ACC: STB’s Reciprocal Switching Rule Missed Opportunity
WASHINGTON (May 1, 2024) – The Surface Transportation Board (STB) missed an opportunity to address freight rail problems when it adopted a final rule on reciprocal switching, a process that permits shippers served by a single railroad to switch their freight to another major railroad.
The STB’s final rule allows shippers to seek reciprocal switching when their current railroad fails to meet specific service performance metrics. Unfortunately, the rule specifically excludes any rail traffic that is moved under contract, preventing the vast majority of rail customers from accessing competitive rail service.
It’s good to see that there is unanimous agreement at the STB that the status quo is not acceptable and freight rail reform is needed. Unfortunately, the Board’s reciprocal switching rule is too narrow to help most shippers and does not address the heart of the matter – removing barriers to competition for all freight rail customers. It simply does not go far enough and do enough to incentivize the railroads to provide reliable and competitive service.
As Board Member Primus explained in his concurring statement, the rule is “unlikely to accomplish what the Board set out to do” because the rule will not help most rail customers that receive substandard service.
Despite calls by the White House through President Biden’s Executive Order urging the STB to strengthen its reciprocal switching rules and to consider other rulemakings to strengthen competitive access, the STB failed to exercise its authority to provide reciprocal switching as a tool to promote rail-to-rail competition.
When done properly and implemented broadly, reciprocal switching can help unlock market forces, which reduces the need for government intervention and helps head off rate and service issues. It can also open more service options and alleviate congestion in the rail network.
Going forward, ACC urges Congress to clarify the Board’s authority to apply this rule to contract traffic. And we urge the Board to advance proposals that would fulfill Congress’ vision of reciprocal switching as a tool to promote more effective rail competition.
As stated by Board Member Primus, “We should do more, we should do better, and we should do it without letting another decade pass.”
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