It’s the end of the work week and we continue with our news update series related to previousSupply Chain Mattersposted commentaries or news developments. In this capsule commentary, we include the following topics:

  • Legal Protection Required to Haul Older Railroad Tank Cars
  • Railroads to Face Increased Scrutiny for Agricultural Shipments
  • Potential West Coast Port Disruptions Looms
  • CSCMP Announces New Young Professionals Mentorship Program



Legal Protection Required to Haul Older Railroad Tank Cars

A new development has occurred concerning the carriage of older, non-compliant versions of railroad tank cars containing crude oil shipments in the U.S. According to a published report by the Wall Street Journal, the Norfolk Southern railroad has become the first U.S. freight railroad to require its customers to provide legal indemnification that absolves the railroad carrier against damages from fires, explosions or the release of hazardous materials caused by tank cars that do not meet the rail industry’s most up-to-date standards. This change is scheduled to take effect on July 15 and applies to DOT-111 tank cars built before late 2011, which accounts for the bulk of the existing U.S. tank car inventory.

Norfolk Southern indicated this action will cover the railroad, its parent company, subsidiary and affiliated companies, officers, directors, employees and agents from any liability.

The obvious open question is whether other railroads, particularly the BNSF and Canadian Pacific will join in this requirement.  If they do, it will force tank car owners and lessors to re-think current asset management upgrade practices in light of having increased liability exposure.

Railroads to Face Increased Scrutiny for Agricultural Shipments

While on the topic railroads and the shortage of specialized rolling stock, a South Dakota newspaper report indicates that the BNSF and Canadian Pacific Railway will face increased U.S. and Canadian regulatory scrutiny as each service operator works to address potential specialized bulk railcar availability during upcoming agricultural harvest peak periods.  According to the report, each of the railroads must provide weekly status reports indicating the number of total grain car orders, the orders filled, and the average number of days late for rail cars that are behind schedule to meet shipper needs.

This action is in response to current shortages of specialty rail cars affecting farmers, ethanol plants and grain elevator operators. While agricultural shippers acknowledge that prior shortages and delays of specialty rail cars has improved, there are continued concerns that the rail network can again become over-stressed starting in July, when farmers in the upper plains region of the U.S. harvest their wheat and corn, and later, soybean harvests. The other issue is that certain amounts of prior harvests are still being held at farms and grain elevators. Further noted is that ethanol producers have had to previously cut-back on production because of the timely availability of tank cars to ship products to oil company customers.

A side note: The overall shortage of specialty railcars has become a windfall for railcar manufacturers, lessors and finance companies. Monthly leasing rates for such equipment has increased by double-digit rates as the demand and supply imbalance continues across U.S. and Canadian rail networks.


Potential West Coast Port Disruptions Looms

As noted in our prior Friday news capsule, labor negotiations between labor unions representing Longshoremen and the Pacific Maritime Association move closer to next week’s June 30 contract deadline.  The negotiations centers on a labor agreement for roughly 14,000 West Coast port workers in California, Oregon, and Washington.

The latest reports now indicate that such talks will more than likely stretch out to the last hour and perhaps lead to a temporary contract extension or government mandated cooling-off period. Meanwhile, a recent study conducted by the National Retail Federation (NRF) and National Association of Manufacturers (NAM) by economists at the Interindustry Forecasting Project at the University of Maryland indicate the U.S. economy could lose $2.5 billion per day if a shutdown were to occur.  That is impetus enough to keep all the parties working towards resolution of a new labor agreement.


CSCMP Announces New Young Professionals Mentorship Program

Supply Chain Matters has echoed in many of our commentaries the current and future need for increased talent and skills across multiple industry supply chains.

The Council of Supply Chain Management Professionals (CSCMP) has announced a Young Professionals Mentorship Program. The professional organization is inviting its members to provide support and guidance to up and coming supply chain professionals, helping them to either enhance their academic, career or personal goals. Since this blog has a global-wide readership from students conducting studies in supply chain management, we wanted to call out this program for awareness.

The program includes certain requirements and commitments from volunteer mentors as well as certain personal benefits. Students and young professionals need to meet certain baseline requirements including a willingness to make a one year commitment to the program, and be dependable and consistent in meeting the program’s time commitments. Both mentors and mentees are required to submit applications. According to CSCMP, the partnership should be based on mutual trust and respect, and offers personal and professional advantages for both parties. More information can be obtained from the web link or by contacting CSCMP directly.

We applaud CSCMP for coming up with this program and look forward to hearing future feedback from our readers regarding this program.