Friday, October 1, 2021

No simple swap: Ins and outs of reciprocal switching on US railroads – FreightWaves

By Jeff Berman, Group News Editor · November 29, 2021

AAR President and CEO Jefferies addresses myriad topics at RailTrends – Logistics Management