ACC Stresses Importance of Addressing Freight Rail Challenges

WASHINGTON (September 17, 2024) - Jeffrey Sloan, Senior Director of Regulatory & Scientific Affairs at the American Chemistry Council (ACC), today testified before the Surface Transportation Board during a public hearing examining growth and the freight rail industry.

In his testimony, Sloan highlighted the rising transportation needs and opportunities within the U.S. chemical sector. With anticipated production increases of over 25 million metric tons by 2032, the business of chemistry is poised to generate more than 120,000 additional railcar shipments per year. This expansion in American chemical manufacturing provides a unique opportunity for the freight rail industry to attract new business, upgrade service, and improve customer relationships.

"Simply put, ACC member companies want to ship more by rail. Rail is widely recognized as the safest way to transport hazardous materials by land," Sloan testified. "With lower fuel consumption and carbon emissions versus trucking, rail transportation can help companies achieve their sustainability goals."

Impediments to Growth

However, ACC members have dealt with a lengthy list of significant challenges over the years. Key among them are excessive rates and charges, unreliable service, and a lack of network resiliency. These ongoing problems have made rail a difficult and less viable mode of transportation and risk driving shippers to pursue alternatives.

Promoting Competition with Reciprocal Switching

Sloan explained that adopting more workable and accessible reciprocal switching policies, a policy allowing shippers to access a competing rail carrier under certain conditions, would help make rail a more viable and attractive option.

While the Board adopted an final rule on reciprocal switching earlier this year, it fell short of providing more competitive rail options for most customers.

Sloan urged the Board to use its authority to provide reciprocal switching as a tool to promote rail-to-rail competition. "A more competitive marketplace is the lynchpin for growth in the freight rail industry… Broadly implemented, reciprocal switching can help unlock market forces and incentivize railroads to provide reasonable rates and adequate service. This will drive more business to the railroads, with benefits to the nation's economy, consumer prices, and climate goals."

More Transparency on Rail Rates

Sloan also called for greater transparency on rail rates, highlighting the need for data regarding how much more rail shippers must pay solely because they lack competitive transportation options. Understanding this relationship would help the STB evaluate how the lack of effective competition harms growth in the freight rail industry.

Sloan closed his testimony by committing to work closely with the Board, rail carriers, and other stakeholders to build a more competitive, efficient, and customer-focused freight rail system.

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