bobwilcox wrote: One proposal is to cap liability as was done with nucular waste. Another is to design better shipper owned tank cars, such as the project Dow and the UP undertook several months ago. Shippers have always supplied tank cars for chlorine, butadiene, anhydrous amonia, etc.
One proposal is to cap liability as was done with nucular waste. Another is to design better shipper owned tank cars, such as the project Dow and the UP undertook several months ago. Shippers have always supplied tank cars for chlorine, butadiene, anhydrous amonia, etc.
Earlier, RailWay Man had mentioned "methyl-ethyl-death". A that point, I wondered why there wasn't a push for tougher tank cars. It appears some in the industry are thinking that way as well.
What is "methyl-ethyl-death" used for?
Thanks to Chris / CopCarSS for my avatar.
Murphy Siding wrote: bobwilcox wrote: Here is what NS had to say in their last SEC filing covering 2007. "Any material changes to current litigation trends or a catastrophic rail accident involving any or all of freight loss or property damage, personal injury, and environmental liability could have a material adverse effect on NS’ operating results, financial condition, and liquidity to the extent not covered by insurance. NS has obtained insurance for potential losses for third-party liability and first-party property damages. Specified levels of risk are retained on a self-insurance basis (currently up to $25 million and above $1 billion per occurrence for bodily injury and property damage to third parties and $25 million and above $175 million per occurrence for property owned by NS or in its care, custody or control). Insurance is available from a limited number of insurers and may not continue to be available or, if available, may not be obtainable on terms acceptable to NS." They are warning investors that coverage may not be available in the future. I would expect UP, BNSF, CN, CP and CSXT are in a similar situation. Should coverage become unavailable in the future, I can't see what other choice a railroad would have, other than to say no to those shipments (TIH's) that have caused the rates to go over the edge. This phrase:"or, if available, may not be obtainable on terms acceptable to NS" leads me to believe NS, and perhaps the railroad industry in general, are looking for TIH shippers to pay more for the insurance coverage incurred by their shipping.
bobwilcox wrote: Here is what NS had to say in their last SEC filing covering 2007. "Any material changes to current litigation trends or a catastrophic rail accident involving any or all of freight loss or property damage, personal injury, and environmental liability could have a material adverse effect on NS’ operating results, financial condition, and liquidity to the extent not covered by insurance. NS has obtained insurance for potential losses for third-party liability and first-party property damages. Specified levels of risk are retained on a self-insurance basis (currently up to $25 million and above $1 billion per occurrence for bodily injury and property damage to third parties and $25 million and above $175 million per occurrence for property owned by NS or in its care, custody or control). Insurance is available from a limited number of insurers and may not continue to be available or, if available, may not be obtainable on terms acceptable to NS." They are warning investors that coverage may not be available in the future. I would expect UP, BNSF, CN, CP and CSXT are in a similar situation.
Here is what NS had to say in their last SEC filing covering 2007. "Any material changes to current litigation trends or a catastrophic rail accident involving any or all of freight loss or property damage, personal injury, and environmental liability could have a material adverse effect on NS’ operating results, financial condition, and liquidity to the extent not covered by insurance. NS has obtained insurance for potential losses for third-party liability and first-party property damages. Specified levels of risk are retained on a self-insurance basis (currently up to $25 million and above $1 billion per occurrence for bodily injury and property damage to third parties and $25 million and above $175 million per occurrence for property owned by NS or in its care, custody or control). Insurance is available from a limited number of insurers and may not continue to be available or, if available, may not be obtainable on terms acceptable to NS." They are warning investors that coverage may not be available in the future. I would expect UP, BNSF, CN, CP and CSXT are in a similar situation.
Murphy Siding wrote:Should coverage become unavailable in the future, I can't see what other choice a railroad would have, other than to say no to those shipments (TIH's) that have caused the rates to go over the edge. This phrase:"or, if available, may not be obtainable on terms acceptable to NS" leads me to believe NS, and perhaps the railroad industry in general, are looking for TIH shippers to pay more for the insurance coverage incurred by their shipping.
"No other choice ...", "rates ... over the edge", this stuff is just being made up .... something is going over the edge here, that's for sure.
