Surface Transportation Board Chairman Martin Oberman has seen some rail carriers cut jobs and neglect their infrastructure in pursuit of short-term profit, and he says there’s nothing to like about it.

Oberman spoke last week before the Southeast Association of Rail Shippers’ conference, and the “cult of the operating ratio” (OR) could be rising again with BNSF and Union Pacific cutting workers and a hedge fund looking to seize Norfolk Southern.

“These low OR — which could only be achieved rapidly — as the activists demanded — by cutting payroll — have meant lots of free cash which the Class Is have not been shy about paying out in stock buybacks, dividends, and in BNSF’s case, returns to its owner,” Oberman said. “The total in the last decade or so is over $250 billion — money which was not invested in retaining workers or building new infrastructure to increase a railroad’s reach and serve more customers.”

Billionaire Warren Buffett said as much in his recent letter to shareholders, expressing disappointment in BNSF’s latest returns. Union Pacific ousted a CEO in 2023 and the new one is doubling down on squeezing workers in the name of shareholder return.

SMART-TD members and rail workers have been coping with the consequences through job cuts, irresponsibly long trains and inhumane work schedules. For our members, “PSR” stands for “punishing and sadistic railroading.”

Starting in about 2014, more than 45,000 rail workers lost their jobs because of the quest for increased efficiency.

“Railroads are a regulated monopoly. They have a common carrier obligation to the public interest and to the nation’s economy,” Oberman said. “Unlike other businesses, railroad management and owners are not just free to manipulate the business by draining the company’s resources for short-term gain.”

Too often, the pro-free market crowd, overseeing spreadsheets from the comfort of their railroad offices, think that “free market” means “we can run our business however we want and do to workers and the communities we affect whatever we want. We’re here to make money, and they should be happy about it. They’re lucky we’re here.”

That mentality’s brought longer trains, fewer inspections and less emphasis on safety, as much as industry executives and mouthpieces like the Association of American Railroads and Railway Age claim the railroads are working in everyone’s best interests. PSR is only good for everyone who owns stock.

The industry’s shareholders cruised through the initial wave of PSR with fatter wallets and bigger dividends, Oberman noted in his speech. Contrast that with the thousands of workers who were sent home for the last time as service to their former customers suffered.

Investor neglect drew attention of federal regulators, including Oberman’s STB, after a post-COVID national supply chain meltdown. The STB held hearings on carrier performance in 2022 and has kept a close eye on carrier personnel levels since.

Recent events indicate carrier leadership is being guided back to its shortsighted ways. Investors demand quick profits at the exclusion of all else. Hundreds of jobs have been cut from BNSF and Union Pacific over the past weeks and months.

So when leaders such as Oberman and Federal Railroad Administrator Amit Bose decide to oversee the industry through a more skeptical lens, along with the workers and the members of the media, those folks in the comfortable offices get less comfortable.

Oberman also expressed his doubts about activist investor group Ancora’s plan to replace Norfolk Southern’s leadership with a who’s who of exploitative executives.

“Several weeks ago, Ancora wrote me a letter. The essence of their message was that they had taken a $1 billion dollar stake in NS in order for it — quote — ‘to become a safer railroad,’ ” Oberman said. “Really? What hedge fund raises $1 billion to promote safety anywhere? The measure of Ancora’s disingenuous pitch to improve safety is that its slide deck completely omits reference to FRA data which shows that, in the last year, NS has been an industry leader in reducing mainline rail accidents and derailments.”

SMART-TD members —  the people who do the work — have lived through PSR. Oberman has gone through PSR, as has Bose. It was a failure for workers, shippers and catastrophic for the national supply chain. It’s not wanted by anyone or good for anyone except for those who would reap the most by doing the least.

The watchdogs of the industry — Oberman, Bose and SMART-TD — all recognize this. We do not want to go through it again.

UP and BNSF executives — you’ll need to get to work, because PSR doesn’t.

