Freight Rail Policy Reforms Long Overdue
The industry moves supplies and finished products all around the country on the nation’s freight rails.
Thirty years ago, there were over 25 Class I railroads for shippers to choose from. Now, there are only seven, with four railroads handling 90 percent of the nation’s freight rail traffic. That makes for a geographic monopoly and shippers like the pulp, paper and wood products industry suffer poor service and high rates due to the lack of competition.
The Surface Transportation Board (STB) regulates shipments and mediates between shippers and rail service providers. In the early 1980s, the STB decided that competition amongst rail providers was robust and, in an effort to ensure railroads did not face bankruptcy and to streamline certain administrative processes (that no longer exist), they exempted categories of commodity shipments from the STB’s purview- including the forest products industry’s shipments.
Present day this exemption has not served its intended purpose to foster competition but rather has blocked shippers from being able to negotiate with their rail service providers for fair rates and better service. Typically, forest products industry shippers are at the mercy of one rail service provider and have no avenue for recourse with the STB when they are not treated fairly.
AF&PA wants the STB to complete their proposed rulemaking regarding Commodity Exemptions (Ex Parte 704) and to reverse the forest products industry’s exemption.
Related: Freight Rail Policy Reforms One Pager (PDF)