The Fertilizer Institute (TFI) and the Alliance for Chemical Distribution (ACD) have filed separate letters with the Surface Transportation Board (STB) that respectively request all six Class I CEOs to “prioritize fertilizer shipments across [their] networks in response to the global supply disruptions caused by the closure of the Strait of Hormuz,” and urge the Board “to carefully scrutinize any future surcharges imposed by rail carriers arising from the economic impacts of the Middle East conflict.” Union Pacific (UP) was the first railroad to respond to TFI, with BNSF now following suit; the STB has also responded to ACD.
TFI
In a letter dated March 16 (download below) and addressed to Steve Angel of CSX, Keith Creel of Canadian Pacific Kansas City, Katie Farmer of BNSF, Mark George of Norfolk Southern, Tracy Robinson of CN, and Jim Vena of UP, TFI encouraged the leaders to “work collaboratively with fertilizer shippers to:
- “Ensure that rail capacity—both equipment and crew—is available to meet fertilizer transportation needs;
- “Prioritize the movement of fertilizer shipments from production operations and import ports; and
- “Reduce any first-mile/last-mile service issues, including delayed spots and pulls.”
The association, which has more than 250 members, including some of the Class I’s, explained that the United States “relies on a mix of domestic production and imported product to supply U.S. growers,” and that “a multimodal logistics network moves fertilizer from domestic production site or import port to the farm gate.” Each year, it said, 90 million tons of fertilizer are transported throughout the U.S., with nearly two-thirds of all domestic fertilizer ton-miles moved by railroads. “This makes the fertilizer industry one of the most significant freight rail users, and for this reason TFI member companies value strong, day-to-day operational partnerships with your companies,” the association told the six CEOs in its letter, which also copied Brooke Rollins, U.S. Secretary of Agriculture; Sean Duffy, U.S. Secretary of Transportation; Patrick Fuchs, STB Chair; Michelle Schultz, STB Vice Chair; Karen Hedlund, STB Member; Sen. Ted Cruz (R-Tex.), Chair, U.S. Senate Committee on Commerce, Science & Transportation; Sen. Maria Cantwell of Washington, senior Democrat, U.S. Senate Committee on Commerce, Science & Transportation; Rep. Sam Graves (R-Mo.), Chair, U.S. House Committee on Transportation & Infrastructure; Rep. Rick Larsen of Washington, senior Democrat, U.S. House Committee on Transportation & Infrastructure; and Ian Jeffries, President and CEO, Association of American Railroads. “The closure of the Strait of Hormuz due to on-going military operations is having an especially significant impact on global fertilizer trade and the global fertilizer market. Persian Gulf countries are significant producers and exporters of key fertilizers and fertilizer inputs—natural gas, ammonia, urea, phosphate fertilizers and sulfur. Nearly 50% of global exports of sulfur, an important fertilizer as well as a critical input to phosphate fertilizer production, move through this area. The area is also key to producing nitrogen fertilizers, with nearly 30% of globally traded ammonia and as much as half of globally traded urea now unable to reach its intended destinations, impacting farmers around the world including those in the U.S.”
TFI pointed out that “[a]lthough domestic fertilizer supply will be tested due to challenges such as the difficulty of accessing the Strait of Hormuz, U.S. farmer demand will not decrease.” Farmers today, it reported, “are completing their preparations for Spring application and planting season, a time when access to fertilizer supplies is critical to successful crop production. Without reliable and timely fertilizer deliveries, farmers risk missing narrow application windows, jeopardizing crop yields, economic stability in rural communities, and the broader food supply chain.”
The association noted that the Class I railroads “play an important role in ensuring U.S. farmers have access to essential crop nutrients to grow food, feed, fiber, and fuel crops for American families,” and that it appreciates their “attention to the matter.”
On March 18, UP Executive Vice President–Marketing and Sales Kenny Rocker responded to TFI, saying the railroad “recognizes the recent impact global supply chain disruptions are having on the fertilizer industry,” and understands “the importance of being there for our customers as they navigate this unprecedented demand“ (download letter below, which was submitted to the STB). Rocker reported that year-to-date, UP fertilizer shipments are up 2% from last year, and within the nitrogen segment specifically, volumes are up 8%. “UP has been—and remains—fully prepared to support this growth,” he wrote. “We have buffer resources in place, including locomotives, crews, and system equipment positioned across the network to meet customer needs. By the end of February, we proactively pulled all system-covered hoppers out of storage and deployed them to support early-season fertilizer demand. This close coordination ensured resources were delivered exactly where they were needed. Year-to-date, our system car order fulfillment rate is 100%, reflecting our commitment to ensuring every customer order is met. Our Service Performance Index (SPI) for fertilizer customers remains at 100%, enabling us to respond quickly to customer needs and capture business opportunities as they arise. We stay closely engaged with our customers every day and recently met with more than twenty fertilizer shippers at the TFI conference in February. Across these interactions, we consistently received positive feedback on our service performance. We will continue to support our fertilizer customers; we want the business and have capacity to grow.“
On March 24, BNSF President and CEO Katie Farmer told TFI that “service during this spring fertilizer season has thus far been very strong on BNSF.” In her letter(download below), Farmer noted that “[e]ven prior to the developments in the Gulf, BNSF was anticipating robust spring fertilizer volumes. That robust volume has materialized, and we are on pace to set a first quarter record for fertilizer shipments on our railroad. We appreciate our customers’ trust in bringing these critical shipments to us.” BNSF, she said, has worked closely with customers to prepare for the volumes. ”For the first time, we implemented an equipment reservation system for fertilizer trainsets to give both ourselves and our customers better visibility into equipment needs and availability,” Farmer reported. ”With this added visibility, we identified opportunities to bring additional trainsets online for fertilizer service without negatively affecting fluidity and staged surge resources to ensure reserved loadings would be supported. We are grateful for our customers’ commitment and engagement in this collaborative effort. As a result of these efforts, BNSF’s fertilizer service throughout the spring has remained strong while handling these record volumes. Fertilizer car velocity over this year’s fertilizer season has averaged 150.2 miles per day, a 15% improvement over the same period last year.” Farmer concluded that BNSF recognizes “the importance our partners in the fertilizer industry have to the success of American agriculture, and we will continue to meet our commitment to bring your products to market to grow your businesses and ours.”
