NGFA joins petition to STB on use of private railcars 

By Max Fisher, Vice President, Treasurer and Chief Economist 

NGFA joined a petition requesting the Surface Transportation Board (STB)  enact regulations governing Class I railroads’ use of freight railcars supplied to them by rail car owners, shippers, and other non-railroad entities. 
 
Led by the North America Freight Car Association and drafted by the law office of Thomas W. Wilcox, the July 26 petition notes that approximately 73 percent of the railcars in service today are no longer owned by railroads, but are private railcars which are purchased or leased and maintained by non-railroad entities at little or no cost to the railroads that use them.

Non-railroad entities that supply private railcars to railroads have collectively invested tens of billions of dollars to acquire the railcars and they incur additional, ongoing costs to maintain them, in large part for their use by the Class I railroads to provide railroad freight service.

“While there are rules and policies in place by which suppliers of certain types of private railcars receive some compensation from railroads for their use of private railcars, current regulations and policies do not adequately protect this enormous investment by creating sufficient incentives for the Class I railroads to use private railcars efficiently,” the petition states. “When private railcars in the possession of Class I railroads are handled inefficiently due to irregular service or other actions by a railroad that result in private railcars being held too long in the railroad’s possession and control, the investment in those railcars is adversely affected and the business of the party supplying the railcars suffers.”  

The petition proposes that the STB should resolve the current imbalance by adopting a regulatory mechanism that utilizes existing principles governing demurrage and accessorial charges to provide greater incentives for railroads to utilize the private railcars in their possession more efficiently. 

“More efficient use of private railcars by railroads will protect the huge investment non-railroad entities have made acquiring and maintaining them and will result in the national railcar fleet being of a more rational size to utilize existing rail system capacity and meet demand,” the petition notes.