Gene J. Puskar/AP Photo
A Norfolk Southern freight train runs through a crossing on September 14, 2022, in Homestead, Pennsylvania.
For nearly a year, the Prospect has been exploring how the supply chain crisis sprung from the legacy of offshoring, deregulation, monopoly, financialization, and just-in-time logistics. Perhaps nowhere is this truer than in the rail industry, as Matthew Jinoo Buck wrote about in our supply chain special issue. Forty Class I railroads narrowed to seven after deregulation, and the Wall Street–led demand for what has become known as precision scheduled railroading slashed capacity, making it impossible to surge up as demand for goods rose.
Martin Oberman
The Interstate Commerce Commission was the agency established to regulate railroads the last time they got out of control, in the Gilded Age. Today, that responsibility belongs to the Surface Transportation Board (STB), a five-member panel led by Martin Oberman, a former alderman in Chicago in the 1970s who championed the reform wing of city politics that led to the rise of the multiracial progressive mayoralty of Harold Washington. Oberman, a lawyer who ran for attorney general of Illinois unsuccessfully three times, eventually was named to the board of Metra, the Chicago-area commuter rail authority, before becoming a member of the STB in 2019 and the chair in 2021.
Oberman had no history with or knowledge of rail issues before the Metra appointment, and no understanding of freight rail before joining the STB. But he saw that as an advantage: Rather than a captured regulator slotting in to do the bidding of industry lobbyists, he had enough of a vantage point to see the deterioration of service as a calculated effort to increase rail company profits. “The potential of the freight rail network to build our economy is so great, and we’re not living up to it,” Oberman told the Prospect in a wide-ranging podcast interview.
Speaking with executive editor David Dayen and staff writer Lee Harris, Oberman said that the freight rail issues had “almost nothing to do with the pandemic,” and were a result of the structural issues, which included a cut in workforce of close to 30 percent in the six years before COVID hit. He had strong words for the industry. “You can’t just dump that many workers and expect to recall them when you need them, it just doesn’t work that way,” he told the Prospect. Corporate profits and buybacks have gone up while service has gone down dramatically.
Oberman is a real crusader on behalf of shippers, exporters, and consumers, who are feeling the effects of inflation that in the case of rail is wholly from the management and profit-taking desires of the executives. He’s gotten some notice in the business press, but his crusade has largely been lonely in national policy and politics. As we see continued disruption to shipping and logistics, and a potential rail strike that would cripple the situation even further (though after the date of this podcast, the machinists’ union approved a tentative contract), we wanted to talk to Oberman to give his views a wider audience.
We discussed the concentration of the rail system (which includes a pending merger between Kansas City Southern and Canadian Pacific that would bring total Class I railroads in North America from seven to six), the anomaly of shippers in traditionally regulation-averse industries supporting regulation for rail, and what he thinks of industry executives’ claims about labor shortages. It was a great conversation, and you can watch it all below.
