ILTA is working with interested member companies to develop comments to the Surface Transportation Board egarding issues of concern related to first mile/last mile service by Class 1 railroads serving terminals.
The purpose of the ILTA comments will be to highlight examples and impacts of performance issues during first mile/last mile service and provide recommendations for tracking metrics and reporting. ILTA plans to explain that our industry supports policies that enhance the efficiency and reliability of supply chains. We believe that we, as terminal companies, have the responsibility to be accountable to our supply chain partners, and we believe our partners should be accountable to us as well. ILTA recognizes that the performance of Class I railroads is crucial to a fluid and effective supply chain. Arguably the most consequential and fragile portion of any line haul is the portion known as “first mile/last mile.” Delays and processing errors of railcars enroute to destination can have cascading consequences with profound impacts on shippers and receiving facilities. It is not uncommon for missed switches, partial switches or incorrectly performed switches to have both immediate impacts and cascading ripple effects.
While first mile/last mile challenges have long been prevalent, they have been exacerbated in recent years by the adoption of cost-saving measures collectively classified as Precision Scheduled Railroading. Under PSR, railroads have cut staff and limited locomotive availability, leaving them with significantly reduced capacity to allow them to respond to disruptions. This is a matter of particular concern in cases where the disruption results from the railroad’s own performance. Frequently, terminal operators are forced to commit added labor and expend other resources to compensate for these disruptions.
The net effect is that, while the railroad can report higher efficiencies and operating ratios, in fact it has merely shifted a portion of its operational burdens and costs to terminal operators and other parties. This dynamic is clearly detrimental to the efficient functioning of the entire supply chain.
ILTA believes that only action by the STB can counteract the unintended, perverse incentives that PSR has introduced to first mile/last mMile interactions between railroads and terminals. In most interactions between private sector companies, market forces provide adequate mechanisms to incentivize performance and address non-performance. Because railroads have a special status as regulated monopolies, terminal operators have limited independent ability to address non-performance issues.The STB, however, has the authority and the ability to significantly improve the overall efficiency and reliability of supply chains involving rail service to by instituting a manageable number of first mile/last mile performance metrics. By forcing Class I carriers to be responsible for the entirety of the line haul by which their tariff compensates them, the financial burdens, penalties and claims will be properly placed with the accountable parties.
If your company would like to be involved in the review and development of these comments, please contact Kathryn Clay at kclay@ilta.org.