Read Oberman’s speech

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“Any time a monopoly is broken up, and competition is emphasized in the workplace, American workers win. SMART-TD stands behind today’s announcement by the Surface Transportation Board. It is a clear result of this administration’s dedication to railroad workers and workers in general over the insatiable appetite of the railroad companies to feed their bottom lines to the detriment of all else. SMART-TD, on behalf of the hardworking conductors, engineers, and yardmasters we represent, are thankful for the leadership of Martin Oberman, chair of the STB, and of the Biden administration for their courage in breaking the stranglehold the railroads have had on their customers since 1850. Our hope is that introducing the spirit of capitalism into our industry will force the railroads to run their companies more responsibly, starting with demonstrating more respect for their greatest asset, OUR MEMBERS.”

— SMART-TD President Jeremy Ferguson

This morning, the U.S. Surface Transportation Board (STB), following a unanimous vote by the board, announced a Notice of Proposed Rule Making (NPRM) that represents a tidal shift in the way railroads provide service in this country. Since the golden spike was ceremonially driven in 1869, connecting this country from coast to coast with rail service, our country’s railroads have had a unique business model. This model has always hinged on the fact that if they owned the track your factory or company was adjacent to, you were locked into their services no matter the level of their pricing or the quality of that service.

In recent years, the STB has been flooded with complaints regarding the Precision Scheduled Railroading (PSR) era from shippers who are no longer satisfied with the results of the one-sided partnerships they have with American rail barons. These shippers have been “railroaded” into paying inflated rates for severely inadequate service. The STB has ruled numerous times that rail carriers are obligated to honor their contracts and provide regular service to our country’s most-pivotal industries.

Recently, the STB asserted its power to insist that Union Pacific (UP) service a large-scale poultry farm in California whose livestock was suffering from that carrier’s inability to consistently deliver the feed necessary to keep their animals alive. Currently, the Navajo Nation has engaged the STB in a dispute with BNSF over its inability to deliver on its contractual obligation to get coal to market produced by a subsidiary of the Nation . The idea that railroads can service who they want when they want does not mesh with their obligations to provide adequate service.

Martin Oberman, the Biden administration, and the STB today said they will no longer allow this mentality to continue. The STB is holding the railroads’ collective feet to the fire so that the supply chain for critical goods, like energy and food supplies, delivers on time.

The NPRM announced today provides three basic standards of service railroad companies must abide by. If they refuse to do so, their previously locked-in customers will have the right to contract with another railroad that will. As the press release from the STB points out, this will be a complex process of negotiating trackage rights; however, the STB shows no sign of backing down from the task.

Chairperson Martin Oberman specifically noted, “One of the principal goals of the rule is to incentivize carriers to maintain sufficient resources — specifically workforce and locomotives.”

This NPRM is open to public comments until October 23, 2023. If it is adopted as proposed, this nation’s railroads are, for the first time, forced to recognize a direct correlation between their staffing levels and their ability to retain customers. This puts these carriers in a unique position where retention of their workforce, as well as attracting new talent, will force itself to be their top priority.

SMART-TD is proud to stand with Chairman Oberman, the STB, and President Biden as they make this bold and decisive move to level the playing field and assert the ideals of capitalism into the railroad industry.

Railroad workers, heavy industry, and “mom-and-pop” shops across this country will benefit from adopting this proposed rule-making. As SMART-TD President Ferguson stated, “When monopolies are disrupted by capitalism, our country’s workers and the economy itself win, and win big.”


If you’re interested in speaking more about the union’s stance on this issue and the changes SMART-TD is calling for, we’d be happy to connect you with:

SMART Transportation Division President Jeremy Ferguson

President Jeremy Ferguson, a member of Local 313 in Grand Rapids, Mich., was elected president of SMART’s Transportation Division in 2019.

President Ferguson, an Army veteran, started railroading in 1994 as a conductor on CSX at Grand Rapids, Mich., and was promoted to engineer in 1995. Ferguson headed the recent national rail negotiations for the Union with the nation’s rail carriers.

SMART Transportation Division National Legislative Director Gregory Hynes

Greg Hynes is a fifth-generation railroader and was elected national legislative director in 2019.