According to the minutes of January 16, 2008 the National Academy of Sciences Transportation Research Board's committee on hazardous materials transportation managed to get through its entire agenda without the histrionics that are being, for some reason, peddled on this thread. And I mean good grief, shippers are being unfairly burdened, oops, it actually amounts to pennies, no insurance is being written, oops, it actually is being written -- it doesn't seem to really matter here what the objective facts are: there is going to be a problem here that needs to be solved by somebody doing something because something must be unfair for some reason.
Oddly, at the recent Hazardous Materials conference referred to above, XL Insurance Co. managed to get through an entire presentation on the subject of insuring hazardous materials transportation without uttering a single word remotely suggesting that such insurance would not be available in the future.
Now, that does not mean that an insurance carrier is willing to insure specific companies which may have poor risk factors regarding the insured behavior -- but that is a part of the system that encourages improving risk at all levels.
Hazardous materials present a problem. They always will. And the potential for great harm will always be there. And it will always represent a risk that may be insurable or may have to be self-insured. And railroads will continue to pass costs on to their shippers, and the shippers will have to ante up their 96 cents and skip their cup of coffee.
In other words, there is insurance coverage available.
Hurricane Katrina thoroughly rattled the insurance industry and as part of its own risk reduction, carriers withdrew coverage for all sorts of things formerly insured. As the industry recovers from its hurricane related sticker shock, it will no doubt return to offering many of its former lines of coverage.
One concern of the insurance industry, however, in regard to HAZ-MAT relates to the rail industry's own decisions which have increased the risk regarding railroad rolling stock. After Staggers in particular, one of the usual bright ideas was to pressure shippers to purchase their own rolling stock. This reduced the capital needs of the rail industry, which is usually a good idea.
With regard to HAZ-MAT, however, what it did was disperse a specialized maintenance expertise regarding railroad rolling stock away from the rail industry -- which had the centralized expertise and plausible experience -- to hundreds of shippers, and maintenance facilities, companies for which railroad rolling stock was not their ordinary line of business. The red lights should have already been flashing on that one.
The results ought to have entirely predictable. Naturally, not for this bunch, which then cried that what was an entirely predictable result of their intentional policy, when it happened, wasn't their fault.
From the AAR:
"For example, a few years ago in New Orleans, a tank car that railroads did not own containing more than 30,000 gallons of liquid butadiene began to leak. Vapor from the butadiene tank car rolled out across a neighborhood until the pilot light of an outdoor gas water heater ignited it. More than 900 people were evacuated. The National Transportation Safety Board found that the probable cause of the accident was an improper gasket that a chemical company had installed on the tank car. Nevertheless, a state court jury entered a punitive damages verdict against the railroads involved in the amount of $2.8 billion."
The amount was, of course, later set aside, but railroads complain that such potential verdicts have caused insurance carriers to threaten to withdraw coverage. That's just not entirely true. What railroads have done even as they have sigificantly improved their own safety records is to knowingly and purposefully create a technical circumstance under which the most hazardous of materials are carried in equipment no longer fully under railroad control insofar as safety is concerned. That increases the risk as the New Orleans case points to.
Murphy Siding wrote: bobwilcox wrote: The insurance companies have been burned badly in the last three years in SC on the NS, TX on the UP, etc. Therefore, they have stopped writing insurance. Are you saying they stopped writing insurance on railroad HAZ-MAT shipments? If so,one would think there is a problem.
bobwilcox wrote: The insurance companies have been burned badly in the last three years in SC on the NS, TX on the UP, etc. Therefore, they have stopped writing insurance.
The insurance companies have been burned badly in the last three years in SC on the NS, TX on the UP, etc. Therefore, they have stopped writing insurance.
Yes, its called "HAZ-MAT" for a reason. No one is arguing that it is inherently safe, but it is insurable, if and only if insurance carriers are convinced that railroads are not contributing to the risk.
MichaelSol wrote: Presumably the average shipper is smarter than that. Presumably BN is smarter than this. This may distinguish the average shipper and the railroad company from some of the posters to this thread who think there is a problem.
That happens when you work with parts of the story instead of the whole thing...
The thread does serve a purpose, however. I now have that much better understanding of the process for having read through the thread. I'm still no expert, but I'm smarter than I was. Hopefully others can say the same.
