Amidst a decline in crude oil demand, the storage capacity for excess crude has become increasingly limited, prompting oil producers to explore alternative storage options. One solution that has emerged involves storing crude oil in rail cars, which are then positioned within shortline railroads. However, this approach has encountered resistance from Class 1 railroads, such as BNSF and UP, who have taken measures to restrict this practice. The primary concern driving these actions is the safety implications associated with leaving railcars, designed for continuous movement, stationary for extended periods of time.
Class 1 railroads have been advising clients that tank cars are not suitable for long-term storage of hazardous commodities like crude oil. Federal regulations typically mandate that tank cars filled with crude must be relocated within 48 hours, discouraging the prolonged storage of crude oil “in transportation.” While routine maintenance, including airbrake testing, can still be conducted during short-term storage, more challenging issues may arise when railcars are parked for extended periods. For instance, needle bearings that rely on self-lubrication may corrode when inactive, leading to potential overheating and fire hazards during subsequent lengthy trips.
Now, let’s clarify the concept of “in transportation.” This term generally refers to an active waybill accompanying the railcar. A waybill is a document issued by the carrier, outlining instructions pertaining to the shipment and consignment of goods. It typically includes details such as the names of the consignor and consignee, the origin and destination points, as well as the designated route. Freight forwarders or trucking companies often utilize an internal waybill known as a house bill.
This analogy can be likened to a receipt issued by a courier service, serving as proof of shipment and providing essential information regarding the transported goods.