Chemical makers warn against higher US rail rates

11 April 2007 19:30  [Source: ICIS news]

WASHINGTON (ICIS news)--Badly needed improvements in US railroad infrastructure and overall capacity should not justify major rate increases for heavy rail freight users, US chemical industry officials said on Wednesday.

 

Thomas Schick, senior director for regulatory and technical affairs at the American Chemistry Council (ACC), told a federal rail panel that chemical manufacturers routinely face delays in the supply of raw materials by rail and in the outbound rail movement of their chemical products.

 

In a hearing before the federal Surface Transportation Board, the principal US regulatory agency for railroads, Schick said that railroads have in some cases attributed these service difficulties to rail capacity constraints. The board was hearing testimony on the rail industry’s need to increase capacity and rebuild existing infrastructure.

 

“The rail industry’s ability to meet future demand for service should be a matter of concern to the board and to all rail-dependent sectors,” Schick said. “But it should not become the rationale for board actions that would harm shippers or interfere with competitive economics.”

 

“For example, railroad investment needs do not change the requirement that railroad rates and practices must be reasonable,” Schick said.

 

The Association of American Railroads (AAR), which represents major US freight rail carriers, said on Wednesday its member railroads expect to spend as much as $9.5bn (€7bn) this year to lay new track, buy engines and other rolling stock and repair bridges and other infrastructure. That projected capital investment is 14% higher than last year.

 

Schick also raised anew the chemical industry’s longstanding complaint about high rail freight rates charged to shippers whose plant sites are served by only one rail provider, so-called captive shippers. He said the board’s failure to remedy the captive shippers situation effectively denies competitive service to more than 60% of rail-served production sites among ACC-member companies.

 

The US chemicals industry has joined with other high-volume rail freight users to support legislation pending in Congress that would remedy the captive shippers problem and provide other relief to shippers. Rail leaders charge that the legislation would amount to re-regulation of US railroads and would hamper needed capacity expansions.

By: Joe Kamalick
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