Some freight railroads have it all

Daily Gazette
March 16, 2009

We in the Capital Region are fortunate to be served by three major railroads, CSX, Canadian Pacific and Norfolk Southern, which is about to greatly increase its presence by merging with a Northeastern freight line, the former Pan Am Railways, and building a large new yard in Mechanicville. That means there is some competition for shippers in our industrial parks, General Electric, etc.

But other areas of the country aren’t so lucky. They have so-called “captive shippers,” who have only one freight line to haul their product, whether it is coal for utilities, wheat, lumber or paper. Increasingly, that lack of competition is leading to much higher rates — and at a time when shippers can least afford it. Congress has recognized the problem and is considering various ways of addressing it, including taking away the railroads’ anti-trust exemption.

When the freight industry was largely deregulated in 1980, there were more than 40 good-sized freight lines operating in the country. Today there are just four major ones, which control 90 percent of U.S. freight rail shipments, and some much smaller ones. The big boys, who own a lot of the country’s track, often put obstacles in the way of the little guys, including refusing to accept transfer of cargo handled by them.

On March 5 the Senate Judiciary Committee, by a bipartisan vote of 14-0, approved legislation to end the railroads’ exemption from anti-trust law. The House Judiciary Committee is expected to approve similar legislation later this month, and Congress is expected later this year to make it easier for captive shippers to get relief.

The railroads say they must charge captive shippers the higher rates to have the money to invest in infrastructure, which is certainly needed.

But the federal government’s coming investments in rail largely takes away that excuse. It will also mean more track, not necessarily owned by the big boys, and more room for competition. That’s good. What the country needs is not a few freight lines charging what the traffic will bear, but more freight lines.