STB Announces Initiatives in Wake of 2011 Rail Hearings

07/25/2012| 06:05pm US/Eastern

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   By Bob Sechler 
 

U.S. regulators took tentative steps Wednesday toward resolving a long-running feud between freight railroads and shippers, more than a year after heated hearings last summer regarding pricing and service levels.

The Surface Transportation Board, which oversees the freight-rail sector, unveiled two initiatives it said are designed "to explore ways to further protect captive shippers from unreasonable rail rates." But any changes in shipping procedures or rates stemming from the initiatives could be more than a year away, because they still must undergo an extensive period of public comment and analysis.

"It will be well into 2013, maybe 2014, before we get a decision," said Bruce Carlton, president of the National Industrial Transportation League, which represents shippers. "It's not a change yet--it's the beginning of what might be a change."

Mr. Carlton said he was pleased nonetheless that the STB, a division of the Department of Transportation, saw fit to go forward.

A representative of Union Pacific Corp. (>> Union Pacific Corporation) said the railroad still was reviewing the STB's move and didn't have an immediate comment. Representatives of CSX Corp. (>> CSX Corporation) and Norfolk Southern Corp. (>> Norfolk Southern Corp.) couldn't immediately be reached for comment.

The STB initiatives include a proposal to reform its rules on resolving rate disputes, rendering the process simpler and less expensive for shippers, in part "by discarding the requirement that shippers design a hypothetical railroad to judge a railroad's real world rates," the STB said. The proposal also would substantially increase the potential relief available to shippers.

The second initiative would explore policy changes to help so-called "captive" shippers get better rates if they are within 30 miles of a working interchange with a competing railroad.

The so-called rail renaissance that started in 2004 has seen the railroad industry's financial fortunes rebound, with rising shipping rates and freight volume driving record earnings among the top operators that dominate the sector. But shippers long have complained that the recovery has been partly at their expense, prompting calls for more regulations.

The feud culminated in last summer's hearings, and the STB's move Wednesday marked its first public action on the matters since then. The STB said Wednesday it is continuing to evaluate other competitive issues in the freight rail sector.

Write to Bob Sechler at bob.sechler@dowjones.com

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