Surface Transportation Board updates railroad competition study; but discontinues proceeding on rail transportation contracts

02/05/2010


USDA’s Grain Transportation Report this week reported two developments from the U.S. Surface Transportation Board (STB), the federal railroad oversight agency.
In January, the STB published an update to its rail competition study which extends the analysis to include two additional years of data (the study now includes data from 1987 through 2008).

The Study concludes that although rail rates have been steadily increasing since 2004, with a particularly steep increase in 2008, the rate increases did not appear to reflect a greater exercise of railroad market power over shippers but were driven primarily by fluctuating fuel prices. The updated study is available at http://www.stb.dot.gov/stb/elibrary/CompetitionStudy.html.

In January 2009, the STB also sought public comment on a proposed rule that sought to require a statement to disclose whether agreements made between shippers and carriers are contracts or common carrier tariffs.

STB decided to discontinue the proceeding because it believes the proposed disclosure statement may not adequately protect a shipper from the consequences of agreeing to a contract and because of broad opposition to the proposed disclosure statement. Instead, the STB will continue its current practice of deciding whether a disputed rail rate is a rail contract or a common carrier rate on a case-by-case basis.

While proceeding was generated from concerns of coal shippers, grain movements might be the next commodity to more extensively use hybrid pricing agreements.


Source: USDA Grain Transportation Report, February 4, 2010