2014 Research on Rail Competition
ACC and other groups representing American producers released research on freight rail competition policies and their impact on businesses and the U.S. economy. This research includes an analysis STB data on freight rates for an array of commodities. The full research reports and their summaries can be found here.
Safe, reliable, and affordable rail transportation is essential to the business of chemistry. Nearly one quarter of U.S. shipments of chemical products travel by rail, and these shipments are essential to safe drinking water, a plentiful food supply, life-saving medicines, and more.
Further Improving Rail Transportation Safety
A comprehensive federal regulatory framework addresses all facets of railroad hazmat safety and security. According to the Association of American Railroads, rail hazmat accident rates have declined 91 percent since 1980, and more than 99.99 percent of rail hazmat shipments reach their destination without a release caused by a train accident.
Through ACC's Responsible Care® initiative, member companies and our partners are committed to continuous improvement in every aspect of transportation safety. Collectively, ACC member companies have invested billions of dollars in training, technology, and tank car safety and will continue to do so in the future. In addition, ACC helps first responders prepare for emergencies through programs like CHEMTREC® and TRANSCAER®.
ACC Policy Positions
ACC and its members are committed to working with their transportation partners and lawmakers to promote the safe shipment of chemicals by rail. We support:
- Sensible implementation of technologies like Positive Train Control (PTC) to reduce rail accidents, while allowing essential products to be shipped where they are needed.
- Science-based performance standards for hazmat rail cars developed through collaboration between federal agencies, railroads, shippers, and tank car manufacturers.
- Updating provisions of the Hazardous Materials Transportation Act to improve the safety and efficiency of transporting essential chemicals on highways or by rail.
Promoting Freight Rail Competition
Since the last major railroad reform legislation passed by Congress, the Staggers Rail Act of 1980, a series of mergers has reduced the number of Class I railroads from 26 to just seven in 2001. With drastically reduced competition, railroad rates have surged 76 percent over the last decade—nearly three times the rate of inflation.
Research commissioned by ACC demonstrates that chemical shippers paid a $3.9 billion premium for high freight rail rates in 2010, and the problem is getting worse. Many chemical shippers report that rail challenges have hindered their company from making domestic investments and meeting customer demand.
A shipper who lacks competitive transportation service has little recourse in the face of skyrocketing rates. Filing a rate challenge with the Surface Transportation Board (STB) is extremely expensive and complex with a large rate case estimated to cost $5 million and take more than three years to resolve. Not surprisingly, very few rate cases are ever undertaken.
Promoting greater freight rail competition offers a far more efficient way to temper soaring rates and may reduce the need for government intervention. Furthermore, market-based competition reforms can lead to greater innovation and increased efficiencies in rail service, as it does throughout all sectors of the U.S. economy.
ACC Policy Positions
ACC and its members support policies to promote greater freight rail competition and improve the efficiency and effectiveness of the STB. Specific reforms are needed to:
- Provide shippers the ability to obtain a reasonable rate for service to an interchange where access to a competing railroad is available.
- Prohibit railroads from “bundling” rates in a way that effectively prevents an STB challenge.
- Reform STB “rate reasonableness” standards to ensure that appropriate relief is available in rate cases.
- Streamline STB procedures to speed up resolution of cases and minimize costs.
- Eliminate STB’s annual railroad “revenue adequacy” calculation to provide greater balance for shippers and railroads in regulatory decisions.