(The following article by Pete Bach was posted on the Appleton Post-Crescent website on August 17.)
APPLETON, Wisc. — Officials at Coating Excellence International of Wrightstown would like to move more materials by rail, but dissatisfaction with the service prevented it.
“Railroads are miserable to deal with,” said CEI president Mike Nowak. “You can’t even get them to call back for a quote.”
Nowak, who says his company relies mainly on trucks to ship goods in and out, is far from alone in his disdain for railroad service, whose antitrust status is the target of pending legislation from U.S. Rep. Mark Green, R-Hobart.
Green’s bill is aimed at leveling the playing field between how railroads charge for their service compared to other shipping modes. The legislation seeks to repeal antitrust exemptions that date to the 1920s when railroads were much more heavily regulated.
Patrick Schillinger, president of the Neenah-based Wisconsin Paper Council, said railroads have too long enjoyed near-monopoly status and their frequent price increases coupled with major service decreases hits the state’s paper industry especially hard.
“The paper industry in Wisconsin is being crippled by double and in some cases triple percentage rate increases by railroads,” he said.
In many cases, the alternative to rail service — transportation by truck — is not economically viable for many companies, Schillinger said.
State Railroad Commissioner Rodney Kreunen declined extensive comment on Green’s proposal, saying he was unfamiliar with the bill, which is pending in a House committee. He did say big Class I railroads like the Canadian National, unlike the Wisconsin Central which it purchased in October 2001, “are not geared to handle smaller, fewer loads short distances.”
Recent rail changes have also hit Kaukauna-based Thilmany hard. An irregular pattern of shipments frequently leads to “bunching” of rail cars into company yards instead of a few at a time, said Bill Sotka, logistics manager for Thilmany’s Wisconsin operations.
The Canadian National Railway Co., which supplies the company’s wood pulp products, is proposing a major policy shift in 2006 — to give the company only one day to unload freight cars onsite carrying pulp material instead of the current two days to unload and release the rail cars back to the CN, Sotka said.
That change could cost Thilmany a potentially extra $1 million in “demurrage” charges, a form of penalty imposed if the task is not performed on time, he said.
CN, the only major or Class I railroad to serve eastern Wisconsin, has instituted changes in the business model since assuming the Wisconsin Central territory fours years ago, said Mark Hallman, Toronto, CN’s system director of media relations.
Hallman conceded that those changes may be difficult for some to accept, but he said they stem from railroad attempts to deal with customers in a responsible manner.
“We don’t have as much service as we used to — in some cases it’s three days instead of five. That’s dictated by the volume of the business,” he said.
And when customers are asked to unload more quickly, it demonstrates the higher degree of discipline the CN brings to business, he said. “When you’re turning your cars more quickly you’re increasing the car supply.”
Manufacturers aren’t the only ones who have seen costs rise due to rail changes, said Luke Punzenberger, who is a press aide to Green. He said the utility and agriculture sectors are concerned about higher costs for grain, coal and chemical shipments.
John Wilkinson, the president and chief executive officer of the Town of Neenah-based WPG Shippers Association, is working with a consortium to put together a supply chain analysis of the rail industry.
An erosion of rail service, higher costs, discontinuation of some service lanes, less frequency and lower quality service all have become factors with which shippers must deal, he said.
“It could have a very serious impact on the economy in Wisconsin,” Wilkinson said. “If the public doesn’t start supporting laws such as what Mark Green is doing we’re going to be in a world of hurt.”