The Fertilizer Institute's Statement on Service Issues on the CSX Rail System

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October 12, 2017

The Fertilizer Institute issued the following statement regarding service issues on CSX Transportation, Inc.’s rail system. The statement summarizes formal comments submitted by TFI to the Surface Transportation Board at an October, 11, 2017, listening session in Washington, D.C.

The Fertilizer Institute (TFI) strongly supports the Board’s oversight of this matter. Many of our member companies’ operations have been negatively impacted by service issues on the CSX network. This situation has real world implications because half of all food grown around the world today is made possible through the use of fertilizer, and over half of all fertilizer used in the United States moves by rail.

Shortly after a change in leadership at CSX last March, TFI members began to experience service problems that gradually spread across the CSX network. Those problems included significant transit and switching delays, switching errors, and extended yard dwell times. In one specific case, transit times between two facilities more than doubled, and cars sat so long that the product was rejected. This same TFI member was forced to curtail production resulting in lost sales and costs estimated to be more than $500,000.

A major point of frustration was a decision by CSX to close longstanding interchanges without notice. As a result, cars were sent to these dead-end locations and it often took weeks before they were turned around to a working interchange. One of our members had cars in an endless loop for 2 months while the end-destination was just 10 miles away.

Another point of frustration has been CSX’s decision to cancel long-standing storage agreements with our members in its yards with no clear reason provided for the cancellations and very little time for our members who use these tracks to position cars close to plants, to adjust their operations. Similar to some of the interchanges suddenly taken out of service, these actions merit greater consideration and stakeholder consultation before making a decision.

As CSX’s service metrics have suffered, so has its customer communication. CSX eliminated or changed many of the marketing and operating personnel with whom our members ordinarily would interact, often with little or no notice. There are a lot of new people, new to moving fertilizer, and under pressure to implement a new operating plan.

To be fair to CSX, a few fortunate TFI members have not experienced service problems on the CSX system. But the consequences of CSX’s service problems for most TFI members have been substantial. TFI members have been compelled to shift traffic to other, more expensive and less efficient, transportation modes when possible.

What makes this situation particularly difficult to understand and accept is that it has been self-inflicted. CSX decided to introduce a radical new operating plan that involved closing yards, converting flat yards to hump yards, and reducing personnel over a short time period, without proper advance notice to its customers, and apparently without the full cooperation of many employees tasked with implementing the changeover. It is a case of trying to do too much, too quickly, and with too little communication. Unfortunately, it is the customer who is most dependent upon CSX—the captive customer with few or no options—who bears the brunt of the consequences with very little recourse.

This experience with CSX has exposed the inadequacy of the Board’s existing service remedies. Shortly after the service meltdown following the UP/SP merger, the Board adopted the rules and procedures codified at 49 C.F.R. Parts 1146 and 1147 to provide expedited relief for service emergencies and temporary relief for service inadequacies. These procedures are intended to allow a shipper to obtain direct service from an alternate railroad or indirect service through reciprocal switching and prescribed through routes in situations precisely like the recent CSX service problems. The expedited time frames for obtaining such relief are approximately 2 weeks up to 2 months. And yet not one CSX customer invoked these remedies. Why not?

The problem is that even these accelerated time frames are too long for a shipper whose plant is threatened with a shut down or whose customer may shutdown. Often, by the time a shutdown is imminent, we are talking about only days. Furthermore, even if the STB issues a decision within just 2 weeks from the filing of a petition, a lot still must happen before the shipper can file its petition, which means even more critical time is lost.

The Board should consider taking the following action before the next service crisis arises.

  • Enact an expedited remedy for the exercise of Board authority, on a one-time basis, to direct the incumbent railroad to prioritize cars needed to prevent a customer facility from shutting down.
  • Modify the current emergency service rules to focus on the imminent harm to the shipper due to the incumbent’s service problems and be willing to order an alternate railroad to provide service.
  • Expand reciprocal switching, consistent with the proposals in Ex Parte No. 711 (Sub-No. 1), so that more shippers will have alternatives available to them when service problems arise.

Finally, one cannot redress every service failure through emergency service orders, so the Board must be willing to award shippers damages caused by service failures when such failures are of the railroad’s own making. While the board does not have that authority with respect to contract transportation, it is within its authority to award damages for common carrier service issues. 

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