Railroads leave NIT League
The National Industrial Transportation League's support for overhaul of regulation of railroads has apparently not been without cost.
'Canadian National remains a member of the league and we are happy for that. Others have decided over this past year to take a different path, so you can draw your own conclusions,' said Bruce Carlton, NIT League president.
He said they did not say explicitly why they had left the NIT league, but CSX, Norfolk Southern, Burlington Northern Santa Fe and Kansas City Southern have all left the group during the past year. He said Union Pacific has not been a member of the group for some time.
Robin Chapman, a Norfolk Southern spokesman, told American Shipper the railroad had decided the benefits of NIT League membership no longer justified the costs involved. CSX and BNSF did not immediately respond to a request for an elaboration on their decision on why they had left the group.
The NIT League last week announced its support for S. 2889, the Surface Transportation Board Reauthorization Act of 2009, and Carlton elaborated on the reasons for that support during a press conference on Tuesday.
The bill was approved by the Senate Commerce, Science and Transportation Committee in December. Carlton said it is balanced and fair, and 'will inject a greater degree of competition in the rail market without being harmful to the rail carriers. No one in the league is seeking a return to the dark ages of heavy regulation of our Class I railroads, anything approaching a pre-Staggers environment is not on the table and is not on our wish list.
'We are looking for a rebalancing of the competitive relationship between shippers and their Class I carriers. We think this bill advances that cause very nicely,' he said.
“The league has been around now — this is year 103 — and the league is for and about shippers, cargo owners, people who put things on planes, boats, trains and trucks. We absolutely enjoy the membership of carriers because they inform the debate, but if you look at the membership roster we publish, it is very heavily weighted toward the shipper side. It was that way before I got here and I expect it will be that way long after I leave,” Carlton said. “Shippers looked at this bill intensively and this is where they have come out.”
Executives from CSX, Norfolk Southern and the Union Pacific all made critical remarks about the proposed law during their earnings calls earlier this year.
Carlton said NIT League members represent a cross section of the U.S. economy and that a shipper of unit trains of commodities may have different interests than retailers moving intermodal containers from West Coast ports to distribution centers.
'That formed a basis for a lot of the discussion by the rail committee in January — one shipper might see bottleneck rates as a bigger issue, another might see paper barriers as a bigger issue. But the glue that holds it together is an acceptance by league members that in writing legislation, a lot of compromising has to be done,' Carlton said.
Chances for bill's passage this year is good, he said, but noted the House of Representatives still has to develop similar legislation.
He said the Senate bill is 'very clearly a compromise,' and said he was struck by the degree of bipartisan support for the bill, adding that neither shippers nor carriers got everything they wanted.
The bill, in effect says 'take this industry, don't harm it and specifically says the STB should be focused on adequate revenue for the railroads to maintain and expand their services, but do this with a greater degree of focus on key concerns of shippers,' he said.
The league believes there are several areas in the bill that 'need additional work,' he added. These include a section concerning bottleneck rates. The legislation establishes for shippers a right to get a bottleneck quote. A bottleneck arises when a shipper has the ability to move his cargo entirely with one railroad, but may be able to use a second railroad for a portion of the distance the cargo must move. Railroads are required to hand off freight to each other if that is what is necessary to get freight to its final destination. But under current law, a railroad is not required to involve a second railroad in a movement that it can handles all by itself.
Carlton said the new bill, as written, will require the shipper to prove that the rail carrier has dominance from origin to destination before they get the rate quote.
'What that really does is take away the benefit of the right to a bottleneck rate,' he said. 'It sets up a protracted litigation before they actually get the rate.'
The Association of American Railroads, in a position paper, said, 'reversing existing bottleneck policy would strike at the heart of this regulatory balance. It would force railroads to use routes without regard to their efficiency ' several billion dollars in rail revenue could be lost each year, crippling railroads' ability to make the investments in new tracks, bridges, and tunnels.'
While the new bill would also adjust the rate caps for so-called small and medium-size rate cases, the NIT League feels the new caps in the bill are set too low, Carlton said.
Finally, he said the NIT League is also still in favor of eliminating some antitrust protections that railroads enjoy, as proposed in a bill introduced by Sen. Herb Kohl, D-Wis., in May 2009 and approved by the Senate Judiciary Committee. ' Chris Dupin