United States Department of Transportation
i
Freight railroad regulation : Surface Transportation Board's oversight could benefit from evidence better identifying how mergers affect rates
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2001-07-01
[PDF-590.94 KB]
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Abstract:Railroads have been a primary mode of freight transportation for many years, especially for bulk commodities such as coal and grain. Over the last 25 years, the freight railroad industry has undergone substantial consolidation. Since 1994, just prior to the recent wave of mergers, the number of independent railroad systems with at least one Class I railroad has decreased from 12 to 7. In 1999, the five largest Class I railroads accounted for about 94 percent of the total Class I operating revenue and about 95 percent of total Class I revenue ton-miles. Railroads have consolidated largely to reduce costs and increase efficiency and competitiveness. Industry consolidation has raised concerns from companies that ship and receive their goods by rail (rail shippers) and others about the lack of competition in the industry. In general, rail shippers are concerned that mergers have led to a reduction in railroad competition and consequently higher rail rates, poorer service, or both. In the context of railroad mergers, the Surface Transportation Board (the Board), which reviews railroad merger proposals, has defined "competitive harm" as the extent to which merging parties gain sufficient market power to profitably raise rates, reduce service, or both.
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