STB Proposes Rule to Improve Poor Service for Captive Rail Movements (Docket EP 711)

The STB has issued a Notice of Proposed Rulemaking to provide rail customers with access to reciprocal switching as a remedy for poor service. The proposed regulations provide a streamlined path for obtaining a reciprocal switching agreement when service to a terminal area  shipper fails to meet any of three performance standards.

The proposed standards reflect a minimal level of rail service below which a shipper would be entitled to relief. Each standard provides an independent path for a petition to obtain a reciprocal switching agreement. The standards employ Board-defined terms which can be applied across all Class I rail carriers and their affiliated companies. To readily monitor and measure rail service the rule would require all Class I railroads to provide their customers with the historical data for these service metrics within seven days of a customer’s request. All three Service metrics would be standardized across all Class I railroads.

The three proposed service standards are:

1. Service Reliability:

   • The measure of a Class I railroad’s success in delivering a shipment by the Original Estimated Time of Arrival (OETA) provided to the shipper. Actual performance would be compared to railroads OETA provided to the shipper over a lane for 12 consecutive weeks. One proposed approach would be that at least 60% of the shipments for a movement must arrive within 24 hours of the OETA for minimum service reliability during the first year after the rules effective date. This would increase to 70% during the second year after the rules effective date.

2. Service Consistency:

   • The measure of a railroad’s success in maintaining, over time, the railroad’s efficiency in moving a shipment through the rail system. This standard is based on the transit time for a shipment. For loaded cars, unit trains and empties, a petitioner would be eligible for relief if the average transit time for a shipment increased by a certain percentage (potentially 20% to 25%) as compared to the average transit time for the same 12-week period during the previous year.

3. Inadequate Local Service:

   • This service metric provides rail customers with information on all important first mile/last mile service. Local service would be deemed inadequate if the railroad had an Industry Spot and Pull (ISP) success rate of less than 80% over a period of twelve consecutive weeks in performing local deliveries and pick-ups. The ISP success rate measures whether the railroad provides service within its customary operating window for the affected shipper, which in no case can exceed 12 hours.   

Under the proposed rule a reciprocal switching agreement would be for a minimum period of two years and up to a maximum of four years.

The STB is to be commended for developing this process for assisting rail shippers with inadequate service. There are, however, several issues that need to be addressed and finalized in the proposed rulemaking:

1. The percentages that are used to determine what is acceptable service in each of the three-service metrics.

2. The reciprocal switching fee that the incumbent railroad is allowed to charge an alternate railroad. Setting switch fees based on the cost of service is being considered along with other options. Having pre-determined switch fees is a major part of the inter-switching regulations in Canada but pre-determined switch fees are not being considered in the STB’s proposed ruling.

3. The STB has no authority over contract movements, and it needs to be determined if the proposed ruling would apply to traffic that is provided under rail transportation contracts.

4. It needs to be determined whether the service metrics can consider performance data of railroads under rail contracts or are limited to service for tariff movements.

Comments on the proposed rulemaking are due by October 23, 2023. Rail shippers are encouraged to review the Proposed Rulemaking and submit comments to influence the final outcome of the regulation as this will likely have a big impact on a very large number of shippers.