Shippers Dependent on Railroads Advised to Take Active Role

MEMBERS of Congress are beginning to listen to shipper complaints that lack of competition between railroads continues to drive up transportation costs and causes increased logistic problems, said Diane Duff, Alliance for Rail Competition (ARC) executive director, Washington, DC.

"Now is the time to get your company active in the federal policy debate by writing or meeting with your congressman and senators," she said.

Duff made the comments at Chemical Week's 5th annual Chemical Transportation and Distribution Conference January 17-19 in Houston, Texas.

Shippers must convince legislators to overturn regulatory decisions that protect the railroads from competing and change the mandate of the Surface Transportation Board (STB) to more clearly protect and promote competition, she said. "Only Congress can do this," she added.

Despite the establishment of the STB to safeguard shippers, they remain unprotected and discontented. "Rail-dependent shippers are captive shippers," she said. Rail policy reform requires development and dissemination of facts and figures and elevated awareness and understanding of the issue by Congress and the executive branch of government. Others who must be briefed on the issue include opinion leaders, rail customers, and grassroots advocates.

"It requires a coordinated and unified direct advocacy effort by all rail customers and their associations," she said.

If companies require more information to present their cases, ARC can provide statistics such as railroad revenues and profits and the costs to states and congressional districts for the lack of competition. ARC is a coalition of rail-dependent shippers involved in agriculture, coal and utilities, chemicals and petrochemicals, consumer products, forest and paper products, plastics, and steel.

Duff said four railroads generate 95% of gross ton miles and 94% of revenues. They control 88% of original chemical traffic. Competitive strength has fallen from 60% in 1980 to less than 20% today.

The recently proposed Burlington Northern Santa Fe (BNSF) and Canadian National Railroad merger would mean that two railroads would dominate North America the new merger, if it is approved, and Union Pacific. No other industry could operate with so little competition without intervention from the Justice Department, she said.

Competition develops company efficiencies and appropriate investment decisions which results in profitable operations, she argued. As examples, she pointed to other industries that are restructuring to compete telecommunications, natural gas pipelines, and motor carriers. "This should apply to the rail industry, too," she said.

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