Railroads: Polticos Talk Re-regulation

You can tell when the economy is tanking by the rhetoric on Capital Hill,  particularly when deregulated industries start to become targets for re-regulation. Somebody gets to feeling abused and complains to their congressman.  If it's a lot of "somebodies", or even better, a corporation or two, then legislation gets drafted. Generally this involves politicians responding to the worries and needs of their constituents. Unfortunately, the congressional response doesn't always represent a cure to the problem.

The core of the issue noted below has to do with access to competitive rail service by shippers who may be located in remote or spur line sites. Unlike other modes of transport, the railroads own the tracks. If you happen to be off a BNSF trunk line with no other carrier with adjacent service, guess what? You get to deal with the BNSF and whatever they need to charge at market rates.  Thats as much an issue of site location as it is the railroads available.   If you build an ethanol plant and want to have access to more than one major railroad, then do the site selection survey first. 

Presently there is a lot of competition for railroad capacity. Coal, grain and ethanol in tank cars, are key commodities for railroads in the upper Midwest.  Demand drives rates. A congressional "demand" for competition may not be effective, but could absolutely screw up pricing and true market economics, especially if we wind up with some form of "blended" regulation where carriers have market limits on profitability. Canada has that now for wheat and grain. Where some extra regulation is probably warranted is even application of fuel surcharges etc.

I don't see a need for railroad re-regulation (yet). Railroads are both efficient movers of volume tonnage and have a unique investment in the tracks the tonnage moves on.

Where I could get much more interested in re-regulation would be the airline business. Service stinks, maintenance is sometimes questionable, customers are abused and rates are going up. Airlines are abandoning markets and merging as a course of survival. If ever there was a case for re-regulation, the passenger airlines in the US are a classic case. But thats another article.

Link to HR 1650 Legislation: GovTrack.US

Gary Sattler at Bloggingstocks.com also wrote an excellent article on this topic.

clipped from www.progressiverailroading.com House Judiciary Committee OKs railroad 'antitrust enforcement' bill Last week, a bill seeking to remove railroads' antitrust exemptions passed the House Judiciary Committee. On April 30, the committee approved the Railroad Antitrust Enforcement Act of 2007 (H.R. 1650), which aims to eliminate "antiquated railroad antitrust exemptions enjoyed, unfairly, by freight railroads," according to a press release issued by U.S. Rep. Tammy Baldwin (D-Wis.), the bill's author. If passed by the House, H.R. 1650 would permit the U.S. Justice Department and Federal Trade Commission to review railroad mergers under antitrust law, and eliminate antitrust exemptions for mergers, acquisitions, collective rate-making and coordination among railroads. The bill  which has "wide support from utilities, agricultural groups, chemical companies, the cement and steel industries, paper and forestry companies, and consumer groups," said Baldwin

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Comments

[Trucking Software]

On whatever company the regulation should fair enough. I have to agree that there is no need for re-regulation for railroads now and it would be more better if they will implement this on airline business.