News / New STB chair orders railway CEOs to attend forum on declining volumes

Robert Primus, the new chairman of the US Surface Transportation Board (STB), has called in the CEOs of the North American Class I rail carriers to discuss the decline of rail traffic and how to revive it.

He has set a two-day hearing for 16 and 17 September at the STB Washington HQ.

Citing a 28% decline in carload traffic over the past 10 years, the STB wants to hear from the chiefs of all six railways about their investment plans and how they intend to grow their business.

“The board has an interest in the health and growth of the industry and the need for rail customers to move their goods efficiently and reliably,” the STB wrote in its notice.

It went on to express a desire to explore “how industry participants are strategising and innovating to reverse this trend and achieve freight rail growth”, and wants to discuss “the challenges and effects associated with a failure to grow”.

In addition to the CEOs of the Class I railways, the STB has also invited short-rail players, customers, suppliers and rail labour to express their views and plans.

Business strategies and plans to grow volumes and revenues are not strictly within the purview of the STB, but the regulator has taken a strong line on service issues in recent years. In late 2022, it hauled in the then Union Pacific chief, Lance Fritz, for a two-day hearing on UP’s poor service levels and excessive use of embargoes.

Martin Oberman, who held the STB chair until the spring, has warned rail carriers not to pursue an aggressive precision scheduled railroading strategy, which has been widely associated with deteriorating service. He indicated that the regulator might consider a broad push for reciprocal switching, which would give shippers more choice of carriers.

Mr Primus has allegedly called the hearing without a vote by the STB board, which has prompted speculation that he might adopt this cause as a signature initiative of his tenure. The rail carriers are said to be viewing him with misgiving, as he is supposedly close to labour organisations. Several unions have called him a “true friend”, and described him as “vehemently opposed” to train crew size reductions.

Rail volumes have contracted. Following a drop of almost 3% in 2022, it was down 2.3% last year. Intermodal volumes shrank 4.9%, wiping out a 0.7% gain over 2022’s carload traffic. Compared with 2019, traffic was down 8.7%, with drops of 7.7% and 9.8%, respectively, for intermodal and carload volumes.

Last year, with the exception of CPKC, which eked out a modest 0.1% increase in volumes over 2022, all Class I carriers reported diminished volumes, ranging from 5.7% at BNSF to 1% at Union Pacific.

Some carriers have blamed a slump in coal shipments: between 2019 and last year, coal traffic shrank 14.5%.

And there is little cause for optimism. The latest economic outlook from the Association of American Railroads shows the three-month average of the Index of Consumer Confidence at its lowest level in almost two years.