Scrap Industry Takes on the Railroads

The changes in the way the railroads service and charge their customers has come under intense scrutiny over the last couple of years, by both the Surface Transportation Board (STB) and the Congress.

However, in January 2019, most Class 1 railroads implemented what is referred to as ‘precision rail scheduling’ accompanied by very large demurrage charges. Precision railroad scheduling requires railcars to be loaded and released usually in one day regardless of whether the railcar was delivered on a weekday or weekend. 

Why it is important:
It enables the railroads to own and use less railcars. It also enables the railroads to charge demurrage fees to those shippers that cannot load and release railcars in a 24 hour period. The additional demurrage charges are raising the profits of the railroad companies significantly to the delight of Wall Street.

In addition, ferrous scrap is currently exempt from regulatory (i.e., Surface Transportation Board) oversight which leaves the ferrous scrap industry with virtually no remedies in situations where rail customers experience poor rail service or excessive fees. While the STB’s Office of Public Assistance is certainly helpful, they lack the statutory authority to initiate an investigation of railroad actions or take enforcement action against the railroads.

  • What has the STB done? The STB has taken action by questioning the leaders of the railroads about the resulting service disruptions and excessive charges requiring regular reports from the railroads on their progress in properly servicing customers.
  • What’s ISRI done? ISRI met with the STB several times as well as with leaders in the Congress to describe the negative impacts on the scrap recycling industry as a result of these railroading changes.
  • Did the STB respond to ISRI? Yes, the STB responded. It will hold a hearing on this subject on May 22 where a myriad of industries will tell their stories about how these new changes have adversely impacted their rail service and their business.
  • What has ISRI’s involvement been? In 2016, ISRI filed comments with the STB requesting that the rail exemption for ferrous scrap be revoked. However, following the 2016 Presidential Elections, the STB lost its quorum while waiting for nominees to be confirmed for their posts. Finally, in late 2018, three STB members were confirmed by the Senate and took their new posts only to be furloughed by the government shutdown. Luckily, three out of five Board Members are now at work looking at the railroad industry’s practices and clearing the substantial backlog of regulatory proceedings.
  • Did ISRI seek help from the STB and its new quorum? Yes. ISRI petitioned the STB earlier in 2019 to restart the revocation proceedings and requested the opportunity to educate the STB’s new Board Members both about the proceeding and the scrap recycling industry. ISRI’s petition was almost immediately granted and ISRI and several of our members will be meeting with the STB in the coming months.

For more information about ISRI’s advocacy against unfair treatment from the railroads, please contact Billy Johnson or call (202) 662-8548.


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