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Group calls for fairness in rail rates for ag products

Agriculture.com Staff 11/03/2006 @ 8:01am

Rail rates for agricultural products are increasing at a greater clip than other commodities reliant on the railroads for transportation, according to the National Grain and Feed Association (NGFA).

The organization this week called upon the federal Surface Transportation Board (STB) to even the playing field for rail rates that NGFA officials say is unfairly slanted against agricultural commodities. According to NGFA, in the past three years, railroads have generated a 32% jump in revenue for ag shipments versus 26% and 20% for coal and intermodal shipping, respectively.

"This raises some critical questions regarding (rail) congestion, rail performance and the continued ability of rail carriers to truly meet their common carrier obligation to provide reasonable service on reasonable demand to various segments of their business,” said NGFA president Kendell Keith this week.

Keith and other NGFA officials called upon the Surface Transportation Board to:

  • Monitor and publicly report the nature and extent to which rail carriers are investing in new infrastructure;
  • Address the severe capacity constraints that currently characterize the rail system;
  • Revise and finalize the agency's proposal that would amend guidelines that small-volume rail shippers could use to challenge unreasonable rail rates;
  • Expedite the handling of unreasonable rail practice complaints brought before the agency.

"Because of tight rail capacity, the pricing power of carriers is much more obvious in the marketplace today," Keith said. "Certainly, carriers need revenue to be able to invest. But this increased pricing power can be subject to abuse...and these conditions underscore the importance of the STB, in a timely fashion, providing shippers that have smaller volumes some reasonable access to rate relief if that proves to be necessary."

Rail rates for agricultural products are increasing at a greater clip than other commodities reliant on the railroads for transportation, according to the National Grain and Feed Association (NGFA).

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