WASHINGTON, D.C. – July 9, 2021 – The Biden administration today announced an executive order that included a misguided direction to interfere with functioning freight markets that could ultimately undermine railroads’ ability to reliably serve customers. In part, the executive order called on the independent Surface Transportation Board (STB) to consider a forced switching rule and other ill-considered policy changes.
“Competition is alive and well in the rapidly changing freight transportation market, with nearly three quarters of all U.S. freight shipments moving by a mode of transportation besides rail,” said AAR President and CEO Ian Jefferies. “With the logistics chain already challenged by the recovery from COVID, this executive order throws an unnecessary wrench into freight rail’s critical role in providing the service that American families and businesses rely on every day.”
As freight providers work to resolve issues at the ports and supply chain disruptions, the need for reliable, efficient transportation solutions has never been clearer. To meet today’s challenges and prepare for the 30% growth in freight demand projected by the U.S. Department of Transportation (USDOT) by 2040, a viable, thriving rail network is foundational to current and future economic health.
Railroads — one of the most environmentally friendly freight transportation modes — compete against each other and other transportation modes to win business and remain viable. The significant investments in private infrastructure made by railroads — nearly $25 billion annually — are only possible under a market-based economic regulatory framework overseen by the STB. Thanks to those investments and productivity improvements, today’s average rail rates are 44% less than they were in 1981 when the current economic regulatory framework was put into place.
“Any STB action mandating forced switching would put railroads at a severe disadvantage to freight transportation providers that depend upon tax-payer funded infrastructure,” said Jefferies. “Such a rule would degrade rail’s significant benefits to both customers and the public by throttling network fluidity, disincentivizing investment, increasing costs to shippers and consumers, and ultimately diverting traffic onto trucks and the nation’s already troubled highways.”
For decades, large corporations dissatisfied with paying fair-market rates to ship products by rail have sought to leverage political influence to change that framework and force railroads to hand over traffic to competitors who might charge less. These proposals have varied over the years, but all had one thing in common: they would benefit select favored shippers at the expense of the efficiency of the whole rail network, including passenger operations.
Just last year, a large and diverse coalition — including eight former USDOT Secretaries, crucial industry partners like ports, policy analysts and scores of state and local officials — wrote in support of today’s system and cautioned against wholesale changes. An open access regime, endorsed by today’s executive order, is in direct conflict with their message and would undermine the market system currently in place.
For more information contact: AAR Media Relations at [email protected] or 202-639-2345.
About AAR: The Association of American Railroads (AAR) is the world’s leading railroad policy, research and technology organization focusing on the safety and productivity of rail carriers. AAR members include the major freight railroads of the U.S., Canada and Mexico, as well as Amtrak. Learn more at www.aar.org.