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Policy

Railroad Rates Soared After Mergers

by Glenn Hess
June 17, 2013 | APPEARED IN VOLUME 91, ISSUE 24

New research shows that freight rail rates jumped by 76% during the past decade after dramatic consolidation in the railroad industry. Escalation Consultants conducted the study on behalf of the American Chemistry Council, a chemical industry trade group. ACC has urged the Surface Transportation Board to act on proposed reforms that would increase competition among freight railroads and presumably lower rates for shippers, which include chemical companies. When Congress deregulated the industry in 1980, there were 26 large railroad companies in the U.S. After a series of mergers, only seven major railroads have operated since 2001, four of which hold 90% of the market. “Given the dramatic consolidation of the railroad industry and skyrocketing freight rail rates, federal policies must be reevaluated and modernized,” says Thomas E. Schick, ACC’s senior director of regulatory and technical affairs. ACC and other organizations are seeking new rules to prevent freight carriers from locking in a single rate for a shipment and allow shippers to switch to a competing railroad along the route to the final destination.

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