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STB Hears Competitive Switching Pros & Cons

Volume 2, Issue 8
April 30th, 2014
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Members of the Surface Transportation Board got an earful during two days of hearings in late March from the nation’s Class I railroads and their customers on the controversy surrounding a proposal to require more reciprocal, or competitive, switching.

The National Industrial Transportation League has petitioned the STB to grant captive shippers increased access to competing railroads if there is a working interchange within a reasonable distance — defined as 30 miles by NITL.

The league contends that this change would make railroads more competitive and save shippers who currently have access to only one line about $900 million each year.

“You have the discretion to make changes and the statute gives you that discretion, and it’s ludicrous to hear that the current rules are etched in stone and can never be changed,” NITL attorney Karyn Booth told the board.

NITL President Bruce Carlton said shippers would switch only 1.44 million carloads, or 4.6% of total annual carload traffic, contradicting rail assertions of massive financial losses if the change is made.

The Association of American Railroads estimates that switching would cost the industry $7.9 billion in annual net income, which equals what those same rail companies spent on capital investments in 2010.

A CSX representative told the board that the change would lead to unpredictable traffic flows, leading to reallocation and inefficient utilization of resources.

The railroad also contends that the proposal could lead to additional delays of up to three days, and in some cases trains would have to go an extra 300 miles out of their way.

“This proposal is a solution looking for a problem,” AAR President Edward R. Hamberger testified at the hearing. “Railroads already voluntarily switch traffic when it makes economic sense for all parties.”

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