CHICAGO — Shipping scrap by rail poses a variety of challenges, and some new stumbling blocks could emerge in the near future, an executive at one of North America’s largest providers of rail products and services said.
More rail cars are being built to move supplies in and out of energy plays, leaving less capacity to build scrap gondolas, Jeffrey Miller, business development manager at Albertville, Ala.-based Progress Rail Services Corp., said at the Platts 2nd Annual Scrap Seminar in Chicago.
"Steel mills manage as best as they can with large shippers," he said, but fewer foundries are getting scrap in by rail because while they use less material than mills, the timing of deliveries can be less reliable.
Additionally, it’s often necessary to clean rail cars because gondolas can be one-third filled with dirt that needs to be removed before the car can be reloaded with scrap, Miller said, noting that proposed new reciprocal switching rules could also cause delays in the future.
These regulations could require shippers or receivers to switch rail cars that don’t belong to them—at their own expense—in order to hasten the return of those cars to the railroad’s customers. That would increase dwell time in receivers’ yards and potentially push equipment, labor and insurance costs higher.
A rail safety regulatory bill approved in 2008 and up for renewed authorization this fall could also have an impact, Miller said. It caps employee working hours, just as hours-of-service rules have done for truck drivers, and requires more training for employees.
The industry is also worried about a new Transportation Department study on rail car loading that might lead to new compliance standards, Miller said.
The positive train control (PTC) mandate, which integrates command, control, communications and information systems in order to safely manage train movements, will require the railroads to invest roughly $15 billion over the next three to four years, he said.
"How will PTC affect you on your siding or your customers on their siding?" Miller asked, suggesting that the industry doesn’t know.