A new government report dismisses captive rail shippers' contentions that rail carriers are gouging them on rates. In fact, that study found that rather than rising, rail rates on average decreased between 1997 and 2000. The report, Railroad Regulation: Changes in Freight Railroad Rates From 1997 Through 2000, was prepared by the General Accounting Office (GAO) at the request of the House Transportation and Infrastructure Committee.

Although the GAO found that rail rates generally dropped, it did note that pricing for some commodities in certain lanes, such as wheat moving over long distances and coal moving over short distances, stayed the same or even increased during the study period. The report also noted that the percentage of rates that exceeded the statutory level required for relief to kick in stayed constant at about 30 percent from 1997 to 2000. The Surface Transportation Board allows shippers to seek rate relief if the railroad's revenues for a shipment exceed 180 percent of variable costs.

U.S. Rep. Don Young (R-Alaska), who chairs the House Transportation Committee, praised the report, commending the GAO for its thoroughness. He also pointed to the survey results as testimony to the effectiveness of deregulation: "The GAO has found a continuing general decline in freight rail rates, reflecting the continued success of the rail freight industry as revitalized by the 1980 Staggers Rail Act," he said in a statement.

In contrast to Young's positive assessment, a shipper group that is seeking increased rail competition has rapped the study. The Alliance for Rail Competition says the report's conclusions are flawed because the GAO did not review the actual rates paid by rail shippers that lack service choices among carriers. "Taking waybill samples and using average lengths of haul as elements in rail pricing does not reflect the situation faced by captive shippers," says Diane Duff, the group's executive director. "The rates people complain about tend to be confidential rates."

Shadrick May, a principal of Escalation Consultants in Gaithersburg, Md., agrees that although it may provide an accurate representation of the industry as a whole, the study failed to examine the situation faced by individual shippers. "In aggregate, shippers haven't been gouged," he says, "but individual shippers are being gouged."