U.S. Senators Amy Klobuchar (D-MN) and David Vitter (R-LA) today introduced bipartisan legislation to address so-called "captive shipping" and help promote fairness and competition in the railroad industry. The Railroad Antitrust Enforcement Act removes the railroad industry's obsolete exemption from the antitrust laws. Doing so will require the railroad industry play by the same antitrust rules as other industries, resulting in more competitive pricing that helps keep costs down for shippers and customers. Captive shipping has been a concern in rural communities across the country, where many businesses and agricultural producers only have access to one rail company to ship their goods to market. Klobuchar chairs the Judiciary Antitrust Subcommittee.
"It's simply unfair that companies like Blandin Paper Company in Minnesota pay higher prices because railroads enjoy an exemption from the antitrust laws," said Klobuchar. "This legislation makes commonsense reforms that will require the railroad industry play by the same antitrust rules as other industries and will help keep costs down for businesses, farmers and consumers."
"Many of Louisiana's unique businesses rely on efficient shipping using railroads, and our bill will ensure they are not punished with higher rates, especially those in more rural areas or areas suffering from higher rail captivity,"Vitter said.
Currently only four Class I railroads provide more than 90 percent of the nation's rail transportation, resulting in constant increases in rail rates for companies that rely on freight railroads to get their goods to market. These increased rail transportation costs are ultimately passed on to consumers and lead to higher prices. A recent study by the Consumer Federation of America estimated that rail rates are $3 billion higher for captive shippers than they would be if the market was competitive. The excess charges can cost consumers as much as $100 per year per household.
The Railroad Antitrust Enforcement Act would eliminate the railroad antitrust exemptions that allow freight railroad companies to take advantage of their market dominance, resulting in higher shipping rates for companies like Blandin Paper Company in Minnesota that rely on freight railroad to ship their products. Blandin Paper Company has a plant in bothGrand Rapids and in Finland, and pays lessto ship paper from theirFinland plant to customers in Georgia, Pennsylvania, and South Carolina thanit pays to ship to those same three locations from the local millin Grand Rapids along a captive rail line.
Klobuchar chairs the Judiciary Subcommittee on Antitrust, Competition Policy and Consumer rights and has been a leader in pushing for policies that boost competition and protect businesses and consumer from anti-competitive behavior. Last year, she authored a provision that was included in the 2012 Farm Bill to authorize a joint study by the U.S. Departments of Agriculture and Transportation to examine rural transportation issues, including captive shipping issues, to help farmers and ranchers move their products more quickly and efficiently. The provision would require the study to be updated every three years and directs the Secretary of Agriculture to report his recommendations for improvements in rural transportation policy to the Senate and House Agriculture Committees.