Two congressmen have initiated government analyses of precision scheduled railroading’s effects on industry. On May 12, Rep. Peter DeFazio, D-Ore., chair of the House Committee on Transportation and Infrastructure, and Rep. Donald Payne Jr., D-N.J., chair of the Subcommittee on Railroads, Pipelines, and Hazardous Materials, asked the Government Accountability Office to review PSR’s impact on workers, safety, and shippers. The congressmen also seek a GAO investigation into how PSR affects 10 practices, or metrics railroads use, including changes in demurrage fees and reliability of service to freight shippers.
Many North American Class I railroads have used PSR since 2019 to streamline operations. The PSR model shifted focus from moving entire trains to moving cars. Trains are always moving and cars are picked up on schedule, regardless of train length. Shippers feel the pinch. “Instead of giving 5-7 days to load the cars [the railroads] give very short periods—sometimes just overnight,” says Billy Johnson, ISRI’s chief lobbyist.
Under PSR, the railroad industry reduced or removed credit days for system and private railcars, and imposed significant demurrage charges. This led to bunching of cars, unreliable car delivery, and other charges. “[Railroads] were charging shippers demurrage off of incorrect invoices,” Johnson explains, likening it to receiving a receipt from the grocery store with charges for unpurchased items. “Sometimes [the railroads] had the wrong number of cars, or the wrong day [cars] were shipped,” he says. “They would say that they sent [a shipper] 10 cars. [The shipper] only received five, but was charged storage for the five they never received.”
In May 2019, the Surface Transportation Board held hearings with Class I railroads, shippers, and ISRI regarding rail practices and demurrage. “ISRI made a lot of good cases,” Johnson says. In June 2019, ISRI members met STB board members to share how demurrage charges affect their businesses.
In April, the STB issued its final rule on Demurrage Billing Requirements. “Now the railroads must provide accurate information in one place,” Johnson says. “Before that, the railroads wouldn’t make invoices easily available for shippers to challenge.”
The upcoming GAO study will examine whether PSR has affected long-term capital investments; reduced rail infrastructure; affected service for some shippers; and caused layoffs and safety issues. “PSR, in practice, means the bottom line drives the decisions,” DeFazio notes in a press release. “Longer trains, unhappy shippers, and a workforce pushed to do more with less is not a model to chase after — unless you’re on Wall Street.”
ISRI anticipates the study will help shed light on its members’ issues and the problematic operations of the railroad industry. “We want to reinforce that the railroads were overcharging shippers and not letting them have a remedy for it,” Johnson says. The study may also provide an opportunity for ISRI and its members to continue advocating for the removal of scrap as an exempt commodity, so recyclers would be treated like other shippers. The rail industry has undergone many changes since the Interstate Commerce Commission, the STB’s predecessor agency, adopted commodity exemptions in the late 1980s. So has recycling. ISRI hopes the GAO study will support its arguments in favor of updating the rules.
“This report is really good because an independent government agency will be doing a historical look at the railroad industry as it changed over time,” Johnson says. “If we get a chance at it, we’re going to make the point that railroads have changed, and industry manufacturing has changed, and the exemptions need to change to reflect the current time.”
