Freight Rail Legislation Would Improve Market Competition for U.S. Wheat
This month, members of Congress, including the Chair of the House Transportation Committee introduced the Freight Rail Shipping Fair Market Act (FRSFMA). If adopted, the legislation will reauthorize the Surface Transportation Board (STB) and “create a fair marketplace” for railroads and shippers. A detailed look at what’s in the bill can be read here, while industry observations can be found here. The bill includes many updates that would provide fairer treatment for agricultural shippers, noted DTN.
Railroad users, wheat farmers, included, have been vocal about performance. Railroad executives and the shippers that depend on their service disagree on the reasons fueling the breakdown in reliability from the Class I railroads. The newly introduced legislation will go some way in creating a more even playing field for shippers, which will benefit farmers down the line.
Supporting Legislation
Most importantly, this bill would reauthorize the STB, a body that U.S. Wheat Associates (USW) supports and has worked with to put forward policies that benefit U.S. wheat farmers and their customers. The Agricultural Transportation Working Group (ATWG), of which USW is part, sent a letter to lawmakers encouraging the passage of FRSFMA. The letter was signed by 88 members of the ATWG, including the National Association of Wheat Growers (NAWG), with USW’s support.
According to the American Farm Bureau Federation, between the second quarter of 2021 and the second quarter of 2022, unfilled orders for grain cars went from 62,000 to 204,000, a 231% increase. During the same period, nearly 70% of grain car orders were 11 days overdue. Based on such challenges, the U.S. House of Representatives held two hearings and the STB held a hearing on poor freight rail performance since the start of the year. FRSFMA goes a long way to remedy the problems uncovered in those hearings.
Critical Components
Progressive Farmer, a news publication, explained some of the critical components of the bill that:
- Strengthen the STB’s authority to address freight rail service emergencies. It requires rail contracts to include service delivery standards and remedies while leaving details to be privately negotiated between parties.
- Provide the STB with a clear direction to resolve common carrier obligation complaints.
- Create financial incentives for both railroads and their customers to move railcars efficiently.
- Support freight railroad efforts to identify where freight is located on their systems while in transit.
- Adequately fund the STB to allow for quicker dispute resolution when petitioned.
Meaningful Freight Rail Reforms
The American Chemistry Council, a trade group, commended the legislation saying, “This important legislation contains many thoughtful solutions that complement the much-needed reforms being considered by the STB. We urge Congress and the STB to work together on meaningful reforms that will incentivize the railroads to provide reliable and competitive service and hold them accountable when they fail to deliver.”
The CEO of the Association of American Railroads (AAR) pushed back on the legislation saying that it provides “unjustified government mandates” but failed to address the challenges that continued to plague the Class I railroads over the last year.
The Freight Rail Shipping Fair Market Act will significantly improve the issues piling up for the U.S. Class I railroads. FRSFMA also improves the farmers’ standing when dealing with the railroads. USW and the Transportation Working Group (TWG) supports the passage of FRSFMA and will continue to promote the work of the STB. Wheat farmers and customers of U.S. wheat know the importance of reliable freight rail service; it would positively help set U.S. wheat apart from other suppliers. This bill goes further toward improving that service.
By USW Market Analyst Michael Anderson
