WASHINGTON (March 15, 2022) — During a hearing on proposed reciprocal switching reforms, the Surface Transportation Board (STB) heard many compelling examples of how switching – in the limited instances where it’s allowed – has helped improve shipping goods by rail.
“Today’s hearing clearly shows that lifting the STB’s outdated regulatory restrictions on reciprocal switching can improve freight rail service and support producing and shipping goods in America,” said Jeff Sloan, Senior Director of Transportation and Infrastructure at the American Chemistry Council.
“While reciprocal switching can help combat the rising prices of shipping by rail, there are also many real-world examples of how it can help increase the efficiency of the rail network and improve service,” he continued. “It’s time for the STB to use the tools Congress provided the Board to put rail competition to work for American manufacturers.”
What is the STB proposing?
The STB is looking to modernize its policies to keep up with major changes to the freight rail network. Specifically, the Board is considering a proposal to change its rules that greatly limit the ability of shippers to request that their cargo be transferred to another railroad through a reciprocal switching agreement.
If adopted, rail customers that currently lack competitive transportation options would for the first time have an effective means to seek competitive bids for rail service.
Benefits of Reciprocal Switching
- Improve efficiency: Greater access to switching could help reduce shipping distances and move cargo quicker. In comments to the STB, one ACC member company reports that reciprocal switching would provide access to more efficient routes, potentially reducing hundreds of thousands of unnecessary shipping miles per year.
- Alleviate Congestion: Providing access to multiple railroads can help improve the flow of goods. When a railroad does not have the resources to handle traffic levels, reciprocal switching would allow shippers to shift some traffic to another carrier to alleviate service challenges.
- Attract Investment: Reciprocal switching creates incentives for both railroads and shippers to make infrastructure investments. One ACC member company reported making significant capital investments to allow access to competition options via switching. And competition encourages each railroad to invest in their network to attract and retain business.
- Establish Market Based Rates: Switching can help provide greater access to competition-based freight rail rates. ACC members with operations in Canada where switching is available to them have found that railroads are more likely to offer reasonable rates.