STB chairman wades into intermodal terminal congestion issues

WASHINGTON — Surface Transportation Board Chairman Martin J. Oberman today asked the Class I railroads to provide information on congestion at inland intermodal terminals, where international containers are stacking up faster than customers can receive them.

“I am particularly concerned about significant increases in container congestion at key U.S. terminals, and substantial charges being levied by the railroads for container storage at these terminals,” Oberman wrote in a letter to the chief executives of all seven Class I systems.

There has been a surge in imports through West Coast ports as retailers look to keep up with strong consumer demand and restock their warehouses and store shelves. Due to labor shortages and pandemic-related protocols, shippers have been slow to pick up and return containers to intermodal terminals, which has in turn crimped chassis supply and drayage capacity – and created a backlog at terminals.

Union Pacific and BNSF Railway have both taken steps this month to ease congestion at their terminals in the Chicago area. UP suspended inbound shipments from West Coast ports to its Global IV intermodal terminal in Chicago for a week, beginning on Sunday, and has temporarily reopened the idled Global III terminal in Rochelle, Ill., to store inbound containers [see “Union Pacific suspends inbound international container shipments …,” Trains News Wire, July 14, 2021].

BNSF, meanwhile, this week began limiting the flow of international containers from Southern California to Logistics Park Chicago terminal for two weeks [see “BNSF restricts flow of containers …,” News Wire, July 19, 2021].

Railroads have said the congestion issues have largely been beyond their control and that they are working with ports, steamship lines, shippers, and drayage companies to alleviate congestion.

Container Storage Fees in Spotlight

Shippers have complained that railroads have charged excessive demurrage fees for containers that are hopelessly buried within intermodal terminals.

“The Board has received numerous reports related to the length of time that containers are being held in rail yards, and the sizeable storage fees (“demurrage”) some customers have been required to pay in order to obtain release of containers bearing their shipments,” Oberman wrote. “These reports have come from shippers, both large and small, in addition to third-party logistics providers. I am particularly troubled about reports that Class I railroads are continuing to impose these charges even in circumstances when the receivers, as a practical matter, have no means to facilitate the release of their containers. Under these circumstances, demurrage fails to provide any constructive incentives, and perversely results in massive charges that can exceed the commercial value of the shipment.”

Oberman has asked the railroads to provide information on their demurrage policies, whether receivers are permitted to use their own chassis to retrieve their boxes, a description of any efforts made to reduce storage charges when the delay is beyond a shipper’s control, and the average daily volume of stored containers.

Regulation Issues

Intermodal is exempt from regulation, but shippers have asked the board to lift that exemption so that the STB’s demurrage policies and rules would apply to containers and trailers.

“It is important to underscore that, at this time, the Board has not initiated any actions with respect to the existing intermodal exemption,” Oberman wrote. “Because I recognize the significance of any such potential Board action, I am requesting the above information to facilitate careful consideration of this difficult situation and to assist the Board in determining whether any action may be warranted.”

The board’s primary concern, he wrote, is alleviating congestion and providing relief to shippers who can’t avoid high storage charges.

Oberman’s letter may not sit well with the Association of American Railroads. In April, Memphis business leaders asked the STB to look into intermodal congestion at the important rail gateway.

The AAR told Oberman to stay in his lane, noting that intermodal traffic is exempt from regulation. “​​Railroads are engaging with their customers, supply chain partners, and other stakeholders to do their part to meet demand to support the recovery of the national economy,” AAR counsel Timothy Strafford wrote. “Particularly at this critical time in the nation’s recovery, regulatory action by the STB that interfered with that effort or that hindered railroads’ ability to serve their customers could be very damaging.”

In a May letter, Oberman was critical of the AAR’s response. “It was not useful that AAR chose to focus entirely on a legal argument conveying its perception of the Board’s regulatory authority, as the existing legal and regulatory framework with respect to intermodal traffic is not in dispute,” he wrote. “Instead of a legal and policy argument about perceived limits on the Board’s ability to address the significant problems facing the shipping public, what was called for from AAR was a constructive response to the essence of the letter from the Memphis Chamber, which sought amelioration of what appear to be serious congestion and chassis shortages in the Memphis area.”