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HOUSTON (ICIS) – The Rail Customer Coalition (RCC) urged members of the US Surface Transportation Board (STB) in a letter this week to take action to improve rail service and lower costs for customers.

The letter highlighted the findings of a new RCC report showing that “rail freight rates and rail industry revenues from monopoly pricing continue to climb higher and higher.”

The report, produced for the RCC by Escalation Consultants, said that an analysis of rail freight rates found that the largest (Class 1) railways “have reaped an increasing share of their revenue from the traffic that is required to pay rates that the STB considers potentially non-competitive “.

Source: Association of American Railways, implicit price deflator for gross domestic product

RCC represents a wide range of manufacturing, agricultural and energy industries that depend on railways to provide reliable and affordable service.

Included are the Renewable Fuels Association, the American Petroleum Institute, the American Chemistry Council, and the American Fuel & Petrochemical Manufacturers.

He said his industries accounted for more than half of the total volume of goods shipped by rail and generated more than three-quarters of the revenue the railways collect.

The letter follows an executive order signed by President Joe Biden earlier this month that encouraged federal regulators to focus more on consolidation and allegedly anti-competitive pricing in the rail and shipping industries.

RECIPROCAL SWITCHING RULES
Biden’s executive order called on the STB to demand that railroad owners step up their obligations to treat other freight companies fairly.

This likely referred to a 2016 STB proposal for reciprocal switching, which would allow a shipper to access another railroad under certain circumstances.

Reciprocal switching refers to the situation where a railway that has physical access to a specific shipper facility switches rail traffic to the facility for another railway that does not have physical access.

The second railway pays compensation to the railway that has physical access, usually in the form of per-car switching charges.

As a result of the arrangement, the shipper’s facility has access to an additional track.

“Reciprocal switching would help rail customers such as farmers, manufacturers and energy suppliers to choose a carrier that offers the best combination of tariffs and services,” the RCC said in the letter.

The RCC also urged the STB to finalize tariff relief procedures for shippers who do not have competitive transportation options and to consider potential rail mergers to ensure protection of the public interest.

The two federal civil antitrust law enforcement agencies announced earlier this month that they would begin a review of the merger guidelines following the executive order.

In the United States, railcar loads of chemicals account for about 20% of chemical transport by tonnage, with trucks, barges and pipelines transporting the remainder.


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