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6/22/2006



Rail News: Rail Industry Trends

Railroads' prices decline since 1985, GAO reports; rates not fair for chemical shippers, ACC says



A recent Government Accounting Office (GAO) report shows railroads’ rates have decreased rather than increased during the past 20 years, according to the Association of American Railroads (AAR).

From 1985 to 2004, rate increases were below the inflation rate, so “all rates have declined in real terms,” the report states. During the period, coal rates dropped 35 percent.

“I don’t know of many other industries charging less for their services in 2006 than they did in 1985,” said AAR President and Chief Executive Officer Edward Hamberger in a prepared statement.

However, a chemical shippers organization believes captive shippers are charged twice the amount of “competitive rates” and pay higher fuel surcharges. American Chemistry Council (ACC) officials also claim freight railroads are exercising monopoly power and limiting rail competition for captive shippers.

Testifying on behalf of the ACC, Olin Corp. President-Chlor Alkali Products John McIntosh recently told U.S. Senate Subcommittee on Surface Transportation and Merchant Marine members that Congress needs to pass the Railroad Competition Act of 2005 (S. 919) to restore competition and ensure railroads are covered by antitrust statutes. The AAR and railroads oppose re-regulation.

Nearly two-thirds of ACC members’ facilities are “captive customers with service from a single monopoly railroad,” said McIntosh, adding that captive shippers “have no way to negotiate, beg or buy reliability.”


Contact Progressive Railroading editorial staff.

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