World Grain - July 2010 - 40

PIXEL Optical sorter

FEATURE: U.S. TRANSPORTATION STUDY
T.

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The USDA study noted that the trucking industry carries 70% of the tonnage of agricultural, food, forest products, alcohols and fertilizer.

"The loss of rail-to-rail competition due to railroad mergers and the associated increase in market power was not
foreseen by many when the Staggers Act was passed," the
study said. The Staggers Rail Act of 1980 basically deregulated railroads and promoted reliance on free markets for
railroad profitability and on competition to protect shippers.
After the act was passed, railroads reduced costs by eliminating excess capacity, abandoned many routes and branch
lines and merged to eliminate duplication, resulting in lower
costs and higher productivity.
"The mergers increased railroad market power and profitability," the study said. "Rates for many shippers fell from
1981 through the end of the 20th century. Since 2004, however, rates have begun to rapidly increase as railroads reach
the limits of their capacity.
"The level of rail-to-rail competition for grains and oilseeds
decreased significantly between 1992 and 2007. Almost 75%
of agricultural areas lost rail competition (during the period)."
The Staggers Act also allowed railroads to charge different
rates to different shippers.
"Nationally, not only are rail rates for grain and oilseeds
higher than those of other commodities, but the rates have increased more rapidly during the four years since 2003," the
study said. "Rail rates for grain and oilseeds rose 46% from
2003 to 2007; rates for all other commodities increased 32%
in the same period."
Further, the study indicated "considerable" evidence that
railroads boosted profits as fuel surcharges recovered more
than the additional cost of fuel.
The study noted railroads' share of grain transportation has
decreased in recent years due to the way grain is marketed,
higher rail rates and the closure of branch lines. The shift to
shuttle trains and higher capacity cars limited areas served by
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World Grain - July 2010

Table of Contents for the Digital Edition of World Grain - July 2010