WASHINGTON – Bob Zelenka, executive director of the Minnesota Grain and Feed Association, sums up the current rail shipping conditions for Minnesota grain farmers in a single sentence:
“What a difference a year makes.”
A transportation crisis driven by more crude oil trains and bitterly cold weather in 2013-2014 turned into a reasonably smooth ride in 2014-2015.
Railroad investments in tracks and manpower helped.
But without this year’s confluence of a longer harvest, milder winter, slightly depressed yields and low crop prices, commodity shippers could still be at risk of service problems, especially as new government efforts to avoid fiery derailments of oil trains threaten to once again slow down traffic on the state’s rails.
In the harvest season of 2013-2014, cold weather and burgeoning rail shipments of crude oil from North Dakota’s Bakken fields, as well as jumps in other train traffic, delayed grain deliveries, not to mention shipments of coal to power companies trying to generate electricity.
Now, a new study conducted by the University of Minnesota for the Soy Transportation Coalition shows grain shippers with declining past due orders and shorter delays for trains that are behind schedule.
That, said Soy Coalition director Mike Steenhoek, is partly a function of the rail industry’s investments in tracks and manpower.
“We did see the railroads respond,” he said.
But in 2014-2015, the harvest season stretched out into a milder winter. Meanwhile, many corn farmers faced with shrinking demand and lower prices chose not to ship their products.
Any change could portend more shipping problems as new oil train speed restrictions take effect in urban areas.
“That would add congestion to an already congested network,” Zelenka said.
Some grain and feed association members are concerned about new slowdowns in commodity deliveries at the very moment old slowdowns seem to be abating, Zelenka said. But they also operate grain elevators alongside tracks where oil trains loaded with explosive Bakken crude pass. They must weigh their worries.
Oil trains must go slower
So must the government. It has ordered Bakken oil trains to slow down to 40 miles per hour in heavily populated areas and ordered that trains with 70 or more oil tank cars eventually be equipped with electronic braking systems. Those that are not will eventually be restricted to speeds not exceeding 30 mph.
BNSF Railway, Minnesota’s major hauler of Bakken crude, did not respond to a Star Tribune request for comment. The railroad has said previously that it voluntarily imposes a 35 mph speed limit on oil trains in heavily populated areas.
Canadian Pacific, Minnesota’s other principal oil carrier, deferred comment to the Association of American Railroads (AAR), an industry trade group.
The rail industry has complained emphatically about installing electronic braking systems.
Electronically controlled pneumatic brakes, the formal name of the technology, “will not prevent accidents as the public expects,” AAR spokesman Ed Greenberg said. If trains without electronic brakes are forced to move at no more than 30 mph, Greenberg added, “slow-moving trains will impact the flow of the network and may add more trains to the system, which will result in additional congestion.”
Railroads can’t order tank car makers to install electronic brakes, Greenberg said. So if tank car makers do not, oil trains speeds will decline across every mile of track everywhere.
Supporters of reform counter that it will be the industry that causes the slowdowns and gums up the system by refusing to install the brakes that the government has mandated in order to run oil trains fast.
“I’m not sure slowing down from to 50 or 40 miles per hour is going to throw the rail system off,” said U.S. Sen. Al Franken, D-Minn. He called the rail industry’s reluctance to install electronic brakes “self-interested.”
‘A cascading effect’
“You have to have a balancing act between safety and efficiency,” explained the Soy Coalition’s Steenhoek. “Safety is paramount. But if you’re a congested system, slow speeds in urban areas can have a negative impact on the entire system. It’s a cascading effect.”
In an interview, Franken said that the government and the railroads should consider rerouting oil trains around urban areas to keep things moving.
“Safety is really important,” he said. “But efficiency is part of this as well as safety.”
Sen. Amy Klobuchar, D-Minn., said in an interview that the balance between safety and efficiency can be struck with better technology to monitor rail shipments and by building more track.
Franken and Klobuchar both favor measures that they say will make railroads more accountable for “efficient and reliable” commodity shipments even with the oil train rules. Both are concerned about what they call “captive shipping,” farmers and other business people restricted to only one or two rail companies and subject to rate increases that those companies impose.
Klobuchar and Franken support laws that shift the burden of proof for rate increases to railroads instead of the current system that generally requires customers to prove them unfair.
But for railroads, one of the most controversial issues in commodity shipping reform — at least as controversial as electronic brakes on oil trains — is something Klobuchar and Franken refer to as “competitive switching” and which the rail industry calls “forced access.” Within limits, the process lets farmers choose different rail carriers for their products and lets those new rail carriers operate on another railroad’s tracks for short distances.
Klobuchar said she will soon be introducing legislation “to get rid of the antitrust exemption for railroads.”
Franken is cosponsor of the Rail Shipper Fairness Act of 2015 introduced by Sen. Tammy Baldwin, D-Wis. Among other things, the bill would allow “competitive switching” and add two new members with rail shipping and consumer advocacy experience to the U.S. Surface Transportation Board.
Neither approach pleases the rail industry.
“It will lead to local service disruptions, degrade rail service throughout the system and result in a decline in rail productivity,” the AAR’s Greenberg said. “It will lead to increased costs and reduced efficiencies for America’s rail industry.”