TAMPA, Fla. – American farmers are as frustrated with rail service as their Canadian counterparts.
In 1980, more than 40 Class 1 railroads competed for shipper business in the United States.
Today, after more than 50 mergers and consolidations, seven Class 1 railroads are left, three of which control more than 70 percent of the country’s grain movement.
Farmers in the central U.S. have competition for their grain because that’s where the major railways converge. However, the far corners of the grain growing region often have only one railway.
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“That makes it a little tougher for our shippers to negotiate the good shipping rates,” said Eric Steiner, director of government affairs for farm policy with the National Association of Wheat Growers.
The organization hopes Congress will pass two pieces of legislation this year that will help address its concerns about rail capacity and captivity.
One bill would remove anti-trust exemptions for railways, ensuring that future attempts at consolidation would face extra review by the Surface Transportation Board to take into account the effect on consumers and shippers.
The other would remove the Surface Transportation Board from the control of the U.S. Department of Transportation and set it up as a separate commission.
The board oversees the shipping industry, ensuring that the rates the railways charge are what they need to maintain infrastructure, pay employees and generate a reasonable profit. It also resolves disputes between railways and shippers.
NAWG believes the board would become a better advocate for shippers if it was its own entity.
“We think the dispute resolution entity would be stronger if it were its own commission” said Steiner during an interview at the 2011 Commodity Classic conference.
