Editorial: Freight Rail Slowdown

Railroads are in an enviable position: They have more customers wanting to move more products than the few national carriers can handle. But a shortfall of investment in track, in railcars and in train crews has produced critical delays that hurt large swaths of the national economy, from farmers to auto manufacturers to intermodal shippers.

While the rail problems are nationwide, the situation across the northern tier of states — from Chicago west — has drawn most of the attention. Shipments from the booming oil fields in North Dakota are pushing other freight, much of it perishable grain, to sidetracks.

Minnesota, Montana and North and South Dakota are major grain growers, and they export a large percentage of their production to grow-ing markets in Asia through ports in the Pacific Northwest.

It’s been a good year for grain farmers in those states, which means big crops. Those same big crops, unfortunately, put pressure on prices and shipping delays add to the pain.

According to the U.S. Agriculture Department’s Sept. 4 grain transportation report, “rail-service delays have already cost U.S. grain producers in some areas millions of dollars in 2014.”

“This year’s fall harvest is expected to be challenging because of rail-service delays, a bumper crop and limited storage,” the report continued. “Rail-service delays are expected to continue because of brisk competition for limited rail capacity from oil, coal, intermodal, and cars resulting in rail congestion.”

The Hub Group, a large intermodal carrier, said last week that rail delays cut into its profits, while the Alliance of Automobile Manufacturers said its members “have been seeing systematic problems that have been worsening,” due to a lack of railcars to carry new automobiles and delays en route once cars are loaded.

Last week, the Senate Commerce, Science and Transportation Committee held a hearing on the problem, and members questioned Edward Hamberger, CEO of the American Association of Railroads, about why rail carriers haven’t provided better service.

Hamberger defended the rails, saying they were blindsided. He also said $26 billion is being invested this year.

Failure to anticipate demand and to make more timely investments makes the railroads’ claim that “Freight Rail Works” sound pretty hollow.