By Chip Hallock, Emanuel Jones, and Marnie Primmer
August 24, 2021 at 5:00 am ET
On the campaign trail, President Joe Biden pledged to bring about the “second great railroad revolution.” We agree with the president and Transportation Secretary Pete Buttigieg that making greater use of rail — the most environmentally efficient surface transportation mode — will be critical to combatting climate change.
Rail is far and away one of the safest and best means for moving people and freight over land — the administration is right about its benefits. Rail is also expensive, and it has taken decades of intensive capital investment by private U.S. rail companies to build, maintain and continuously improve a nationwide rail network that moves 40 percent of U.S. intercity freight while accounting for just 2 percent of transportation emissions.
It is with this in mind that we want to raise concerns about a potential policy shift that could disincentivize private-sector investment in rail, undermine customer service, push more freight from railways to already congested highways and raise prices on the goods hard-working Americans buy every day.
The administration’s recent executive order, “Promoting Competition in the American Economy,” while aimed at increasing competition to help keep costs down, may in fact have the opposite effect when it comes to the rail industry. Encouraged by this EO, the U.S. Surface Transportation Board, the economic regulator responsible for railroads, is dusting off its outmoded playbook and ignoring the fiercely competitive freight marketplace, undercutting the president’s vision for rail and for climate change — and jeopardizing the future of America’s rail network rather than reinforcing it.
At the heart of the matter is a complicated process known as reciprocal switching, where one railroad handles freight for another. Railroads have done this voluntarily and efficiently for years. Pending STB proposals, however, would force railroads to enter reciprocal switching agreements to artificially reduce the rates certain shippers pay.
In other words, the government could compel Railroad A to let its competitor, Railroad B, use its private infrastructure at a below-market rate. And, since this is for certain shippers only, this forced access would essentially pick winners and losers in the freight sector rather than making the industry more competitive overall.
This idea isn’t new, and forced access has been rejected in the past because of the damage it could sow across a rail network of nearly 140,000 track-miles and about 1.5 million railcars. While a few favored shippers might enjoy short-term benefits, the efficiency losses and cost increases for consumers and all other shippers could be staggering. One evaluation of a similar proposal estimated it could disrupt 7.5 million carloads of traffic. That’s why some major rail customers like UPS have opposed forced access.
Second, this step toward re-regulation of freight railroads could undercut their ability to adapt and meet future economic demands. A new study from the Northwestern University Transportation Center shines a light on the exceptional performance of freight rail throughout the pandemic, showing that railroads were nimble in handling supply-chain disruptions and helped stabilize the intermodal market, keeping goods on shelves and getting much needed personal protective equipment to health care providers.
Rail’s resilience is no accident. It is the result of consistent, massive private spending on rail infrastructure and operations. Healthy railroads can spend what it takes — about $25 billion annually, in recent year s— to build and grow the network that our economy moves on. Healthy railroads support jobs, reduce congestion and roadway wear and tear, ease the burden on publicly funded roadways and decrease freight’s carbon footprint.
Last October, we joined over 1,000 other local and national leaders, including eight former U.S. secretaries of transportation, on a letter to the STB opposing changes to the current balanced approach to rail regulation. America’s freight railroads are among the best in the world by productivity and cost, with customers paying about 44 percent less, on average, than they did before the deregulatory efforts of the Staggers Rail Act of 1980. We urged regulators to continue to let freight railroads innovate and adapt because our communities, and our climate goals, depend on efficient railways doing even more.
U.S. freight demand is expected to increase 40 percent over the next 25 years. With so much riding on the ability of railroads to play an even greater role in moving freight, let’s recognize the rail renaissance that was catalyzed 40 years ago when Biden joined 90 other senators in supporting the Staggers Act. Congress and the administration should reject policies like forced access that could degrade our nationwide rail network at a time when we need it most.
Chip Hallock is President and CEO of the Newark Regional Business Partnership. Sen. Emanuel Jones represents the 10th District in the Georgia Senate. Marnie Primmer is executive director of FuturePorts, which advocates for sustainable growth for the Southern California supply chain.
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