Shipper Coalition Seeks Reciprocal Switching

A coalition of railroad shippers is seeking new federal rules that would allow reciprocal switching.

The group, known as the Rail Consumer Coalition, made their plea in a letter to the U.S. Surface Transportation Board.

Shippers n the coalition account for more than half of U.S. freight traffic and claim to generate three-quarters of the revenue earned by Class 1 railroads.

They include firms in the manufacturing, agricultural, and energy sectors and include trade associations for the automakers, chemical producers, forest product and paper manufacturers, as well as rail shipper groups such as the National Industrial Transportation League.

In their letter to the STB, the coalition said rail freight rates adjusted for inflation have risen 43 percent since 2004 because of railroad industry consolidation.

“Given the dramatic concentration of market power in the railroad industry, rethinking policies designed for a different era is both timely and smart,” the coalition wrote to federal regulators.

“Reciprocal switching would help empower rail customers such as farmers, manufacturers and energy providers to choose a carrier that provides the best combination of rates and service.”

The letter went on to say greater market choice would change shipper-railroad relationships and lead to resolutions of rate and service issues.

Reciprocal switching would allow a facility served by one railroad to seek service from a second railroad via interchange.

It has long been a goal of carload rail shippers. The STB launched a reciprocal switching investigation in 2016, but it has yet to lead to any action by regulators.

The Association of American Railroads opposes reciprocal switching, which it has labeled forced access.

“Any STB action mandating forced switching would put railroads at a severe disadvantage to freight transportation providers that depend upon tax-payer funded infrastructure,” AAR CEO Ian Jefferies said. “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.”

AAR officials have described freight rates as fair market rates.

STB Chairman Martin J. Oberman in recently remarks has expressed an interest in taking up reciprocal switching and others measures that might increase competition among railroads.

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