Addressing outdated regulations will help keep the U.S. steel industry moving

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Rebuilding our nation’s infrastructure is a hot topic in Washington again, and as it should be, it also appears to be a top priority for the incoming administration. Our system for moving goods has been neglected for far too long and is in dire need of an update. And while much of the focus will rightfully be on repairing roads and bridges, we cannot afford to overlook badly outdated transportation policies that are also failing us.

Thankfully, the U.S. Surface Transportation Board is off to a good start and is working on regulatory reforms that will help address ongoing issues that are important to manufacturers who depend on freight rail. The preservation of a strong rail industry is extremely important to the member companies of the Steel Manufacturers Association (“SMA”).  For many steel producers, the railroads are highly valued customers. And most steelmakers also rely on the railroads to transport a significant portion of their raw materials and finished steel products. 

{mosads}SMA’s member companies account for over 75 percent of domestic steelmaking capacity and operate 127 steel plants across North America, including major operations in Florida, Texas, Ohio and Pennsylvania just to name a few.

Like many other industries, steelmaking is extremely competitive. U.S. producers compete not only with one another, but also with producers overseas. While our industry has gone through many tough changes, competition has helped make steel producers stronger, more efficient, and better prepared to deliver value to shareholders and customers.

We also believe that competition is healthy for the industries that SMA members do business with – including the rail carriers that are so critical to moving raw materials and finished goods. That is why we have joined with other manufacturers as part of the Rail Customer Coalition to support the STB’s effort to adopt free market principles and streamline its process for resolving freight rail problems.

Under one of the Board’s proposals, rail customers will for the first time have an effective means to seek competitive bids for service through reciprocal or competitive switching. For more than a century, switching has worked well for both railroads and customers in Canada. As Canadian Pacific Railway recently stated, railroads that provide competitive switching to its customers are “the two most efficient carriers in the industry today, demonstrating that a low-cost, service-focused carrier can increase revenues, operate efficiently and reinvest in infrastructure in a competitive environment.”

The Board is also trying to cut red tape out of its procedures for resolving rate issues in markets that lack competitive transportation options. The current system is a bureaucratic nightmare, with rate cases taking an average of three and a half years and more than $5 million to complete.

With these reforms, we think the STB is on the right course to ensure that freight rail carriers can benefit from greater competition and continue to make investments to help serve our industry well into the future. We strongly urge the new administration and Congress to support the vitality of the U.S. steel industry and to keep the STB moving forward.

Philip K. Bell is President of the Washington, D.C. based Steel Manufacturers Association (SMA). Prior to leading the SMA, Phil served as Director of External Communications and Public Affairs for Gerdau Long Steel North America based in Tampa, Fla.

The views expressed by authors are their own and not the views of The Hill.


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