Cargo Business Newswire

Monday, August 25, 2014

Shipper cry foul as rail rates soar

Following 10 years of freight rate hikes that resulted in record rail profits and stock returns, shippers such as Diversified gas company and Dow Chemical are asking the U.S. government to give them some relief.

"We kept cautioning the railroad and cautioning the railroad, but they didn’t listen," said Sandra J. Dearden, president of Highroad Consulting, which represents Diversified. "They priced everybody out of the business."

The companies want the government to change the rules so that they can compel railroads to hand off cargo to a rival in mid-journey, which would make it easier to challenge higher rates with the U.S. Surface Transportation Board.

Carriers say shippers are paying less for better service since the 1980 Staggers Act deregulated the industry. Railroad lobbyists say that easing the 1980 law that ended price controls would threaten the industry’s renaissance.

Ed Hamberger, chief executive officer of the Association of American Railroads in Washington, says shippers want to restore regulated prices and return the industry to a cash-starved era with tracks in such disrepair that even immobile rail cars would tip over and trains would be forced to run at 10 miles per hour or less on a quarter of U.S. tracks.

Rates may keep rising. Rail carloads climbed 7 percent last quarter, triggered by surging crude-by-rail cargoes and a bumper North American grain harvest. Truckers are hiking fees, too, with long-haul rates forecast to increase 5.1 percent in the second half, according to data from transportation consultant FTR Associates.

For more of the Bloomberg story: www.bloomberg.com

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