US hearing on key rail freight technology costs set for next week

31 October 2011 21:55  [Source: ICIS news]

WASHINGTON (ICIS)--An upcoming US railroad regulatory hearing could open the door to sharply higher rail freight rates for chemicals producers, but an industry spokesman said on Monday that the meeting also is an opportunity to enhance freight rail safety.

The Federal Railroad Administration (FRA) has scheduled a hearing for 10 November to advance railroads’ implementation of positive train control (PTC) technology.

That technology involves the installation of on-board equipment on engines to monitor train speeds and routes to ensure real-time control of cargo movement, especially for bulk hazardous materials.  In theory, PTC systems would provide greater overall safety by routing hazmat trains away from populated areas and avoiding potential conflict with other train movements or switching errors.  

System-wide implementation of positive train control for US freight and passenger railroads was ordered by Congress in the 2008 Rail Safety Improvement Act. 

PTC is supposed to be implemented nation-wide by 2015, although there are doubts that the deadline can be met.

Also of concern, especially for US producers of hazardous chemical cargoes such as chlorine, is allocation of costs for PTC implementation.

Rail carriers essentially want the cost to be absorbed by producers and shippers of high-risk cargoes – known as toxic inhalant hazard (TIH) cargoes – while  the chemicals sector argues that the costs should be spread across all freight shipments.

A study commissioned by the American Chemistry Council (ACC) indicated that if the estimated $10bn (€7bn) cost of PTC implementation were allocated across all rail cargo freight, the cost per carload could increase by $23. 

However, according to the study by consulting firm Snavely King, if those costs were allocated  only to hazmat cargoes, the per-carload cost could increase by up to $10,000.

“The potential adverse impact of focusing the PTC cost burden on limited commodity groups would result in ruinous and unsustainable rate increases,” the consultants concluded.

ACC spokesman Scott Jensen said the council “supports the goal of enhancing the safety of transporting chemicals”.

He said that next week’s federal hearing on PTC issues is “an opportunity to work with regulators and other stakeholders to develop the most effective path forward”.

($1 = €0.71)

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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