Keep Your Ear to the Rail – Part II

As reported in JobbersWorld last week, base oil suppliers, lubricant manufacturers, distributors, and others in the lubricant supply chain have been challenged over the past two months to ship and receive product by rail, specifically CSX Rail (the country’s third largest railroad). This is because CSX is currently restructuring to rationalize infrastructure and consolidate operations. And while this is taking place, a number of base oil suppliers, lubricant manufacturers and others in the value chain tell JobbersWorld that they are experiencing delays, inconsistency, unpredictability, and longer than expected transit times when shipping by CSX.

In looking deeper into this issue, JobbersWorld has learned that some of the challenges stemming from the CSX reorganization are a result of regional cuts in personnel. We are told that this is particularly troubling when the cuts impact the number of employees that receive cars in the CSX yard and set the rail cars up on storage tracks for receiving by local short line. Whereas some of the yards used to be staffed to handle 60-80 cars in a day for delivery to its customers; with the reductions in employees, CSX is now reportedly only moving 35 to as few as 15 cars a day. This results in significant delays and in one instance a lubricant supplier says they lost a sale due to such delays.

Also of concern is that CSX has reportedly reduced the number of “hump” tracks it operates. Hump tracks are those used for storage and lining up rail cars to be pulled. One lubricant blender says that whereas in the past CSX used to have 10 hump tracks available, it cut that number in half at a location critical to its transportation. This has caused backup of cars being received. As a result, rail cars are sitting in other yards until there is enough track space to bring them forward.

Another concern reported to JobbersWorld is that CSX has changed some of its shipping patterns. As a result, unexpected delays are experienced when a rail car loaded with base oil or lubricants is sent north before going south to its intended destination.

Interestingly, some in the lubricants business are looking into moving product by US-flag shipping for moves between the East Coast and the Gulf as an alternative that before this time was not competitive.

So once again, keep your ear to the rail, because if the challenges in rail transport continue, there is a good chance the higher transportation costs will be passed down the rail to lubricant marketers and ultimately, the consumer.