Shippers to face increased regulatory scrutiny in 2016

In our April guest column, AllTranstek LLC Senior Vice President and Chief Commercial Officer Richard Kloster says that shippers this year will become the focus of the Federal Railroad Administration's (FRA) tank car regulatory efforts. The agency initial concentrated those efforts on leasing companies, who own the largest fleets, but attention is now turning toward smaller fleets, which are mostly shipper owned.

Complying with the FRA's regulations is the best way for companies to reduce risks, but it can be a costly endeavor, especially for smaller firms.

"The concern is that as the FRA's focus shifts to smaller fleets, compliance gaps will be greater, since regardless of fleet size, compliance obligations are the same," Kloster writes. "The regulations only spell out the 'what you have to do' part, not the 'how you do it' part. ... This may be difficult for a smaller fleet owner with resource challenges; they may need to budget for new employees or vendors. Companies with larger fleets generally have greater resources and also may be more up to date on the regulatory requirements and market realities."

Small tank-car owners face the added challenge of securing space in repair shops for necessary audits, Kloster says. Shop space is at a premium due to the current qualification cycle that's expected to run through 2020.

How do you think shippers will fare in 2016? Will the FRA's regulations pose a significant challenge to their business? Let me know in the comments section below.

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