Equitable, Timely Rail Shipments

The crop production industry continues to undergo significant transformation and challenge associated with increasing demands imposed by changing markets, rising energy and manufacturing costs, foreign competition, consolidation, and ever increasing regulatory requirements. One of the most important issues facing the industry has to do with the lack of equitable and timely rail transport of inputs such as chemicals and fertilizers and outputs including grain and feed. The exorbitant cost and shipment delays associated with rail transport have brought this issue to the forefront of industry outrage and political debate.

Deregulation of the railroad industry including exemption from antitrust regulations, connected to passage of the Staggers Act of 1980, has led to a variety of continuing negative economic impacts on agribusiness and agriculture in general. The Act resulted in deregulation of competitive railroad activities and directed the organization now referred to as the Surface Transportation Board (STB) to “ensure rail customer access to rail competition and to maintain reasonable rates where there is an absence of effective competition.” Many critics of the STB have described the organization as failing its legislative directives miserably. Some of the most concerning issues that have resulted from the Staggers Act include the railroads’ continuing consolidation and monopoly of rail transport markets, the decline in rail service standards, and, most significantly, the rate increases that continue to negatively impact our businesses, our customers, and the economic health of the entire country.

A Class 1 Problem

Consolidations have led to a decline in the number of Class 1 railroad companies, which accounts for the fact that only four companies are now responsible for servicing the lion’s share of freight (averaging approximately 90% of rail shipment). In most cases, customers are held captive by dictates on delays and high cost since their transport needs are monopolized by one of the four Class 1 railroads. The prevailing attitudes of the railroad companies are best described as a “take it or leave it” provision of service. In cases where there are multiple carriers, customers find that railroad companies refuse to compete for their business.

It is also widely believed that lease agreements between short line railroad companies and Class 1 companies are designed to prevent movement of freight between competing Class 1 railroads. The STB allows railroad companies to take advantage of junctions, where cars can be transferred to another rail system, as a means of preventing rail customer access to competing companies.

Lack of healthy competition is known to drive prices higher. Railroad companies are also more likely to favor higher profit cargo from foreign sources than less favorable farm supply markets. Finally, even though Class 1 railroad companies continue to report record profits, maintenance and repairs of the railroad infrastructure are in decline.

The Need For Rail

Our country needs a financially viable and efficient railroad system that is accountable to rail customers and the nation for reliable service and reasonable rates. The monopoly that railroads have achieved does not accomplish either of these important and legislatively mandated objectives. As a recent example of the railroads’ abuse of market power, excessive fuel surcharges had been included in transport cost that did not coincide with the actual cost for specific rail shipments. Although a ruling by the STB did prohibit the railroads’ excessive fuel surcharge practice, it did not call for the reimbursement of lost revenues to the unfair profiteering.

The STB rate challenge process is also known to be so cumbersome and expensive that it provides essentially no protection to customers who depend on cost effective rail shipping service. In fact, the STB has actually made rulings that permit railroad companies to block customer access to competitors, which flies in the face of the legislative intent of the Staggers Act and documented objectives of the STB.

A coalition composed of hundreds of businesses and trade associations referred to as C.U.R.E. (Customers United for Rail Equity) is gaining valuable ground in urging Congress to repeal the freight rail industry’s antitrust exemptions, to revitalize the STB so that rail competition and reliable service at reasonable rates can once again be achieved, and to ensure that railroads reinvest in their infrastructure to meet the needs of their customers and the crop production industry as a whole.

Some of the champions pushing ahead with this include Rep. James Oberstar (D-MN), senior Democrat on the House Transportation and Infrastructure Committee, and Sen. John Rocke­feller (D-WV) and Sen. Byron Dor­gan (D-ND). There are also other senators that are supportive of this issue.

However, this is a very tough issue since the railroad lobby effort is very strong and the railroad companies have strong opinions as to what is and is not needed. To state the case clearly, C.U.R.E. has declared that “railroads have an obligation to serve ALL rail customers, the nation, and the nation’s taxpayers that have nurtured and protected them for more than 150 years.” 

