Coal Customers Turn Up The Heat - coal industry reacts to prices and quality of service of railroads - Brief Article

Railway Age, March, 1999 by Luter S. Miller

Contributing Editor Frank Wilner readily acknowledges that his story on coal shippers (p. 37) is one-sided. But it's the side that Congress is likely to hear, and it's one that the carriers can't ignore if they want to keep the market freedoms they won in the Staggers Rail Act of 1980.

To hear the railroads tell it, both carriers and customers have benefited handsomely from Staggers:

Rail rates as measured by revenue per ton-mile have fallen more than 50% on an inflation-adjusted basis; freight volume has increased almost 50%; train accident rates have declined almost 70%; car and locomotive productivity has doubled; labor productivity has tripled.

With that kind of performance, you'd think the average railroad customer would be pretty happy. Maybe. But who's average?

Not some of the coal shippers who talked to Wilner for this issue's cover story. They're steamed up about what they perceive to be the railroads' abuse of their market power, and they aim to do something about it.

Interestingly, they're no longer talking open access as a solution to their grievances. But they want some kind of competitive access where it is now denied them.

A coal-shipper lawyer said the railroads' treatment of captive customers "is like selling $3 Cokes in the ballpark because there's no competition." He added that you might not mind paying that much for a ballpark soda if you got a good game to go along with it-but coal shippers, he said, were getting only "high prices, poor service" and the disinterest of "unresponsive rail employees."

Congress may be hearing a lot of that kind of talk if coal customers feel they have no choice but to take their case to Capitol Hill.

If coal customers do make war on the railroads in Congress, they may find themselves fighting shoulder to shoulder with some real adversaries of the railroads, big trucking interests.

That's right: American Trucking Associations threatened last month to join big railroad customers in seeking to roll back some of the railroads' market freedoms. ATA said its board had empowered it to do this if the railroads persisted in resisting the introduction of heavier, longer trucks on the highways.

What kind of allies are these?

If motor carriers succeed in their effort to put veritable trains-of-trucks on the highways, the railroads will lose another layer of relatively high-rated traffic. What remains on the railroads-low-rated bulk commodity traffic that the truckers don't want, traffic like coal-will have to bear a greater share of costs.

Is this what coal shippers want?

Certainly not. They have everything to lose from a weakened railroad system. But their constant sniping at the railroads encourages those who have everything to gain.

Luther S. Miller