Shippers Cite Rail Cost Relief Hurdles
A report by the General Accounting Office, released Tuesday at a Senate hearing, shows that large numbers of rail shippers feel they are systematically being overcharged by rail carriers who have monopolies in their region. But at the same time, a majority believe federal regulators don't provide accessible relief.
The federal agency in charge of fielding complaints about rates — the Surface Transportation Board — has a process that seems too complicated and unwieldy for many shippers to undertake, according to the report by the GAO, the investigative arm of Congress.
"The process of providing rate relief is so expensive and so cumbersome that it is almost unworkable," says Sen. Byron Dorgan (D-N.D.), one of the lawmakers who requested the report. "When shippers are held captive by a monopoly, they don't have an effective way to complain."
And 70 percent said the time, complexity and costs in filing complaints with the STB are barriers that often preclude them from seeking relief.
For example, the GAO said, shippers who file a complaint that a railroad is using its market dominance to overcharge must create a model for the STB, demonstrating how much an optimally efficient railroad should charge.
Nearly 72 percent of shippers told the GAO that constructing such a model is a difficult task, particularly for small businesses. "The time and cost associated with the model's
evelopment may outweigh the compensation afforded the shipper should the board determine that the challenged rate was unreasonable," GAO said.
The auditors tracked the 41 complaints filed with the STB since 1990 and found that shippers spent about $500,000 to $3 million preparing each case. The process can also be timely — with the STB taking anywhere from several months to, in one instance, 16 years
o resolve a case.
The report was to be introduced today as an exhibit in a Senate subcommittee hearing on reauthorizing the Surface Transportation Board.
Dorgan said the GAO study will give the surface transportation and Merchant Marine subcommittee of the Senate Commerce Committee "a road map" in determining what changes are needed at the agency.
"Especially in a period when you have so many railroad mergers, you either need effective regulation or a complaint process that is simple," Dorgan said. He stressed that extra costs are eventually passed down to farmers and small businesses.
In a separate survey, the GAO interviewed the nine major freight railroads. They expressed satisfaction with the rate review process and said no change in the process is necessary.
The board has implemented some measures to streamline its complaint process, the GAO said. For example, it eliminated product and geographic competition as criteria for determining market
ominance by a railroad. It also has implemented guidelines to simplify complaints involving smaller dollar amounts.
A second GAO report analyzing the rates shippers pay freight railroads is scheduled for release in April.
