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Survey of Chemical Distributors Reveals Ongoing Challenges in Freight Rail Service

The Alliance for Chemical Distribution (ACD), formerly the National Association of Chemical Distributors, released the results of its most recent survey on members’ rail use and issues during the final half of 2023. The survey was conducted by John Dunham & Associates.

The chemical industry, one of the largest customers of freight rail in both volume and revenue, depends on freight rail to deliver the raw materials it needs. With regard to rail transportation in the second half of 2023, the ACD member survey found:

  • Nearly half (43.8%) of respondents said railroads only sometimes notified the companies when railroads were unable to make a delivery date; almost one-quarter (22.9%) said they were not notified at all when delivery dates were missed or changed.
  • Over three-fourths of respondents (77.1%) said rail service was about the same when compared with the first half of 2023; 10.4% reported it has worsened.
  • Freight rail is underutilized due to service issues. Based on the survey, 35% of chemical distribution members would increase their use of rail service if the service were more reliable.

“Moving goods through rail is critical to chemical distribution as it is the safest form of transportation for certain materials,” said Eric R. Byer, president and CEO of ACD. “The U.S. is reliant on rail to transport chemicals such as chlorine and other chemicals essential to every industry including public safety, infrastructure, agriculture, and transportation. Unfortunately, freight rail service has significantly deteriorated in recent years and the most recent ACD freight rail survey shows members continue to struggle to receive consistent, on-time rail service.” 

Demurrage – the charge for the detention of rail cars –continues to be a problem. The charge is levied either to the shipper for holding the car, or to a connecting railroad, and it is often charged to the shipper even if delays are due to late shipments by the railroad. Thirty-one percent of respondents report that they received more demurrage charges in the second half of 2023 than during the same period last year. They also stated that about 13% of the charges were in error, and that they were successful in disputing an average of 7.4% of the charges that they received. According to survey participants, the majority of those disputes (80%) were not resolved in a timely manner, diverting important time and resources from overall company operations to contest inaccurate charges.

The ACD reports that the Surface Transportation Board (STB) has taken several measures to address rail service issues, including adopting a rule to require more clarity on demurrage invoices; launching an inquiry on first mile/last mile rail service; and reopening a rulemaking on reciprocal switching. In 2022, the STB continued its oversight, holding a two-day hearing on general freight rail service concerns, followed by a hearing on the increased use of embargoes by Class I railroads. The STB also issued a notice of proposed rulemaking to update the emergency service rules to provide relief for shippers in situations that require immediate action. ACD supports Congress giving the STB additional authority to ensure chemical distributors and other shippers receive adequate rail service.

Additionally, ACD stated that it supports the Railway Safety Act of 2023 and the RAIL Act as critical tools to address freight rail operational challenges in order to ensure a safe and reliable freight rail system in the years to come.

Learn more about ACD at www.acd-chem.com

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