Wednesday, May 05, 2010

Hamberger to Capitol Hill: “Congress must be careful”

Written by 
On May 5, a cadre of crusading railroad customers led by CURE (Consumers United for Rail Equity) and enjoying the rapt attention of a cabal of Washington legislators determined to re-regulate the rail industry—Rockefeller, Oberstar, Kohl, Dorgan, Klobuchar, Conyers, Baldwin, and Walz—trudged up Capitol Hill to offer the arguments they’ve been beating their collective drums about since the Staggers Act of 1980. Attempting to muffle some of the noise, Association of American Railroads President and CEO Ed Hamberger (pictured) published an eloquent editorial in The Hill, Washington, D.C.’s widely-read daily newsletter.

edward-r-hamberger.jpgThe CURE folks (who by the way represent a minority of railroad customers) are seeking a cure for “a problem where there is none,” according to Hamberger. They were in Washington for “Rail Customer Day” to urge enactment of the Surface Transportation Board Reauthorization Act of 2009 (S.2889) and the Railroad Antitrust Enforcement Act of 2009 (S.146/H.R. 233), two pieces of harmful legislation that they insist “would ensure that the protections against unrestrained monopoly pricing power intended by the Staggers Rail Act of 1980 and contained in the antitrust laws are implemented properly.”  The self-described “captive shippers and customers who use rail to move agriculture, chemical and forest products” claim that “the railroad monopoly is hurting consumers, forcing them to pay artificially high prices for their utilities, groceries, and other products.”

Hamberger’s counter to CURE’s rhetoric, as published May 5 in The Hill:

“Freight rail is a highly efficient industry that is essential to the U.S. economy and to economic recovery. It provides more than one million direct and indirect  jobs and supports many thousands more that rely on it to ship goods hither and yon.

Use whatever metaphor you like: It is the backbone, the lifeblood, the sinew. Without it, the lumber in Maine wouldn’t make the trip to Texas or to a port along the East Coast bound for markets around the globe. The grain in the Midwest wouldn’t make it to market in California or to Asia through the ports of the Pacific Northwest. You get the picture.

 “So in a discussion of freight rail rates, it is always a tad frustrating when I read of critics asserting that rates are ‘unfair’ or ‘too high.’

“For starters, these critics are usually massive chemical, utility, and agribusiness companies with great market power and, often, major investments around the world. I congratulate one of these companies that just announced a doubling of its profit for the first quarter of 2010.  So apparently rail rates are neither ‘too high’ nor ‘unfair.’ In fact, rail freight rail rates are a bargain.

“Take into consideration this fact: According to the American Association of State Highway and Transportation Officials (AASHTO), if all freight were moved by trucks instead of trains, costs to American consumers would jump by almost $70 billion a year. Why? Rail rates in 2009 are 55% lower than in 1981, meaning the average rail shipper can move twice the freight today for the same price it paid almost 30 years ago.

“When these shippers complain about rail rates, it is a bit like New York Yankees fans complaining about their team, which won the 2009 World Series: ultimately there isn’t much to gripe about. (Editor’s note: The Yankees have captured 27 World Series titles. The only plausible gripes I've ever heard have come from so-called “Yankees haters.”)

“An independent team of consultants commissioned by the Surface Transportation Board found that rate increases in recent years were the result of rising input prices, such as fluctuating fuel prices and other costs and did not reflect a greater exercise of railroad market power over shippers.

“For railroads to keep delivering on their benefits to the economy and economic recovery, they have to earn the sufficient revenue needed to upgrade and modernize the 140,000-mile U.S. rail network. Our country has great expectations of our rail system, and great investments are required.

“That’s surely why Congress must be careful as it addresses rail economic policy. If the federal government starts running the nation’s railroads, there is a big question mark about whether rail companies would earn the revenues needed to invest in the nation’s rail network.

“Financial reform, national security, economic recovery: Congress has so many weighty issues on its collective plate. Let’s not make aproblem where there is none.”

Thank you, Ed Hamberger, for fighting the good fight and presenting the facts. Let’s hope that the folks on Capitol Hill have enough smarts to screen out the static and allow America’s world-class freight railroad industry to continue rebuilding the U.S. economy and moving goods the best way ever devised: steel wheels on steel rails.

 

—William C. Vantuono, Editor, Railway Age