ACD
In ACD’s separate letter, dated March 13 (download below), the association raised concerns to the three STB members (Fuchs, Schultz and Hedlund) about “potential surcharges that freight rail carriers may impose on shippers in response to the military conflict in the Middle East and resulting economic disruptions.” It said it is particularly concerned “given the history of freight rail carriers leveraging external crises to impose unwarranted charges.” ACD noted that its members, some 400 primarily small chemical distribution industry companies, “have experienced this during both the COVID-19 pandemic and the 2024 labor disruptions.”
The United States “relies on rail movement to deliver chemicals, such as chlorine, which is essential to public safety, infrastructure, agriculture, and transportation,” ACD wrote. ”It is the rail carrier’s responsibility to ensure any fuel surcharges are directly tied to fuel costs and that rate increases are posted 20 days in advance,” it pointed out. “The STB must hold them accountable in meeting these standards. ACD is particularly concerned about surcharges on intermodal shipments, as there is a lack of clear regulatory oversight over rail charges assessed on intermodal traffic, which is exempt from STB regulation. This makes it particularly difficult for shippers to dispute charges that may not meet STB regulatory requirements. Moreover, these surcharges are typically in addition to surcharges already imposed by ocean carriers on the same intermodal movement, forcing shippers to pay a second layer of surcharges on the same shipment. It is critical that the Board clarify the regulatory oversight of freight rail charges for intermodal shipments.”
The association noted that the STB “has consistently been an important ally to shippers in the freight rail industry, ensuring freight rail carriers are held accountable and shippers have access to the resources needed to pursue regulatory assistance when appropriate.” It encouraged the Board “to continue using its authority to protect American shippers amid ongoing economic uncertainty.”
The STB responded to ACD in a March 20 letter (download below), thanking the association for raising concerns about potential surcharges and saying it is “committed to enforcing applicable law as appropriate, maintaining open communication with rail carriers, shippers, and other stakeholders, and conducting active oversight of the freight rail network.”
The Board made four key points:
- “First, with regard to rail fuel surcharges, as you know, the Board has held that such surcharges covering traffic subject to the Board’s jurisdiction must have ‘a reasonable nexus to fuel consumption.’”
- “Second, as you point out, changes in common carrier service terms are subject to the 20-day notice requirement under 49 U.S.C. § 11101(c).”
- “Third, the Board is committed to ensuring that carriers engage in reasonable rules and practices under 49 U.S.C. § 10702 and uphold their common carrier obligation to provide ‘transportation or service on reasonable request’ under 49 U.S.C. § 11101(a).”
- “Fourth, with respect to demurrage and accessorial charges in particular, the Board continues to be guided by its policy statement on the principles the agency would consider in evaluating the reasonableness of such charges, including the clarification that the purpose of demurrage is not fulfilled if a rail user cannot avoid the charges.”
According to the STB, its Office of Public Assistance, Governmental Affairs, and Compliance “will engage informally with the Class I railroads to ensure the Board remains informed of any surcharges and any changes thereto rail carriers may impose,” and “can provide informal assistance” to ACD members if they have questions about specific surcharges. Additionally, it said, the Board “will continue monitoring the quarterly rail fuel surcharge data received from the Class I carriers under 49 C.F.R. § 1243.3 to assess the impacts of international events on rail fuel surcharges,” and noted that it is “committed to the fair and expeditious handling and resolution of all proceedings required or permitted to be brought under statute and regulation, including requests concerning the application of its regulatory authority.”
“Reliable rail transportation is critical to the safe and efficient distribution of chemical products, and we understand the effects of fluctuations in freight rail surcharges on your member companies,” the STB concluded.
Both association letters and UP’s letter were submitted to the STB as part of non-docketed proceedings. All letters, including the STB’s, have been placed on the Board’s website as Non-Docketed Public Correspondence.
