Comments for NITL’s Class I railroad competitive switching proposal due Friday

This Friday, March 1, the National Industrial Transportation League (NITL) and other concerns will file comments on the Surface Transportation Board’s (STB) Ex Parte 711, its July 2011 request to the STB that it adopt new rules regarding reciprocal switching between Class I railroad carriers, formally known as Petition for Rulemaking to Adopt Revised Competitive Switching Rules, Ex Parte 711.

NITL officials have stated that the League is asking the STB to “abandon its existing rules on switching and decision precedents, pointing out that no captive shipper had ever succeeded in gaining access to a second potentially competitive rail carrier under existing rules.”

They added that the STB did not act on the NITL request but instead offered up a set of questions about the impact of the NITL proposal with a March 1 deadline for answers. And the NITL also said that its request for a new rule is to bring a measure of competition into a non-competitive market, which has received broad support among rail shippers.

The NITL proposal would require a Class I rail carrier to enter into a competitive switching arrangement whenever a shipper—or group of shippers—demonstrates that certain objective operating conditions exist. The League is asking the STB to eliminate existing competitive access rules and precedents as they apply to reciprocal switching and replace them with the following conditions:
-the shipper’s or receiver’s facilities for which switching is sought are served by only one Class I rail carrier;
-there is no effective inter- or intramodal competition for the rail movements;
-there is (or can be) a “working interchange” between a Class I rail carrier and another Class I within a “reasonable distance” of the shipper’s facilities; and
-the proposal states that a competitive switching agreement shall not be imposed if either rail carrier can establish that the arrangement is not feasible, or unsafe or, that it would unduly hamper the ability of either carrier to serve its shippers.

“From our perspective, this would introduce a measure of head-to-head competition, between the Class I railroads in the U.S.,” said NITL President and CEO Bruce Carlton at last December’s Rail Trends conference in New York, sponsored by Progressive Railroading magazine and independent railroad analyst Tony Hatch.  “This petition is built on a discussion of competitive switching and the rights, privileges, and responsibilities that are wrapped around the whole subject of switching.”

In regards to the STB’s questions regarding the petition, Carlton said they were good questions regarding what the subsequent impact would be on shippers and Class I railroads—in terms of those who could and could not take advantage of switching—were the NITL’s requests to be granted, coupled with the fact that these were not easy questions to answer, adding that the STB provided NITL access to the confidential waybill sample it controls with limited visibility of its data.

“This is about competition, it is not about regulation or re-regulation,” said Carlton. “We continue to say and we do want a strong, profitable, well-functioning freight railroad industry. Shippers need it and depend on it and it is a mutual goal with our railroad friends.”

Carlton added that after the comments are filed on Friday there is likely to be a “long pause” as the STB pours through the NITL’s, shippers’ and railroads’ comments on this matter.
Association of American (AAR) Railroads President and CEO Ed Hamberger agreed with Carlton in that the STB’s questions regarding EP 711 were spot on.

“Like NITL, we will be doing our best to try to show what the impact would be, not just from a revenue standpoint from a freight rail perspective but also on efficiency and the effect on service,” he said. “I am told that to spot a car after it is loaded and to bring it back into service on a single line can be as few as six discrete moves to that car. If you have mandatory reciprocal switching, that can grow to 16-to-20 moves. Each one of those moves is an opportunity for something to go wrong, and each move takes time and equipment and personnel and clogs up rail yards. We believe that EP 711 would have an adverse impact on revenues and operations.”