Farmers feel effects of railroad delays, regulators look for resolution

Federal regulators will hold hearings on April 26 and 27 to look into why rail capacity has become increasingly scarce in recent months. 
Closeup of BNSF logo on the side of a locomotive. Credit BNSF Railway.

LINCOLN, Neb. (KLKN) –  Some grain elevators are so full that farmers trying to sell crops are being turned away.  At the same time, flour and animal feed mills are halting production because they can’t get the grain they need.

Experts cite the issue as a result of the lack of trains to move the grain.

Railroads and railroad companies largely attribute delays to factors outside of their control, such as the broad supply chain issues and widespread labor shortages.

Shippers, regulators, and rail labor groups say the heart of the problem is that railroads got ahead of themselves when they eliminated nearly one-third of their workforce in recent years in the name of efficiency.

“The cuts were too severe,” said Max Fisher, chief economist for the National Grain and Feed Association.  “Now there’s no buffer capacity to respond to increases in demand or problems in weather or train derailments and things like that.  That buffer capacity that used to be in place is no longer there.”

Union Pacific, BNSF, and other major railroads say they are addressing the problems by hiring aggressively and asking customers to cut the number of carloads they are shipping to reduce congestion along the rail network.

“Railroads are not immune to challenges felt throughout the economy,” said Ted Greener, a spokesman for the Association of American Railroads trade group. “Railroads continue to take active measures to address these challenges, including labor shortages.”

Companies across the country are reporting shipping problems but trade groups say some of the worst rail issues are currently in the western United States.

In addition to the issues for farmers and grain processors, some ethanol plants have had to cut production while waiting for empty railcars to arrive.  A spokesman for the American Chemistry Council said Tuesday that more than half the companies it represents have reported railroad service problems this year.

Secretary of Agriculture Tom Vilsack recently joined the NGFA and Growth Energy trade groups in making formal complaints to the Surface Transportation Board that oversees rail service.  Many other groups also weighed in with concerns about recent job cuts and their impact on railroad capacity.

“All of this has directly contributed to where we are today — rail users experiencing serious deteriorations in rail service because, on too many parts of their networks, the railroads simply do not have a sufficient number of employees,” said Surface Transportation Board Chairman Martin Oberman.

Railroads have been hiring steadily since the economy rebounded sharply from the depths of the pandemic, and they have stepped up those efforts this year to help resolve the service problems and prepare for more volume.

Union Pacific said it has hired 450 additional workers since January and BNSF says it is on pace to hire 1,000 people this year.

Federal regulators will hold hearings on April 26 and 27 to look into why rail capacity has become increasingly scarce in recent months.

Categories: Nebraska News, News