Shippers seeks more access to competing railroads

Shippers seeks more access to competing railroads    The National Industrial Transportation League, the nation’s largest advocate organization for shippers, is asking the U.S. Surface Transportation Board to adopt new rules so that captive shippers served by a single railroad can more easily gain access to competing railroads.
   In a filing with the STB Thursday, the NIT League is seeking a change in rules having to do with reciprocal switching. If captive shippers can’t get a Class I railroad to give them access to a competing railroad, they would be able to go to the board and get a competitive switching agreement ordered if they could meet several conditions that NIT League said would be “unambiguous.”
   NIT League President Bruce Carlton said the STB's existing competitive access rules 'have not worked. No shipper has ever succeeded in gaining access to a competitive line in today's regulatory framework. The new approach we are seeking would be a first step toward correcting that imbalance.'
   He noted the STB, which last month held two days of hearings on rail competition, has 'asked for straightforward, specific proposals with clear standards, and our proposal fits the bill.”

Carlton

   Carlton said the NIT League’s proposal “is clearly not a move to reregulate the carriers. Likewise it is not a panacea for every rail service and rate problem we heard at the recent board hearing. But it is a positive and balanced step that can be taken by the board to enhance competition in many rail markets.'
   The American Association of Railroads said it was “reviewing the NIT League filing and will need to analyze it further before we can provide substantive comment.” AAR has traditionally opposed mandatory reciprocal switching, saying in a fact sheet explaining the issue that “rail investment and rail capacity would decline, and with it railroads' ability to continue to provide the affordable, environmentally responsible rail service.”
   Carlton said the NIT League has not discussed its proposal with the AAR or Class I railroads, but said the proposal was a “game changer” because it would “change the entire regulatory approach by essentially starting over.”
   The NIT League is asking the STB to eliminate existing competitive access rules and precedents as they apply to reciprocal switching and require Class I rail carriers to enter into a competitive switching arrangements whenever a shipper or group of shippers demonstrate the following:
   ' The shipper's or receiver's facilities for which switching is sought are served by only one Class I rail carrier, or what the filing refers to as the “landlord carrier.”
   ' There is no effective competition from other railroads, trucks or barges. There would be a conclusive presumption that there is no effective competition if either a movement for competitive switching has a revenue to variable cost ratio of 240 percent or more or if the “landlord carrier” has handled 75 percent or more of the freight for which competitive switching is sought in the prior year.
   ' There is (or can be) a 'working interchange' between a Class I rail carrier and another Class I within a 'reasonable distance' of the shipper’s or receiver's facilities. There would be a conclusive presumption this was the case if there was an interchange were cars are regularly switched between the railroads within 30 miles of the shipper or receiver or if the shipper or receiver was within the landlord railroad’s terminal.
   The NIT League proposal also expressly states that a competitive switching agreement shall not be imposed by the STB if either rail carrier can establish that the arrangement is not feasible, unsafe or would unduly hamper the ability of either carrier to serve its shippers.
   The league said its proposal has rules that can be simply applied and not result in lengthy and expensive litigation, which it said is the case today when shippers attempt to obtain an order for reciprocal switching.
   Carlton emphasized that the proposal came from its membership, “who have been talking about this issue for years.” The league said a recent survey of its railroad committee found that changes to the STB's reciprocal switching policies were deemed the most important reforms the STB could undertake and would be helpful in providing more efficient, reliable and cost effective rail transportation.
   He said that while NIT League had made a strategic decision to target one issue, competitive switching, because it was “the relief valve” most important to NIT League members. But he said the group would not turn away from other competition limiting practices such as “paper barriers” or “bottleneck rates.”
   Carlton said it was difficult to gauge how many shippers or receivers would take advantage of the new rules if they were approved, but he believed there were dozens of companies that would see them as an opportunity to get a better rate or service package.
   A one-page summary of the petition is here, and the entire filing can be accessed here.
   Railroads will have 20 days to respond to the NIT League’s filing, and then the STB has 120 days after the replies to decide whether to open a rulemaking proceeding and allow other parties to comment. ' Chris Dupin