Hynes served on the SMART Transportation Division National Safety Team that assists the National Transportation Safety Board with accident investigations, from 2007 – 2014.

In 2014, he was appointed to the Federal Railroad Administration’s Railroad Safety Advisory Committee (RSAC), which develops new railroad regulatory standards.

Hynes was appointed the first chairperson of the UTU Rail Safety Task Force in 2009 and served in that capacity until being elected SMART Transportation Division alternate national legislative director at the Transportation Division’s 2014 convention.

SMART Transportation Division Alternate National Legislative Director Jared Cassity

Jared Cassity was elected by his peers in 2019 and currently serves as the Alternate National Legislative Director for the SMART Transportation Division, which is comprised of approximately 125,000 active and retired members who work in a variety of different crafts in the transportation industry. These crafts include employees on every Class I railroad, Amtrak, many shortline railroads, bus and mass transit employees, and airport personnel.

In addition to his elected roles, Cassity has also been appointed as the Union’s Chief of Safety, serves as the Director for the SMART TD National Safety Team (which assists the NTSB in major rail-related accident investigations), is SMART TD’s voting member on the Federal Railroad Administration’s C3RS Steering Committee, and is the first labor member to ever be appointed to the Transportation Security Administration’s Surface Transportation Safety Advisory Committee.

By a 3-2 majority June 23, the Surface Transportation Board (STB) ruled in favor of Navajo Transitional Energy Co. (NTEC), ordering BNSF to fulfill its common-carrier obligation to serve the Powder River Basin energy producer and transport 4.2 million tons of coal.

NTEC filed a complaint April 14 seeking an emergency service order to move coal from a facility in Big Horn, Wyo., to a Canadian terminal.

As a result, BNSF must move 23 trains per month of NTEC’s coal beginning immediately, and an additional six trains per month when additional train sets and crew become available. Both parties will be providing weekly service updates, the STB said in a news release announcing the decision.

STB Chairman Martin Oberman

“The common carrier obligation is a core tenet of the Board’s regulation of the freight railroad industry and is a pillar of the railroads’ responsibility to our country’s economy,” STB Chairman Martin Oberman, who will be a guest at the SMART Leadership Conference in Washington, D.C., said in the release. “Today’s decision reflects the majority’s finding that the common carrier obligation requires a railroad to provide service on a customer’s request that is within the railroad’s capacity to provide.”  Further, Oberman noted, as the STB has previously held: “The common carrier duty reflects the well-established principle that railroads ‘are held to a higher standard of responsibility than most private enterprises.’”

Board members Patrick Fuchs and Michelle Schultz dissented with the ruling.

The STB decision is below.

On June 13, Greg Regan, president of the AFL-CIO Transportation Trades Department (TTD), of which the SMART Transportation Division is a member, sent a letter to President Joe Biden regarding recent attacks on Surface Transportation Board Chairman Martin Oberman. The text of the letter is reproduced below.

The Honorable Joseph R. Biden
President of the United States
The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500

Dear President Biden:

On behalf of the Transportation Trades Department, AFL-CIO (TTD) and the totality of rail labor as represented by our affiliated unions, I write to reaffirm our strong support for Surface Transportation Board (STB or Board) Chair Marty Oberman and Board Member Robert Primus. We vehemently object to the sentiments expressed by Freedom Bloc, Revolving Door Project, and RootsAction (the coalition) in a May 17th letter urging you to relieve Chair Oberman and replace him with Member Primus. We firmly believe that removing Chair Oberman or failing to reappoint him would undermine the significant progress the Board has made during his tenure.

Surface Transportation Board Chairman Martin Oberman

The coalition’s request for Chair Oberman’s removal is in direct response to the Chair’s authorization of a merger between Canadian Pacific Railway (CP) and Kansas City Southern Railroad (KCS). The Chair’s vote in favor of the transaction is no reason to remove him from his position or to not re-nominate him. Compared to the four railroads that dominate the U.S. freight rail network, CP and KCS are comparatively minor players. It must be recognized that the merger was literally “end-to-end”; CP and KCS had one point of connection and they did not compete head-to-head for business. There was no compelling evidence of a real decrease in competition. Further, rejection of the transaction would not have enhanced competition or decreased concentration in the industry in any significant way.

