Dive Brief:
- The Surface Transportation Board (STB) is looking into fees that Norfolk Southern and Union Pacific have begun charging shippers relating to the railroads' transitions to precision scheduled railroading (PSR), The Wall Street Journal reported.
- Both railroads, among others, are charging shippers fees for delays that may hold up the system like slow unloading or late pickups.
- At an industry conference this week, STB Chair Ann Begeman said that it may be unfair to charge shippers for their lateness when the railroads take no such penalty for the same offense, according to The Wall Street Journal.
Dive Insight:
In theory, PSR offers a more efficient system for shippers and decreases dwell time, which is at the heart of the new fees. But the model only succeeds if all parties play their part and cars keep moving. Plus, history does not offer many examples of successful rollouts.
The fees in question are meant to help avoid the nightmare scenario of the CSX transition, which was plagued by last-minute service changes, lost cars and delayed deliveries. But railroads do not have a reputation among shippers for acting in the customer's best interest, so these fees are likely to face a rocky reception.
Union Pacific announced its intent to transition to PSR in October, and an announcement regarding service changes is expected from Norfolk Southern next month, according to the Journal.
The STB is reportedly keeping in close touch with Union Pacific through the transition process, checking in weekly by phone.
Beyond that, Begeman has requested that all railroads report the fees they collect to the agency so that it can keep better track and make sure they are "fair," reported the Journal.
That being said, nothing is likely to come of that request in the near-term, because the STB is affected by the ongoing government shutdown and all its activities are suspended.
