The idea that freight rail should be regulated like a monopoly is an antiquated view of the market.

recent study shows freight shipping is more competitive today than when heavy-handed regulations were imposed more than 100 years ago. Despite this, proposals to expand standard carrier requirements would return the industry to public utility-style controls exclusively for freight rail shipping. 

Legislation that ignores the competition in the modern freight shipping industry risks repeating the same mistakes that crippled the freight rail industry before 1980.

The Freight Rail Shipping Fair Market Act and Reliable Rail Service Act were recently proposed in Congress and would each increase the Surface Transportation Board’s authority over freight rail providers in ways that will reduce the productivity and safety of freight rail. These bills would expand common carrier regulations, allowing stricter control over what services rail freight providers must offer, the prices for those services, and how freight rail equipment is deployed to serve their contracts. This interference with rail operations drives up the cost of shipping and, ultimately, the prices consumers pay for goods.

The bill — proposed in June by senators Tammy Baldwin, D-Wisconsin, and Roger Marshall, R-Kansas — shares much in common with the other two proposals. It would expand the Surface Transportation Board’s authority to direct freight rail employment and equipment. As with similar proposals, this bill will bring back regulations that nearly bankrupted the industry in the 1970s. It is likely to drive up prices for goods and push shippers into rent-seeking to force contract terms on rail companies through the STB instead of reaching mutually beneficial agreements for shipping.

Read the full Inside Sources article here.

Justin Leventhal is a senior policy analyst for the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit www.TheAmericanConsumer.Org or follow us on Twitter @ConsumerPal.