SURFACE REFLECTION BY LAWRENCE H KAUFMAN: DIVIDED, RAIL SHIPPERS FALL

SURFACE REFLECTION BY LAWRENCE H KAUFMAN: DIVIDED, RAIL SHIPPERS FALL

The nation's railroads owe a big 'thank you' - if not hugs and kisses - to the folks running the various shipper groups. Why? Because with enemies like these, the railroads don't need a lot of friends.

For several years shippers have been calling for legislation to curb what they call railroad abuses of market power. To date, they have not been able to get congressional hearings from the committees that have the legislative jurisdiction. They have accomplished two things. They managed to get hearings before other committees, but that's more for show than for substance. And, with the support of rail labor acting in its own self-interest, they have managed to delay reauthorization of the Surface Transportation Board.This column has observed on numerous occasions that shippers are not a monolith. One of the few things most of them have in common is that they all use the transportation system. They compete with each other and generally will do everything within their power to best each other in the marketplace.

Despite numerous efforts to present a common front against the railroads, the major shipper groups appear unable to get their act together.

Last week, for example, the National Industrial Transportation League's Railroad Transportation Committee agreed to support conditionally Canadian National Railway's proposed acquisition of Wisconsin Central Transportation Co. as a 'minor transaction' under STB rules.

At virtually the same time, however, in a commentary in sister publication Traffic World, the executive director of the Alliance for Rail Competition was condemning any further rail mergers 'unless and until the railroad industry can come to an agreement with its customers as to how to enhance rail-to-rail competition.'

Last year, shortly after CN and Burlington Northern Santa Fe announced their intention to merge, the American Chemistry Council, then known as the Chemical Manufacturers Association, issued a public declaration against the combination - even before an application was filed or details were known.

The ACC was playing to the political gallery. In its communication, which was aimed at Congress more than the two railroads or the STB, the chemical trade group said it would oppose the BNSF-CN deal unless captive shippers were granted competitive service by another carrier.

An official of another shipper group referred to the ACC proposal as 'loony.' For one thing, the STB had never ordered that competition be created where it hadn't already existed - most shippers are more concerned about loss of existing competition in rail mergers. Also, the ACC approach would have required BNSF-CN to provide competitive access to their existing customers, but would not have provided for reciprocity by competing railroads.

To be fair, NIT League has been more pragmatic and less doctrinaire in dealing with rail merger issues. It has demonstrated a willingness to negotiate conditions that would satisfy its members concerns.

Shipper groups and their allies complained in the last Congress that Sen. John McCain, R-Ariz., chairman of the Senate Commerce Committee, wouldn't even hold hearings on the railroads' alleged abuse of market power. 'We are owed a hearing,' Sen. Jay Rockefeller, D-W. Va., said on numerous occasions. With a divided shipper world and a united rail lobby, why would McCain hold hearings?

Most legislation passes as a result of compromise intended to satisfy as many interests as possible, or to diminish as much opposition as possible. The watershed Staggers Rail Act of 1980, which substantially deregulated the railroads, would not be law if it were not for a coalition of railroads, shippers, labor and Wall Street financial interests that convinced Congress that it was time to lift the heavy hand of government regulation from the railroad industry.

No such coalition exists today. Delaying STB reauthorization and forcing it to operate under continuing resolution for three years is the most the shippers and unions have been able to accomplish. And some rail unions would abandon the shipper coalition in a heartbeat if the carriers would give up 'cramdown,' the practice of using STB merger rules to abrogate labor agreements signed years earlier.

Forget labor and Wall Street. If shippers cannot find common ground, why would McCain want to take up committee time to consider legislation that doesn't have a broad base of support? Remember, some of what shippers call abuse of market power is exactly what they do to their customers when they have the opportunity. In the railroad world, it's called 'charging all the traffic will bear' - not too much nor too little.

Lawrence H Kaufman can be reached at lkauf81509@aol.com.

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