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Report Finds Lack Of Rail Competition

by Glenn Hess
February 4, 2013 | A version of this story appeared in Volume 91, Issue 5

Credit: Shutterstock
Railroad train moving on the tracks.
Credit: Shutterstock

Rising rail freight rates driven by a lack of access to competitive rail service are hurting the chemical industry’s ability to meet the needs of its customers, according to a study commissioned by the American Chemistry Council (ACC), a trade group. About 70% of U.S. chemical facilities are “captive”—meaning they are served by a single railroad—and have to pay the carrier’s rate, according to a survey of 82 chemical shippers conducted by Veris Consulting. Captive production facilities pay rail rates that are 30% higher, on average, than plant sites that have access to multiple carriers, the report says. “Captivity and higher rates are not just impacting chemical shippers, they are taking a toll on the broader U.S. economy,” says ACC Chief Executive Officer Calvin M. Dooley. “Federal policies should no longer protect railroads from competing with each other.” He says the industry will seek both legislative and regulatory changes this year. The American Association of Railroads, which represents freight rail companies, maintains that from 1980 through 2010, average rail rates for all shippers dropped by 45%.


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