The primary issue plaguing the freight rail industry is not corporate concentration, but rather the implementation of an operating business model known as Precision Scheduled Railroading (PSR). PSR prioritizes profits above all other goals, including rail safety, reliable freight rail service, and workplace dignity. Recent high-profile derailments like the one in East Palestine, Ohio are a direct consequence of rail operations under the PSR model. Simply put, PSR is well on its way to destroying the freight rail industry and poses a direct threat to the safety of our communities and economic well-being of our country.

Chair Oberman recognizes the scope of these problems and champions real solutions to them. The call for his removal over the CP and KCS merger is not only unjustified but would be counterproductive to creating a safer, more effective freight rail system. To be clear, our objection to replacing Chair Oberman in no way diminishes our support for Board Member Primus. Mr. Primus has been an aggressive critic of the industry’s practices and we fully support his continued service on the Board as well.

The actions and approach of the current Board are a refreshing change from its predecessors, and Chair Oberman is due much credit for that change. We look forward to the Board’s continued attention to freight rail service issues exacerbated by the scourge of PSR.

Greg Regan

As part of the first SMART Leadership Conference in San Francisco on Aug. 8, Surface Transportation Board Chairman Martin Oberman appeared remotely to address the general session.

The STB, which is tasked with the economic regulation of various modes of surface transportation, primarily freight rail, heard the concerns of SMART Transportation Division President Jeremy Ferguson and three members of the union as well as other labor unions and shippers in April.

As a result of those hearings, the board instituted additional requirements for the large U.S. Class I carriers, including submitting service recovery plans and more recruitment and trainee retention data, bringing some press outlets to say that labor unions, including SMART, “had Oberman’s ear.”

“It isn’t a question of favoring labor or favoring someone else,” Oberman said. “And I have insisted from the outset, and I will continue to do so, that the board wants input and feedback from everybody.”

Class I carriers’ Precision Scheduled Railroading (PSR) operating scheme has lengthened trains and led to a 30% rail workforce reduction among Class I carriers since 2017. Struggles with service and the ability of railroads to retain employees have drawn the attention of federal regulators including the five-member STB.

“It’s been apparent for a long time — certainly since the pandemic began that the Class I railroads just way overdid it in cutting the workforce,” Oberman said. “I don’t know of any business that can operate by taking out 30% of the workforce and have the same level of delivery and productivity and service and products to be delivered.”

Additional employment reductions that happened during the first days of the pandemic made the situation worse and left the rail industry unprepared to deal with the economic rebound.

“They’ve all been struggling to have sufficient people and sufficient crews,” Oberman said of the Class I carriers.

Almost three months in, the more granular reports now being provided by the four U.S.-based Class Is to STB have not shown very good results for carriers attempting to meet the six-month targets their labor recovery plans have set, he said, with Norfolk Southern showing slight improvements in recruitment and T&E worker retention.

“I would say that the news is not great,” he said. “The good news is, it hasn’t got much worse, but the disappointing news is that, with minor exceptions and improvements here and there — they should be acknowledged — there hasn’t been much improvement.

“To say the least, I was hoping to see more improvement during this time period.”

Oberman also remarked that the input the board has received from members of rail labor has been “very enlightening” for the STB

“I really do welcome the input I get,” he said.

Oberman took multiple questions from the audience, including fielding a report out of Seattle and Kent, Wash., regarding service cuts and out of Texas.

In regard to the STB authorization bill proposed recently in the U.S. House, Oberman said that he and the other four board members — two Democrats and two Republicans — will focus on establishing a consensus.

“We don’t have, fortunately, on the board the kind of polarization and tribalism that you see too much in Washington. I am determined to keep that from happening on the board.”

SMART Transportation Division President Jeremy Ferguson, left, and SMART General President Joseph Sellers Jr. listen as Surface Transportation Board Chairman Martin Oberman appears live via video on Aug. 8 at the first day of the SMART Leadership Conference in San Francisco.