There is value in debunking rumors and misconceptions.
Larry Resident Microferroequinologist (at least at my house) Everyone goes home; Safety begins with you My Opinion. Standard Disclaimers Apply. No Expiration Date Come ride the rails with me! There's one thing about humility - the moment you think you've got it, you've lost it...
Murphy Siding wrote: edbenton wrote:A normal carrier that does not haul HAZ-MAT gets by with 100k and 1million in Cargo and Liability insurnace each. HAZ-MATs are required to carry 1million cargo and 5 million in Liability insurance so they do carry higher costs and pass them onto their customers. Hm...Do I see some glaring differences in the way trucks and trains can deal with hazardous material shipments? A trucking firm can decide not to haul a hazardous load-no? Can a railroad do the same? A big accident, like the one in S.C would eat up the $5 million liabilty insurance, then bankrupt the trucking company. The trucking company can pass the higher cost of HAZ-MAT onto their customers (the shippers), but railroads have to pass the costs onto all shippers?
edbenton wrote:A normal carrier that does not haul HAZ-MAT gets by with 100k and 1million in Cargo and Liability insurnace each. HAZ-MATs are required to carry 1million cargo and 5 million in Liability insurance so they do carry higher costs and pass them onto their customers.
To answer your question, a railroad cannot decline a hazardous shipment if it meets federal transit requirements, i.e., proper container or car in good mechanical order, display placards, shipping papers, waybilling and emergency response information.
UPRR at one time debated internally whether or not to cease accepting certain hazmat shipments but found out it could not legally deny the shipments if requirements were met.
This is one of those topics ...
Say BN decides to pay $10,000,000 a year for major catastrophe, wipe-out-North-America, end-of-the-world type hazardous materials incident insurance. That ought to write about a $5 billion policy.
If paid by ALL shippers equally -- a concept that, if true, appears offensive for those who become easily indignant at someone else's "plight", everyone except captive shippers, of course -- that works out to a whole $0.96 per carload. Yup, 96 cents. At the average carload revenue on BNSF last year, $1,519.42, that works out to 0.06% of each shipper's carload cost. Yup, six hundredths of one per cent.
To the average shipper, it is not even worth the time or breath to discuss it. Only here.
On the other hand, if the railroad refused to handle Chemicals, which I am generally assuming as a class at some level to be hazardous, and lost the profits therefrom, each remaining shipper, including the marshmallow guy, would have to pay an additional $16.94 per average carload to maintain BN's operating profitability. That is, the shipper may be chipping in 96 cents to pay for an insurance premium or self-insurance reserve, but is getting a $17 break on costs because the railroad is willing to handle this class of freight. On the math, the shipper is winning. He is not complaining and agitating about it. He is not being treated unfairly.
Presumably the average shipper is smarter than that. Presumably BN is smarter than this. This may distinguish the average shipper and the railroad company from some of the posters to this thread who think there is a problem for the average shipper.
MP173 wrote: hoe? Lets not go Imus here. Or Spitzer (my bad, those are called escorts).Regarding my suggestion...I see the point, there would be an enormous difference between value of the lading vs liability of the carrier due to a boom in the night.ed
hoe?
Lets not go Imus here. Or Spitzer (my bad, those are called escorts).
Regarding my suggestion...I see the point, there would be an enormous difference between value of the lading vs liability of the carrier due to a boom in the night.
ed
That makes sense.
I can visualize how Ed MP173 is looking at this. The rate paid by a shipper would be variable, based on the cost of liability insurance for shipping that product. However, since there would have to dozens (hundreds?) of different rates for different chemicals, that may be a little too unweildy. As was posted earlier, perhaps the 2 tier system of nasty/not nasty rates would be simpler.
Do trucks have the same problems in shipping TIH's?
