Freight Rail Reform Will Grow the Economy

Freight Rail Reform Will Grow the Economy
AP Photo/Gene J. Puskar

Despite today’s contentious political landscape, many Americans still agree that leaders in Washington should adopt reforms that will grow the U.S. economy. Business as usual is simply not cutting it.

One straightforward action that the administration and Congress can make to boost our nation’s businesses and help consumers is to improve how products are shipped by rail. Today, manufacturers are being stifled by antiquated regulations that have unnecessarily driven up the costs of shipping everything from food and beverages to steel, timber, chemicals, and other essential products by rail.

Dramatic consolidation within the rail industry coupled with regulatory barriers that shield railroads from competition in many parts of the country are hindering American commerce. Companies have seen their freight rail rates doubled — more than three times the rate of inflation over the past decade — even though the volume of freight carried by the railroads has barely increased. To make matters worse, service has declined to the point that some manufacturing plants have been shut down because inbound products have not arrived as promised.

This isn’t just bad for business, it’s bad for consumers too, resulting in higher prices at stores and restaurants.

To help address this growing problem, more than a dozen global food and beverage producers headquartered in North America have banded together to create the Private Railcar Food and Beverage Association, Inc. These companies are household names that deliver products found in almost every store in America, from your morning cereal to your preferred wine. The group’s mission is simple: create a better environment for transporting food and beverages by rail in which free-market competition can flourish so that our members — and, by extension, consumers — can benefit.

Part of the solution is to remove an outdated regulatory barrier that protects railroads from competing with one another. This would allow shippers served by a single railroad to request that their cargo be transferred to another major railroad at a nearby interchange. Another sensible reform would help streamline the process for handling rate disputes by using real-world data from the marketplace to create benchmarks for competitive rates.

At the heart of these reforms sits the federal Surface Transportation Board, which is responsible for oversight of the nation’s freight rail network. Unfortunately, two of the seats on this five-member panel have been vacant for almost 2 years.

America’s shippers need a fully functioning Surface Transportation Board that is committed to completing meaningful freight rail reform. President Trump must act soon to appoint reform-minded members, and the U.S. Senate should promptly confirm them.

Helping this little-known yet important government agency carry out these reform will benefit U.S. industry and keep consumers happy.

Herman Haksteen is President and Barbara Cataneo is Secretary of the Private Railcar Food and Beverage Association, Inc., a trade association comprised of 13 global food and beverage companies and manufacturers headquartered in North America.

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