Several groups appeared before the Surface Transportation Board – a regulatory agency Congress charged with, among other things, resolving railroad rate and service disputes. Much of the testimony was in reaction to a 95-page General Accounting Office report released in October that stated while rail rates have declined overall; the price reductions were not equal for all commodities. "For example," the report said, "from 1985 through 2004, coal rates declined 35 percent while grain rates increased 9 percent."
Darrell Wallace, VP Transportation, Bunge North America: "We've had instances where the prices that the railroad had given us to move freight has actually taken us out of markets we had. We got one or two plants we're probably going to close down because its cost ineffective to ship product to those markets."
Dale Schuler, National Association of Wheat Growers: "The cost of transporting wheat at times has represented as much as one-third of the overall price a producer receives for his grain."
As for solutions, the National Grain and Feed Association is urging the Surface Transportation Board to include monitoring and publicly reporting the extent to which rail carriers are investing in new infrastructure to address service and capacity constraints.
That suggestion may help address another item in the GAO report that, quote, "raises the question whether rail rates in selected markets reflect justified and reasonable pricing practices, or an abuse of market power by the railroads."
Representatives from four railroads also appeared before the committee. The representative for the Union Pacific railroad said the GAO used old data in concluding that the cost to grain shippers went up – when the cost had actually decreased. He added if his price is not competitive, he risks losing business.
Douglas Martin, Union Pacific Railroad: "If we fail to offer rates that are market competitve, the farm truck will simply passby the elevators we serve and seek the best price in the market less the cost of delivery."
In a question and answer session following the testimony, one railroad representative said it is sometimes difficult if not economically cost-prohibitive to provide a shipper with a specific request for service.
Kevin Kaufman, BNSF Railway: "And it is so market volatile that its constantly changing picture. and I think its a credit to our industry that we've been able to get it, mostly pretty good."
After a full day of testimony, the Surface Transportation Board said it will keep the record open until January 12.