Reform needed to end the railroad pricing monopoly

The elimination of rail-to-rail competition in the freight rail industry has come at a heavy cost for those who rely on it. Rail dependent customers with no access to railroad competition have experienced significant rate increases throughout the recession. Those increases have translated into much higher costs to consumers and businesses trying to compete in domestic markets against foreign imports and access the export market to sustain or create American jobs.

Consumers in Omaha and western Nebraska were forced to accept residential and industrial electricity rate increases of 11 percent and 27 percent per month respectively after a lack of competition among freight rail carriers  increased coal transportation costs to the Omaha Public Power District by $100 million per year.

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The Weaver Popcorn Company in Indiana is one of the world's largest popcorn producers and relies on railroads to transport goods for shipment globally. Lacking local rail access, Weaver exports 360 million pounds less popcorn per year, giving overseas competitors a large advantage. They have sent several requests to their primary railroad, Norfolk Southern, to be allowed to invest over $1 million of their own money to create a critical rail upgrade to access Norfolk Southern to the nation's ports, but have yet to even receive a response.

These are only two examples of a huge problem affecting our economy. In a March 2011 letter to the President, the Export Council, consisting of CEOs of 19 of the nation's major companies - most of whom are not even rail-dependent shippers - identified freight rail policy reform as one of the top 5 things the U.S. could do to spur exports and economic growth.

But while shippers and major corporate leaders have identified this problem, the freight railroads themselves refuse to even acknowledge any customers are having problems with rates or service. Freight railroads enjoy broad immunity from the nation's antitrust laws and have even blocked recent Congressional efforts to enact bipartisan compromise regulatory reform legislation - legislation they themselves helped to negotiate.

But the tide may be beginning to turn. The Surface Transportation Board, which oversees the freight rail industry, has launched its own effort to review competition and consider more pro-competitive policies that are authorized under current law. Late last month the board received compelling testimony from some of the nation's largest companies about problems they face within the current rail system. This is a good first step, but now it's time to act.

The U.S. economy is being adversely affected - even to the point of shutting down U.S. plants - by certain railroad practices. These practices can be curbed through reasonable pro-competitive modifications in freight rail policies that will not undercut railroad financial health. The changes proposed by shippers have bipartisan congressional support and are recommended by some of our country's leading corporate executives.

Just as Congress helped restore America's railroads to profitability a generation ago, it should today act to preserve another struggling sector of the American economy -- rail dependent shippers. Without competitive freight rail service the nation risks losing many of our commodity-based industries and jobs to more affordable foreign employers.

Glenn English is the CEO of the National Rural Electrical Cooperatives Association an Chairman of a freight shippers' advocacy group called Consumers United for Rail Equity (CURE).