Shippers Redirect Rail Reform Efforts

Abstract

Rail transportation is important to the chemical industry. In terms of volume, chemicals are the second-largest bulk commodity transported by rail after coal. But rail transportation costs vary widely depending on whether a shipper, regardless of type of cargo, is serviced by a single railroad—a so-called captive shipper—or benefits from multiple railroad servers that compete for its business. The disparity in shipping costs is the basis for a long-simmering dispute over whether railroads are price gouging some of their customers, particularly industries whose plants are served by only one railroad. These shippers say they have little choice but to pay the railroad’s rate because of the lack of competition. Railroads counter that shippers have access to other modes of transportation, including trucks and barges. And they argue that increased regulation would deprive the carriers of billions of dollars in annual revenues, making it impossible for them to fund capacity improvements. ...