AAR Seeks to Forestall Intermodal Regulation

The Association of American Railroads warned federal regulators on Thursday that any attempts they might make to regulate intermodal traffic would have unintended consequences and run afoul of congressional intent to keep the railroad industry deregulated.

The railroad trade group acted after U.S. Surface Transportation Board Chairman Martin J. Oberman expressed concerns about how intermodal traffic has slowed due to terminal congestion.

Containers are stacking up at busy terminals on the West Coast and in Chicago and ships are waiting outside harbors to unload containers coming from overseas.

Oberman also discussed how shippers have had to pay railroads large storage and demurrage fees for containers sitting in intermodal terminals.

The latter has led some shippers to ask the STB to intervene.

In its statement, the AAR said regulation of intermodal traffic would not resolve the current congestion issues.

Individual Class 1 carriers have said in letters to the STB that the issues causing the congestion in the supply chain are not the fault of the railroads

Instead, the railroads have pointed to shippers being slow to pick up containers due to labor shortages at warehouses.

“The global supply chain faces unprecedented challenges in its recovery from the global pandemic, caused by factors beyond the Board’s regulatory regime,” AAR Counsel Timothy Strafford wrote in a letter to Oberman.

Strafford’s letter noted that the former Interstate Commerce Commission and the STB itself have broadly exempted from regulation trailer-on-flatcar/container-on-flatcar services “due to the fiercely competitive nature of intermodal traffic.”

He said railroads lack market domination over intermodal shipments and therefore the STB should refrain from regulating storage charges.

AAR said that if regulators were to limit demurrage fees through regulation, shippers would have no incentive to promptly remove containers from intermodal terminals and that would force railroads to further meter inbound container shipments or halt them altogether until the backlog of stored containers can be cleared out.

In recent weeks some Class 1 carriers have restricted the flow of containers to certain terminals in an effort to reduce the number of containers being stored there while awaiting pickup from shippers.

Strafford said in his letter to Oberman that Class I carriers have been working with shippers to keep intermodal terminals and rail networks fluid.

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