Freight Rail Policy Stance: Congress should maintain the current policy requiring the Surface Transportation Board (STB) to first find that a railroad serving a terminal area is engaged in anti-competitive conduct before the STB can order the railroad to “switch” to another railroad’s traffic.
Why This Matters: The proposed forced access rule would significantly compromise the efficiency of the nation’s 140,000-mile rail network.
In a proposal from the STB — the agency that oversees freight railroad economic regulations — railroads could be forced to turn over their traffic to competing railroads at potentially below-market rates.
Large corporations dissatisfied that they have to pay fair-market rates to ship products are driving this proposal. Under the proposal, they could petition the STB, which in turn would force the railroad to hand over traffic to a competitor who would charge less.
The proposed rule would benefit favored shippers over the efficiency of the whole rail network, including passenger operations.
The proposal would upend the logistical efficiencies that today benefit all customers using the U.S. rail system to move their goods. Railroads purposely concentrate and move traffic along certain routes to maximize operational efficiencies and network fluidity. The railroads’ routing practices, honed over decades, take into account the health and operation of the entire network and benefit all customers, not just a few.
Undoing efficiencies and benefits recognized by all rail customers for the benefit of a few shippers would hurt the overwhelming majority of businesses that rely on rail. Forced access ignores market competition in favor of government regulation and will slow rail traffic, increase shipment delivery time and result in higher costs to shippers and consumers.
William Rennicke, a partner in Oliver Wyman’s manufacturing, transportation and energy group, puts a finer point on the problem. Forced access, he says, “not only affects the local point of switching. It affects the downstream service and the downstream handling of the shipments because you’ve added huge amounts of uncertainty to the equation and you’ve introduced complexity, where simplicity and efficiency have been involved before.”