New federal rule may help boost competition for railroad shipments at companies with few options

The American Chemistry Council trade group that has been one of the leading advocates for the rules expressed some disappointment that the Surface Transportation Board moved away from an earlier proposal that would have been more proactive. It, however, welcomed regulators establishing some clear minimum service standards for railroads that never existed before and requiring railroads to report more details about their performance.

STB Chairman Martin Oberman said it's clear to him that increasing competition in this monolithic industry could do wonders for the countless companies thatto deliver raw materials and finished products by giving railroads another incentive to improve service.

Rob Benedict with the American Fuel and Petrochemical Manufacturers trade group said it's a little disappointing that the rule would force companies to wait until service is bad to seek relief. But maybe the service standards in this rule will provide an incentive for railroads to do what they should have been doing all along: taking care of their customers, he said.

The National Grain and Feed Association said this rule may finally “create some semblance of rail-to-rail competition” that will benefit all the shippers out there who have little bargaining power now because they are only on one railroad. The head of the Association of American Railroads trade group Ian Jefferies said the railroads are studying the new rule to determine how big of an impact it might have on their operations. He said regulators should do a detailed cost-benefit analysis on this proposed rule to make sure it is effective.

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