MP173 wrote:Back in my old days of an LTL trucking guy, we had provisions in the tariff (actually Classification Tariff) for commodities of high value. The customer could choose the valuation which they wanted the carrier to assume in case of damage to the lading. The higher the valuation, the higher the classification, and higher the shipping rate. This generally applied to high value products such as electronics and the customer could choose between lets say:declared value less than .60/lbdeclared value between .60 - $1.25 per poundall the way up to value at $25 per pound.Each declared value thus carried a higher rate. The shipper made the declaration at the time of the shipment on the bill of lading. Thus, they helped control the rate by assuming a portion of the risk.This type of method might work and would be easily implemented. Citizens also do this when they take a parcel to the post office for shipping. ed
Back in my old days of an LTL trucking guy, we had provisions in the tariff (actually Classification Tariff) for commodities of high value. The customer could choose the valuation which they wanted the carrier to assume in case of damage to the lading. The higher the valuation, the higher the classification, and higher the shipping rate.
This generally applied to high value products such as electronics and the customer could choose between lets say:
declared value less than .60/lb
declared value between .60 - $1.25 per pound
all the way up to value at $25 per pound.
Each declared value thus carried a higher rate. The shipper made the declaration at the time of the shipment on the bill of lading. Thus, they helped control the rate by assuming a portion of the risk.
This type of method might work and would be easily implemented.
Citizens also do this when they take a parcel to the post office for shipping.
The valuation in the Classification Tariffs related to what the railway would pay the shipper in case of loss of the good, and does not include damage caused by the good, which is the matter in question here. I don't know if the vehicle you propose could be modified to accomplish this.
It is possible that if TIH shipments by rail had to include in their rate their stand-alone liability there would be no more TIH shipments by rail. That may satisfy many constituencies who do not want TIH shipments through cities, or conversely re-routed through small towns. It might also encourage them to seek limits on rail shipments of LPG, gasoline, ethanol, etc. That may or may not be a good thing; I would not automatically conclude either. I think you could classify all of these events under the long-term trend that requires greater internalizing of costs by each industry segment. For example, the Clean Air Act required coal users to internalize the costs of sulfur dioxide emissions.
RWM
MP173 wrote: Back in my old days of an LTL trucking guy, we had provisions in the tariff (actually Classification Tariff) for commodities of high value. The customer could choose the valuation which they wanted the carrier to assume in case of damage to the lading. The higher the valuation, the higher the classification, and higher the shipping rate.
This falls under the provisions of the "Carmack Amendment" governing liability for the shipment, but does not address liability to third parties for injuries or damages caused by the railroad. The idea that railroads and marshmallow shippers are forced to cross-subsidize the rates of shippers of hazardous materials is an interesting one under alleged deregulation; and yet railroads can charge 400% of the R/VC and it's perfectly fine under the cited statute.
MichaelSol wrote: Kind of like Governor Spitzer's recent contractual embarrassments: ...
Kind of like Governor Spitzer's recent contractual embarrassments: ...
I am learning a whole lot from this discussion, but it does have its lighter moments. Somehow, I had not considered the Governor's troubles as a contractual embarrassment, although it certainly is that.
Railway Man wrote: The STB, following the ICC before it, interprets this clause to require railroads to accept hazardous shipments in the same way they accept non-hazardous shipments. To do otherwise would be an end-run around the common-carrier principle. The issue first arose with livestock, which have the unfortunate habit of dying en route, and quickly became fertile ground for litigation. RWM
The STB, following the ICC before it, interprets this clause to require railroads to accept hazardous shipments in the same way they accept non-hazardous shipments. To do otherwise would be an end-run around the common-carrier principle. The issue first arose with livestock, which have the unfortunate habit of dying en route, and quickly became fertile ground for litigation.
erikem wrote: Seems to me that the middle ground of allowing the RR's to add a surchage to cover the additional cost of insurance would be reasonable.
Seems to me that the middle ground of allowing the RR's to add a surchage to cover the additional cost of insurance would be reasonable.
Well, if we are talking post-Staggers, they are free to set the rate aren't they?
And in the example you cited, that points to liability on the part of the Chemical companies.
As it should.
MichaelSol wrote:The Chemical companies have zero control over last year's railroad maintenance budget that decided to skimp or the engineer that was tired because somebody in Montreal thought he could save a buck by hiring fewer engineers and making them "earn their pay".
The Chemical companies have zero control over last year's railroad maintenance budget that decided to skimp or the engineer that was tired because somebody in Montreal thought he could save a buck by hiring fewer engineers and making them "earn their pay".
Seems to me that the middle ground of allowing the RR's to add a surchage to cover the additional cost of insurance would be reasonable. Since the insurance companies would be the RR's, there would be more incentive for the insurance companies and RR's to work together on reducing the chances of an accident.
