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Rail News: Rail Industry Trends

Many shippers oppose rail-industry re-regulation, AAR's Hamberger says


The squabble over industry re-regulation isn't between railroads and their customers, but between two groups of shippers, said Association of American Railroads President and Chief Executive Officer Edward Hamberger during testimony before the House Transportation and Infrastructure Committee's Railroad Subcommittee yesterday.

Some shippers believe government should dictate the marketplace, but "the rest of America's shippers understand and recognize how deregulation has improved service and lowered rates," he said. "Almost 400 railroad customers have written since last fall to oppose re-regulation."

Officials from the Alliance for Auto Manufacturers wrote that re-regulation would undo progress made since the Staggers Act de-regulated railroads in 1980, while Kokomo Grain officials wrote that deregulation gains and benefits would be thrown aside by blanket re-regulation.

An executive from chemical company Dyno Nobel called re-regulation "remarkably short-sighted," and said all shippers would be short-term losers because railroads would be unable to continue providing their current level of service, Hamberger said.

AAR and railroad officials oppose the Railroad Competition Act of 2003 (S. 919/H.R. 2924), which would "clarify" national rail policy under the Interstate Commerce Commission (ICC) Termination Act and require the Surface Transportation Board to "ensure effective competition" among railroads at origins and destinations; enforce reasonable rail rates "in the absence of effective competition," and maintain consistent and efficient rail service for shippers, including timely distribution of rail cars.

The legislation also would require STB to provide "final offer" arbitration of certain rail-rate cases; remove paper barriers in future line sales or leases to regionals and short lines; eliminate an "anti-competitive conduct" test instituted in the mid-1980s for terminal area and switching agreements; place a cap on filing fees in rate cases involving "coal rate guidelines" to federal district court levels; mandate that railroads quote rates to customers between any two points where freight moves originate, terminate or transfer, when requested by a shipper; and declare that all or part of a state is an inadequate area of rail competition if petitioned by a state.

Since the Staggers Act, railroads have expanded market share, invested more than $320 billion to maintain and improve infrastructure and equipment, increased productivity 183 percent, and decreased train accidents and rates 68 percent and 60 percent, respectively, he said.

"The financial community has consistently stated that re-regulation will lead to capital starvation and dis-investment," said Hamberger. "Instant gratification [from lower rates] usually comes with a headache the next morning and there would be no Advil strong enough for the long-term damage associated with railroad re-regulation. Over the long-term, everyone would share in the hangover: shareholders, customers, railroads, the entire transportation system, and the U.S. and global economies."

Contact Progressive Railroading editorial staff.

More News from 4/1/2004