ARLINGTON, VIRGINIA, US — US President Joseph Biden recently encouraged increased competition in the US economy with an executive order, which the National Grain and Feed Association (NGFA) hopes will urge the US Surface Transportation Board (STB) to allow agricultural shippers to request bids from nearby rail carriers.
According to a letter sent by the NGFA and members of the Agricultural Transportation Working Group (ATWG), President Biden’s July 9 executive order encourages the STB to resume its consideration of a proposed rule on “competitive switching,” which has been pending since 2016 allowing shippers served by a single railroad to request bids from a nearby competing railroad.
“We believe that enhanced competition is an important vehicle through which the Board can address pervasive challenges faced by rail shippers, including poor rail service, and unreasonable rail rates and practices,” the letter said. They urged the STB to adopt initiatives that the order identifies “to enhance rail competition and prevent railroads from abusing their market dominance.”
The letter emphasized how over the last 40 years railroad mergers have decreased rail competition from 33 to seven Class I railroads.
“While these mergers succeeded in rationalizing rail capacity, they increased railroad market power such that many shippers no longer have access to competition necessary to promote efficient service, reasonable rates and charges, and fair practices,” the letter said.
The letter also stressed that ineffective rail competition is affecting agriculture prices from decreased farm-gate prices for crops and increased crop-input and feedstock prices.
The groups also encouraged the STB to finalize proposed regulations creating a Final Offer Rate Review (FORR) process for small rail rate disputes and to support shippers’ ability to challenge unreasonable rail rates.
“To maintain the ability of US agriculture to remain competitive in a very dynamic domestic and world market and to be positioned to capture new market opportunities, the Board must address the serious issues posed by the lack of effective rail competition,” the letter said. “Pragmatic reforms to make the rail industry more competitive will strengthen this vital transportation sector, both to the benefit of rail carriers and their customers.”