Op-Ed: Proposed rail regulations would slow down Santa’s sleigh

For the millions of Americans in the middle of holiday shopping, supply chain backlogs are adding misery to what should be an enjoyable experience. Online shopping is expected to surpass $200 billion this year. The strain of historic sales combined with international pandemic restrictions, inflationary pressures, and labor shortages has meant that products are taking additional weeks (if not months) to reach their destination.

This perfect storm has resulted in a massive traffic jam of freight trying to move through the system, particularly at seaports. Policymakers must ensure that when congestion clears, America’s transportation system can get the massive bundles of goods to the shelves and manufacturers as soon as possible. That’ll mean rethinking the onerous proposed regulations that threaten to cripple transportation modes – particularly freight railroads. With the right mix of policies, delays needn’t slow down Santa’s sleigh.

Freight trains may be handling historic loads, but they can (at least for the time being) have an appropriate number of workers manning operations. Freight operations can hire on enough workers to ensure basic safety without having to cut back overall operations due to the national labor shortage.

This may soon change, though, if the Biden administration moves forward with minimum “crew size rules.” Washington Examiner White House reporter Christian Datoc reports, “the Biden administration is seeking to implement a regulation first proposed in 2016 by the Obama administration that would permanently require all freight trains to operate with traditional engineer-conductor teams.” The President appears determined to come through on a campaign promise made to the International Association of Sheet Metal, Air, Rail, and Transportation Workers in 2020: “I'm going to keep fighting for those crews, requiring two-person crews on freight trains, protecting transit workers from assault, making sure that everyone has what they need to safely do their job.”

The issue, though, is that there’s no real evidence that two-person crews are required to safely keep the trains running. In fact, when the Federal Railroad Administration (FRA) first proposed the rule that would mandate two-member crews, it admitted it “cannot provide reliable or conclusive statistical data to suggest whether one-person crew operations are generally safer or less safe than multiple-person crew operations.” Safety is key, as the FRA is a safety regulator by definition.

Evidence to date shows that equipment and track improvements, as well as automation, are far more important to rail safety than crew size. Mercatus Center senior research fellow Patrick McLaughlin and the late Jerry Ellig concluded in a 2016 analysis that declining freight accidents since the seventies is due to deregulation that has allowed companies to invest in key capital improvements.

In their push to tighten requirements on railroads, policymakers ignore lines that have operated successfully for decades with one-person crews. For example, the Indiana Rail Road has operated a 250-mile regional railroad across Indiana and Illinois for more than 20 years and relies heavily on one-person crews without compromising safety in the process.

The line’s executives explain that “a one-person crew is ideal for trains that don't need any intermediate switching or require the engineer to leave the cab for any reason,” giving rise to efficiencies and cost savings that aren’t possible with increased labor requirements.

At a time of 6% inflation and historic backlogs, these efficiencies and cost savings are needed now more than ever. President Biden should acknowledge that, although he promised a two-person crew mandate on the campaign trail, this misguided policy would only succeed in making rail less competitive over time, which would lead to even less efficient supply chains.

The Biden administration needs to take a step back and let America’s infrastructure system end the worst shortages in our lifetimes, rather than compound the problem with needless prescriptions.

Program Guide

  • Market Wrap
    5:00PM - 6:00PM
     
    Each day, Moe Ansari summarizes the markets' activity —what happened and why—   >>
     
  • The Wise Money Guys
    6:00PM - 7:00PM
     
    The Wise Money Guys with hosts, Ed Outland, Chief Executive Officer and Owner   >>
     
  • Motley Fool Money
    7:00PM - 8:00PM
     
    Join host Chris Hill and a panel of Motley Fool investment analysts each week   >>
     

See the Full Program Guide