Leave a Reply

Management Stories
ManagementMACA 2014: The State Of The Agricultural Industry, And Then Some
October 9, 2014
The trade association’s annual gathering featured speakers from across agriculture and beyond. Read More
StewardshipA Multi-Layered Approach To Water Quality
October 6, 2014
Illinois event highlights research and technology designed to better monitor and improve water quality — and the benefits of cooperative, coordinated effort. Read More
StewardshipMichigan Agriculture Leaders On Toledo Water Ban: We Want To Be Part Of The Conversation
August 8, 2014
Leaders of Michigan agricultural organizations said Thursday that the government should not have a “knee-jerk reaction” based on last weekend’s water ban in Toledo due to fertilizer run-off in Lake Erie. Read More
ManagementRussia Bans U.S. And EU Ag Product Imports In Ukraine Sanctions Battle
August 7, 2014
Russian President Vladimir Putin has banned the import of agricultural goods from countries that have imposed sanctions on Russia. Read More
Top 100 Articles
CropLife 100CHS Partners With Northern Partners Coop On Fertilizer Warehouse
January 21, 2015
In addition, the two companies will form a joint venture to build and operate a grain barge loading facility that will handle corn, soybeans and wheat for export through the CHS terminal at Myrtle Grove, LA. Read More
CropLife 100Wilbur-Ellis Move To Colorado Complete
January 20, 2015
Wilbur-Ellis Co. announces the opening of its new Agribusiness Division location in the Denver, CO, Metro Area. The new facility will host key personnel as the company shifts the base of its Agribusiness operations from California to Colorado. Read More
CropLife 100United Suppliers, McGregor Co., Five Others To Form Aligned Ag Distributors
January 20, 2015
These companies will continue to operate as independently owned and operated businesses, however, their crop protection divisions will now be formally aligned under the umbrella of Aligned Ag Distributors. Read More
CropLife 100Bozeman Named SEEDWAY Chief Operating Officer
January 16, 2015
He succeeds Donald Wertman, who will retire at the end of August 2015 after 40 years with the GROWMARK subsidiary. Read More
CropLife 100Wilbur-Ellis’ Craig Bair Honored For Safety Contributions To Ag Aviation
January 14, 2015
The William O. Marsh Safety Award recognizes significant achievements in safety, safety education or an outstanding operational safety program. Read More
CropLife 100BRANDT Gearing Up For Another NASCAR Season
January 13, 2015
BRANDT will return for its fifth year as a primary sponsor of the No. 51 driven by Justin Allgaier in the NASCAR Sprint Cup Series. Read More
Latest News
ManagementRetail Collaboration, Communicating Agriculture’s Good …
January 23, 2015
Editors Paul Schrimpf and Eric Sfliligoj discuss the recent creation of Aligned Ag Distributors, and the US Farmers and Ranchers Read More
FertilizerOSU Expert: Toledo Water Crisis A Turning Point For Ohi…
January 23, 2015
The August 2014 water crisis in Toledo, OH, impacted Ohioans’ views of Lake Erie algae problems by increasing the attribution of blame of algae growth on agriculture. Read More
FertilizerH.J. Baker Launching TIGER XP
January 22, 2015
Tiger-Sul introduces this next generation sulphur-bentonite product with a proprietary activator – ensuring farmers have a well-balanced nutrient replacement program. Read More
Crop InputsH.J. Baker Expands China Sales Force
January 21, 2015
Global Agricultural firm H.J. Baker announced that sales veteran Shi Dongshen has joined their Shanghai office in China. This newest hire follows the recent opening of their Lianyungang Sulphur Bentonite Plant. Read More
CropLife 100CHS Partners With Northern Partners Coop On Fertilizer …
January 21, 2015
In addition, the two companies will form a joint venture to build and operate a grain barge loading facility that will handle corn, soybeans and wheat for export through the CHS terminal at Myrtle Grove, LA. Read More
Matt Hopkins5 Bold Predictions For Ag Retail In 2015
January 21, 2015
This past year was filled with ups and downs for the nation’s top ag retailers, but what will 2015 have in store? Read More
SoftwareDeere Launches App Center
January 20, 2015
The John Deere App Center provides users the ability to search and find apps most useful to their business or operations. Read More
Crop InputsNew Syngenta Herbicide Approved In Soybeans, Sunflowers
January 20, 2015
Syngenta will sell BroadAxe XC herbicide in 2015 for use on soybeans, sunflowers and dry peas Read More
CropLife 100Wilbur-Ellis Move To Colorado Complete
January 20, 2015
Wilbur-Ellis Co. announces the opening of its new Agribusiness Division location in the Denver, CO, Metro Area. The new facility will host key personnel as the company shifts the base of its Agribusiness operations from California to Colorado. Read More
Crop InputsNovozymes Sales Figures Up For 2014
January 20, 2015
Novozymes announces its sales growth in 2014 was in line with expectations as sales grew by 7% compared with 2013. Read More
CropLife 100United Suppliers, McGregor Co., Five Others To Form Ali…
January 20, 2015
These companies will continue to operate as independently owned and operated businesses, however, their crop protection divisions will now be formally aligned under the umbrella of Aligned Ag Distributors. Read More
Eric SfiligojGMO Or DNA? LOL Or WTF?
January 19, 2015
A new survey finds the American public seems generally confused when it comes to any three-letter descriptor for their food. Read More
FertilizerAGROTAIN Wins No-Till Product Of The Year Again
January 19, 2015
This marks the 10th straight year AGROTAIN nitrogen stabilizer has been named the top product in this category; no other product has matched this honor Read More
FertilizerTFI President To Give Update On Nutrient Management Eff…
January 19, 2015
The Fertilizer Institute President Chris Jahn will give the keynote address at the 2015 Ohio AgriBusiness Association Industry Conference February 4. Read More
Seed/BiotechUnderstanding The Role Of Seed Enhancers In Seed Treame…
January 17, 2015
Seed enhancers such as polymer play a key part in helping to improve germination, seed growth or accuracy of planting. Read More
Crop InputsUSDA Signs Off On Dicamba-Tolerant Trait In Cotton, Soy…
January 16, 2015
A registration decision by EPA for BASF's Engenia herbicide is anticipated to follow the dicamba-tolerant trait deregulation milestone. Read More
CropLife 100Bozeman Named SEEDWAY Chief Operating Officer
January 16, 2015
He succeeds Donald Wertman, who will retire at the end of August 2015 after 40 years with the GROWMARK subsidiary. Read More
Crop InputsDan Clinker Joins Monty’s Sales Team
January 16, 2015
Monty's Plant Food Co. has hired Dan Clinker as a Product Consultant and Sales Support Representative for the Central Ohio region. Read More