US – There are rumblings of discontent in Washington at the moment about the behaviour of the rail freight carriers, some of whom are being accused of monopolistic behaviour. At a recent hearing of the Surface Transportation Board (STB) rail freight customers demanded federal intervention in a move which may be seen to be taking the industry back where it was before the 1981 Staggers Act.
The Act removed government intervention and led to a recovery of an industry which had been in the doldrums for a decade whilst theoretically protecting against anti trust behaviour. Now, in the intervening years, there has been a degree of polarisation with buy outs and failures resulting in an almost baronial system with little competition on vast sections of track. Dozens of independent railroads have now been distilled down to a handful of mega carriers.
When Warren Buffet made his move for BNSF in 2009 critics said he paid billions of dollars over the book price and now those same opponents say his Berkshire Hathaway group has a monopoly over a large client sector which will be forced to pay a premium rate for cargo by rail as they do not have access to an alternative carrier.
Certain industries, principally coal, chemical and agricultural products, have the ability to appeal the rates they are charged before the STB but the waters are muddied by dozens of exemptions such as container traffic where competition is deemed sufficient and the Association of American Railroads, which represents such industry giants as BNSF, Union Pacific, CSX and Norfolk Southern will have a fight on its hands as the economic noose tightens on producers and consumers alike. Now the veteran leader of the Senate anti trust committee, Sen. Herb Kohl, 77, has this week sworn to make it a priority that his team push for more control over the behaviour of the rail carriers and they will need to defend themselves vigorously to convince the sceptics.
The general feeling amongst many objectors is that the pendulum has swung too far in favour of the rail companies. The industry reply is that not only have the train companies spent billions on getting where they are, the need for infrastructure investment is a pressing one and more regulation will simply lead to a poorer service for the future.
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