(The following story by John D. Boyd appeared on The Journal of Commerce website on September 27, 2010.)
WASHINGTON, D.C. — Nearly three-fourths of rail shippers want Congress to pass a regulatory reform bill, according to a Wall Street analyst’s survey, and many shippers say they might consider filing their own challenges to freight rates in the next two to three years.
The Wolfe Trahan research group’s “State of the Freight” quarterly survey found 74 percent of shippers in favor of passing the Senate bill to expand the Surface Transportation Board and put tougher competition access rules on carriers, though the authors said they think “many shippers were hoping for a more far-reaching bill.”
Wolfe Trahan asked the rail customers if, given a recent rise in rate challenge cases at the STB by other shippers, they would be more or less likely to file a case themselves. It said “43 percent of shippers noted that they are now more likely to file a rate complaint” over the coming two to three years, while 20 percent were less likely. The other 37 percent, the report said, “would like to bring a case against one of the rails, but note that their traffic is not eligible” under current STB rules.
Though no shippers indicated firm plans to launch a case within the next year, the authors said based on recent talks with Washington, D.C., attorneys they expect “a moderate increase in large rate case filings is likely.”
The survey went out to more than 2,000 supply chain managers at companies of varied sizes, asking about trends in the second quarter and looking ahead over the coming year. Responses from about 150 came in from mid-July to early August. Researchers said the respondents represented an estimated aggregate transportation budget of about $15 billion; nearly half said their firms spend more than $100 million a year on transportation.
“Rail shippers now expect a 3.3 percent average rate increase over the next 12 months,” Wolfe Trahan said, “up further from 3 percent last quarter and 1.9 percent a year ago. This represents the highest relative expectations in our poll in 10 quarters.”
The rising price trend also comes as shippers told Wolfe Trahan they were rating the major railroads generally worse now than during the recession levels of a year ago in service measures such as average train speed and the length of time shipments sit at terminals.
The research group said those results “make sense to us, given much stronger volumes today versus last year, and significant box (container) shortages that could impact rail intermodal service levels.” Shippers indicated they were moving more shipments from truck to rail than vice versa, so they are giving railroads more share of their overall loads.