Industry Reacts as Biden Issues Order to Preserve Rail Competition

The presidential order called for the STB to allow railroads to more directly compete for traffic and to prioritize passenger rail. Photo Courtesy of Amtrak.

Industry Reacts as Biden Issues Order to Preserve Rail Competition

By Justin Franz

WASHINGTON — President Joe Biden issued an executive order promoting competition in the American economy that is raising eyebrows in railroad executive offices. While the order covered a wide range of the economy, it directly calls for the U.S. Surface Transportation Board to take steps to maintain or improve rail competition, including instituting a forced switching rule that would let operators go after traffic on another railroad’s track. 

The executive order also called into question the need for more railroad consolidation — something that could have Canadian National and Kansas City Southern executives sweating as they try to convince the STB to let them merge. The order also calls for Class I railroads to give passenger railroads like Amtrak more access, a directive that could help the passenger railroad on the Gulf Coast

“In 1980, there were 33 Class I freight railroads, compared to just seven today, and four major rail companies now dominate their respective geographic regions,” a fact sheet about the Executive Order stated. “Freight railroads that own the tracks can privilege their own freight traffic—making it harder for passenger trains to have on-time service—and can overcharge other companies’ freight cars.”

For years, the STB has wanted to institute a forced switching rule, allowing railroads to operate on each other’s track to serve customers and increase competition. But the rail industry has been steadfast against such a rule. The Association of American Railroads quickly blasted the order.

“Competition is alive and well in the rapidly changing freight transportation market, with nearly three quarters of all U.S. freight shipments moving by a mode of transportation besides rail,” said AAR President and CEO Ian Jefferies. “With the logistics chain already challenged by the recovery from COVID, this executive order throws an unnecessary wrench into freight rail’s critical role in providing the service that American families and businesses rely on every day.”

Although the order did not specifically mention the CN-KCS proposal, competitor Canadian Pacific — which tried and failed to merge with KCS earlier this year — issued a press release stating that it was clear a CN-KCS merger would reduce competition.

“The executive order signed by President Biden addressing competition in the U.S. economy sends clear messages: no rail mergers that reduce competition or hurt passenger service and that the U.S. economy needs more competition among railways,” officials wrote.

This article was posted on: July 9, 2021