The Chemical companies do have some control (and thus responsibility) over shipments. Number One is informing the RR's of the full hazard potential of the chemical being shipped and Number Two in making sure that the car carrying the shipment is rated for the hazard. Both of these points were violated by the company that shipped the Metam Sodium that ended up in the Sacramento river in the early 1990's.
Murphy Siding wrote:That makes sense to me. If I were a smoker, my life insurance would cost more money.
Listen to yourself. Who else should have to buy your insurance for you? It should cost you more money if you made the choice. And hazardous materials don't fly off the tracks all by themselves. The Chemical companies can hardly be said to make that choice or have that intent. And railroads, in the full legal analysis, do not make that representation as the basis for the contract, do they? That's not, or shouldn't be, the natural result of the decision to ship by rail. If it is, there's a problem. And it should be the railroad's problem, do you disagree?
The Chemical companies have zero control over last year's railroad maintenance budget that decided to skimp or the engineer that was tired because somebody in Montreal thought he could save a buck by hiring fewer engineers and making them "earn their pay". The law of negligence says the entity that makes the choice that causes the negligence should bear the burden of risk. What's the problem with that?
Murphy Siding wrote: Railway Man wrote: Specifically, the U.S. Code Title 49 Chapter 10501.RWM Uh.....any chance you could give me the layman's expanation of what that says? Thanks.
Railway Man wrote: Specifically, the U.S. Code Title 49 Chapter 10501.RWM
Specifically, the U.S. Code Title 49 Chapter 10501.
Calling Mr. Gabe!
In the interim, the key section of the USC is this:
Sec. 10741. Prohibitions against discrimination by rail carriers (a)(1) A rail carrier providing transportation or service subject to the jurisdiction of the Board under this part may not subject a person, place, port, or type of traffic to unreasonable discrimination. (2) For purposes of this section, a rail carrier engages in unreasonable discrimination when it charges or receives from a person a different compensation for a service rendered, or to be rendered, in transportation the rail carrier may perform under this part than it charges or receives from another person for performing a like and contemporaneous service in the transportation of a like kind of traffic under substantially similar circumstances. (b) This section shall not apply to-- (1) contracts described in section 10709 of this title; (2) rail rates applicable to different routes; or (3) discrimination against the traffic of another carrier providing transportation by any mode. (c) Differences between rates, classifications, rules, and practices of rail carriers do not constitute a violation of this section if such differences result from different services provided by rail carriers.
Murphy Siding wrote: Railway Man wrote: The AAR is asking the Federal Government for authority to revise the common-carrier law to allow railroads to separate shippers into 2 classes: one that ships especially dangerous hazardous commodities, and a much larger class that ships nonhazardous or moderately hazardous commodities. In particular, the AAR is focusing on Toxic Inhalation Hazards, gases such as ammonia, chlorine, and phosgene, which account for 0.3% of all rail carloads but most of the liability risk. RWM That makes sense to me. If I were a smoker, my life insurance would cost more money. After all, insurance is a matter of statistics and risk. I'm surprised that the other 99.7% of railroad shippers aren't kicking and screaming about subsidizing the .3%. What is specifically stopping the railroads from raising rates on TIH's? Regulations?
Railway Man wrote: The AAR is asking the Federal Government for authority to revise the common-carrier law to allow railroads to separate shippers into 2 classes: one that ships especially dangerous hazardous commodities, and a much larger class that ships nonhazardous or moderately hazardous commodities. In particular, the AAR is focusing on Toxic Inhalation Hazards, gases such as ammonia, chlorine, and phosgene, which account for 0.3% of all rail carloads but most of the liability risk. RWM
The AAR is asking the Federal Government for authority to revise the common-carrier law to allow railroads to separate shippers into 2 classes: one that ships especially dangerous hazardous commodities, and a much larger class that ships nonhazardous or moderately hazardous commodities. In particular, the AAR is focusing on Toxic Inhalation Hazards, gases such as ammonia, chlorine, and phosgene, which account for 0.3% of all rail carloads but most of the liability risk.
What is specifically stopping the railroads from raising rates on TIH's? Regulations?
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