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11/3/2006



Rail News: Rail Industry Trends

Grain association to STB: Keep tabs on rail capacity, speed up rate challenge process



During the past three years, U.S. agricultural shippers’ rail rates have exceeded those charged to intermodal and other commodity shippers, and rail service has slipped because of tight capacity, National Grain and Feed Association (NGFA) officials told Surface Transportation Board (STB) commissioners yesterday at a grain transportation hearing. An association of 900 grain, feed and other related companies, NGFA is seeking board intervention to help reduce rates and improve service.

Agricultural shippers incur transportation costs in addition to rail rates, such as the expense to acquire covered hoppers and tank cars, which “can add 10 to 20 percent to overall freight costs,” NGFA said. Shippers own or lease more than 65 percent of all covered hoppers and tank cars used to ship agricultural products.

In addition, intermodal is the primary contributor to rail capacity constraints, yet is not contributing a “fair share” of revenue to enable railroads to expand infrastructure for all commodities, the association said.

“We face a critical time in the rail-served industries in the next five years to determine if the minimally regulated rail industry can successfully add to its capacity to meet what appears to be a secular growth in demand for rail services,” NGFA President Kendell Keith told commissioners, according to a prepared statement. “Carriers need revenue to be able to invest, but increased pricing power can be subject to abuse.”

Association officials called on the STB to monitor and report on railroads’ investments in new infrastructure, revise a proposal that would amend small-volume shippers’ guidelines for challenging rail rates and expedite rate complaints filed with the board.


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