In a new report released by the National Research Council’s Transportation Research Board, the Board suggests that federal regulations regarding the freight railroad industry are out-of-date and should be updated. Specifically, the report refers to current policies that are designed to help keep railway rates affordable for shippers who have no other shipping options.

Changes Necessary to Keep Rates Reasonable

The shippers most commonly affected by the current policies ship common commodities, such as grain and coal. In fact, currently one-third of all freight traffic in the year 2015 is transported using rail. With few other transportation options for some, shippers often face excessively high freight rates, despite federal laws that are intended to prevent this from happening.

Updating the Staggers Rail Act of 1980

In 1980, the Staggers Rail Act deregulated the railroad industry, rejuvenating the industry and allowing failing railways to make changes necessary for survival. Under the act, shippers have the right to challenge railway rates, though, and a formula for identifying excessive rates is provided. However, 35 years later, the formula is no longer reliable or accurate, and cannot correctly be applied in today’s world. As such, a more precise formula or tool for assessing rates is needed.

Changes to the Litigation Process

Not only have changes been proposed that would address the method of determining unusually high rates, but changes need to be made to the arbitration process as well. Currently, the process is extremely expensive, and can take years to resolve. The report recommends a more streamlined process where the current method—where the Surface Transportation Board, which regulates railroads, rules on whether a rate is reasonable—would be replaced with independent litigation hearings.

Before the effect of any proposed changes would be felt, Congress must approve the changes first.

What the Proposed Changes Mean For Freight Shippers

The changes would be a big win for freight shippers who are currently facing excessively high costs when shipping via rail. However, the cost of shipping would only affect the rail industry; other freight shipment methods would not be affected by any railroad-specific legislation. Happily, there are a variety of other affordable freight shipment and storage methods available in Houston and elsewhere. To learn more about your freight management options in Texas, contact the professionals at World Trade Distribution, Inc. You can reach us today at 713-672-7295 or contact us online.

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