Shipper group promotes bill to spur rail competition

By James A. Cooke -- Logistics Management, 6/1/2005

WASHINGTON—Captive railroad shippers stand to gain from a bill filed last month in Congress to promote more railroad competition. The legislation is designed to make the rail freight system act more "like a competitive marketplace," said Michael Grisso, executive director of the Alliance for Rail Competition in Washington, D.C. The shipper group is promoting the legislation, which has been filed in both the Senate (S. 919) and the House (H.R. 2047).

Although the Senate and House versions differ slightly, both have similar provisions that aim to increase competition. One key provision would require railroads to provide rates for the so-called "bottleneck" sections of their networks, which are served by a single carrier. A railroad would have to furnish a rate for a shipment traveling over one railroad's track until it reached a switch point to another railroad, Grisso explained.

The bill also would require arbitration to settle rate disputes in cases where a shipper could not get its freight to a switch point to access a second railroad's track. "When you don't have two railroads and you get a rate that's too high, you could request arbitration," Grisso said. Both the railroad and the shipper could seek such arbitration, he added.

Shippers now can appeal excessive rates to the Surface Transportation Board, but that process can be very costly. Dispute arbitration would make it less expensive to challenge unreasonable rates, Grisso said.

Although similar legislation introduced in the last session of Congress failed to pass, Grisso is optimistic that this time around federal lawmakers will act favorably. He expects Congress to hold a hearing on the bill later in the year, after the Senate and House finalize legislation authorizing continued funding for highways.