US chemicals firms hail move to ease rates for captive rail shippers

26 July 2012 22:55  [Source: ICIS news]

WASHINGTON (ICIS)--US chemical industry officials said on Thursday that federal railroad regulators had taken a significant step toward relief for freight rail customers who are served by only one rail carrier and consequently pay higher rates.

The American Chemistry Council (ACC) said that new actions taken by the Surface Transportation Board (STB) were encouraging and could promote more competition among rail carriers.

Authorised by Congress, the STB has authority over US rail rates and services, including jurisdiction over railroad mergers.

The board announced two initiatives “to explore ways to further protect captive shippers from unreasonable rail rates”.

Captive rail shippers are those companies whose production facilities are served by only a single railroad. 

As the council has often complained, those shippers – including up to 75% of chemicals manufacturers – often are vulnerable to what they consider exorbitant freight rates because they have no access to another railroad’s lines.

In one action, STB proposed reforms to its rules on resolving rate disputes to ensure that shippers can challenge rail freight rates through a more simple process and at lower costs.

In the second decision, the board proposed to increase interest rates that railroads must pay to shippers if it is found that the rail carrier did charge unreasonable fees.

Both proposed changes are subject to public comment.

The ACC said that “While captive shippers and their customers still face important challenges in gaining greater access to competitive freight rail service, we are encouraged by STB’s announcement and look forward to further engaging the STB on these issues and others”.

The public comment period runs through February 2013.

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

By: Joe Kamalick
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