GAO report said capacity challenges loom for railroads
Increased rates this decade have helped the freight railroad industry's financial performance, but capacity and infrastructure crunches loom, a Government Accountability Office report said.
'Rail rates generally declined between 1985 and 2000, then increased slightly from 2001 through 2004,' the watchdog agency's report said. 'Concerns about competition and captivity remain as traffic is concentrated in fewer railroads. It is difficult to determine the number of 'captive' shippers as proxy measures can overstate or understate captivity. Nevertheless, GAO's analysis of limited available measures indicates that the extent of captivity appears to be dropping, but the percentage of traffic traveling at rates substantially over the threshold for rate relief has increased.
'These findings may reflect reasonable economic practices by the railroads or a possible abuse of market power.'
The report said the government must assist the railroads in developing more capacity: 'Significant increases in freight traffic are forecast, and the industry's ability to meet them is largely uncertain.'
Meanwhile, the report cited development of a national freight policy as a good first step.
'In developing a national freight policy, the Department of Transportation has made a good start by providing context for those decisions, and DOT can help sustain the role of the competitive marketplace through strategies that promote a level playing field for freight transportation decision making and acknowledge the constrained federal fiscal environment by focusing federal involvement where demonstrable, wide-ranging public benefits exist,' the report said.
GAO report said capacity challenges loom for railroads
