Late last month, the Surface Transportation Board (STB), an independent economic adjudication and regulatory body tasked by Congress with resolving rail fare and service disputes and reviewing proposed rail mergers, provided information regarding his public hearing on the proposed reciprocal switching obligations, which is scheduled for March 15-16 and will be held in his Washington, DC office.

As previously noted, the STB’s proposed reciprocal routing legislation proposed in 2016 would allow a rail shipper to access another rail if it makes certain declarations. As defined by the STB, reciprocal switching is a situation in which a railway that has physical access to a specific shipper facility switches rail traffic to the facility for another rail that has no physical access. And the second railroad compensates for this railroad which has physical access in the form of railcar switching charges, with the shipper’s facility having access to an additional railroad.

STB officials said this hearing will focus on the reciprocal referral regulations proposed in Reciprocal Referral File No. EP 711 (Sub-No. 1) et al (NPRM), which introduced new regulations in under which it would exercise its statutory authority to require carriers to establish switching agreements in certain circumstances. They added that the NPRM has seen varying responses from industry stakeholders, noting that the STB has reviewed the existing record in this proceeding.

The STB explained that in the case of reciprocal switching, an incumbent carrier carries a shipper’s traffic to an interchange point, where it transfers the cars to the competing carrier. And he observed that the competing carrier pays the incumbent carrier a switching charge for moving or transporting railcars from the shipper’s facility to the interchange point, or vice versa.

“The switching charges are somehow built into the total tariff from the competing carrier to the sender,” the STB said. “Reciprocal switching thus allows a competing carrier to offer its own single line to compete with the single line rate of the incumbent carrier, even if the lines of the competing carrier do not physically reach the facilities of a shipper. “

The subject of reciprocal switching received a fair amount of attention in an Executive Order (EO) issued by the White House last July focused on promoting competition in the US economy.

The OE encouraged the STB to require railway owners to grant rights of way to passenger rail and also to strengthen their obligations to treat other freight companies fairly.

He added that dating back to 1980, there were 33 Class I railways, while there are now seven, with four major rail companies which he says now dominate their respective geographic regions.

“Freight railways that own the tracks may prioritize their own freight traffic, making it more difficult for passengers to get services on time – and may overload other companies’ freight wagons,” a- he declared.

This sentiment is closely tied to the STB’s proposed reciprocal switching legislation, proposed in 2016, which would allow a rail shipper to access another rail if it does certain demonstrations.

Ian Jefferies, president and CEO of the Association of American Railroads, told RailTrends 2021, which was hosted by Progressive Railroading and independent railroad analyst Anthony Hatch, that the president of the STB, Martin Oberman, was very interested in exploring reciprocal switching under the guise of competition. .

“This is something that has been hanging around the board for quite some time, the last STB action was in a 2016 NPRM (notice of regulatory proposal),” he said. “To say the dossier is out of date is an understatement, given that much of the data used to support this proposal dates back to 2011. Think about where the industry and the economy were two years ago and where we are. are now. This should be the start of the process and the discussion and we are happy to have this debate. We think the facts are on our side – why the hell would a regulator consider any sort of proposal that knowingly undermines the fluidity of the rail network no matter how you stretch it.

Instead, he observed, the industry and the STB should focus on ways to maximize the movement of goods and also fluidity, without taking steps to obstruct the network and force traffic from a railway to another.

“It just doesn’t make sense; we’re going to make these arguments and bring these solid arguments and this solid data,” he said. position.

This is a huge problem and I’m glad the STB didn’t just take the 2016 rule and try to move forward and instead resume the hearings and both parties will present their best arguments and bring their best witnesses and we will have this debate. “

Additionally, Jefferies pointed out that only one of the five STB board members had a seat in 2016 and objected to the competitive change proposal, noting that it is time to step back and see where things stand, the AAR eager to engage strongly on this subject.

And, at the same conference, STB’s Oberman said that over the past few months, the STB has had many discussions about EP 711 with industry stakeholders expressing, for the most part, points of view. diametrically opposed view on the subject.

“It has become clear to me that this issue is too important and has a significant improvement in improving the competitive playing field to simply have these endless discussions between the STB, the railways and their customers,” he said. -he declares. “These issues should be aired publicly, the kind of vigorous discussion such a hearing will bring. Since joining the STB, I have focused much of my attention on stimulating competition in the provision of rail services as much as possible. Because in our American system, almost always, more business competition means better products, better prices, and a better economy. I believe there is potential for a more accessible reciprocal switching mechanism to provide this competitive response. Any railway that truly provides this type of service at fair prices should accommodate such an environment. “

In addition, Oberman expressed the sentiment expressed by the late E. Hunter Harrison, who led CSX, CN and CP at various points in his career, and devised the concept of the regular precision railroad.

Harrison, Oberman noted, saw reciprocal switching as one of the regulations in place, but people don’t really benefit from it because it’s not necessary if individual carriers are doing their job.

“In my opinion, for years many railway workers have been afraid of the term open access and I don’t know why,” Oberman said, quoting Harrison. “What that tells me is that all they’re going to do is open up more competition and, with a very limited number of players in North America, it’s important to keep that competitive balance. If an individual carrier… is providing the right kind of customer service at a fair and appropriate price, we have nothing to worry about. If we don’t provide the service, we shouldn’t be reluctant for someone else to come and provide this service. “

Oberman concluded his comments on reciprocal switching by noting that while reciprocal switching was good enough for Harrison – and it is good enough to be accepted as a condition in many parts of the US networks that were the subject of the 1990s mergers. – then it should be good enough for the industry today.

About the Author

Jeff Berman, Group News Editor Jeff Berman is Group News Editor for Logistics management, Modern material handling, and Supply chain management review. Jeff works and lives in Cape Elizabeth, Maine where he covers all aspects of the supply chain, logistics, freight transportation and material handling industries on a daily basis. Contact Jeff Berman