"closed access" rail system

Finally, someone has pointed out the severe flaws of our nation's proprietary "closed access" rail system, as opposed to a more evolved "open access" concept currently in vogue in Europe, Australia and elsewhere. What the US has today in terms of it's rail system is a grotesque example of regional monopolies, and the inherent inefficiencies that lie therein.

Monopolies have no incentive to expand infrastructure or grow their customer base, because it is easier as a monopoly to restrict focus on fewer customers and to maximize their pricing power over those customers. Right now, US railroads have the coal industry (and vicariously, the entire US energy sector) by the you-know-what. US farmers have known this ever since Staggers was passed, and railroads started enforcing the bad end of the differential pricing schemes on our ag sector. Now, the more transparent coal/energy sector is feeling this pinch.

What is most appalling regarding the railroads' actions is that they are taking the profits extracted from those captive domestic producers, and using those profits to expand capacity primarily on the import intermodal lanes (read: Asian imports), and not on the major domestic and export lanes (read: coal[domestic] and grain[export]). Remember, overseas importers are not subject to rail captivity, since all major ports have two or more Class I railroads competing, while most of the captive rail shippers are domestic. Thus, the American railroads are a significant contributor to the US trade deficit with Asian trading partners, by charging the US shippers rates that are often twice as high as those rates being charged to overseas importers. (Source: Consumers United for Rail Equity)

What this nation needs to adjudicate now is to make railroads subject to antitrust laws (to which they are currently exempt), and then enforce an AT&T-style breakup of the US railroad oligarchy into separate infrastructure and transporting companies. The infrastructure companies would be regulated to charge any willing and qualified rail transporter company a predetermined access rate, and those rail transporter companies would be allowed a fee simple access of the entire US rail grid. This is the only way to bring de facto competition (and thus lower rates) to the US rail sector.

Dave Smith
Independent transportation researcher

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