ARLINGTON, VA - March 26, 2014 - At a time when the nation's railroads are reporting healthy profits, partly due to near-monopoly conditions that insulate rail lines from meaningful competition, The Chlorine Institute (CI) is asking the U.S. Surface Transportation Board (STB) to take a closer look at competitive switching agreements to ensure there is real rail competition for the nation's farmers, manufacturers and the consumers.
Testifying for CI in support of competitive switching agreements, DuPont's Sustainability Manager, Eddie Johnston, explained that nearly three-quarters of all shippers are captive to a single railroad, a situation that confers "unrivaled pricing power" on rail companies. Requiring the nation's major railroads to enter into "competitive switching agreements," through which lines must carry cars and shipments from other lines serving captive shippers under certain conditions, is necessary, but insufficient.
Mr. Johnston said the STB must "recognize that competitive switching agreements stop short of actually creating competition. They make competition possible," but the STB "must not interpret competitive switching agreements as creating competition per se." Specifically, CI testified:
- Because competitive switching cannot be interpreted as creating competition per se, the STB should not lessen its oversight over end-to-end rail rates. Examining just part of a shipment's journey is inadequate;
- The STB should unambiguously disallow the use of competitive switching alone as a defense against market dominance in a rate case; and
- The Board should require all railroads subject to competitive switching rules to provide tariff rates when a shipper is not able to obtain a reasonable contract offer.
These measures will help achieve fair rail rates, while protecting the public interest and promoting true rail competition.
The Chlorine Institute (CI), founded in 1924, is a technical trade association of companies that are involved in the safe production, distribution and use of chlorine, sodium and potassium hydroxides and sodium hypochlorite, and the distribution and use of hydrogen chloride. Visit us online at: www.chlorineinstitute.org.
SOURCE: The Chlorine Institute