New research shows that freight rail rates have skyrocketed over the past decade following dramatic consolidation in the railroad industry.
The conclusion is based on research conducted by Escalation Consultants on behalf of the American Chemistry Council. It was released after ACC urged the Surface Transportation Board to take action on reforms it claims would benefit U.S. manufacturing and the economy by increasing access to competitive freight rail service for domestic producers.
It found that railroad rates remained relatively flat during the two decades that followed the enactment of the last major railroad reform legislation passed by Congress, the Staggers Rail Act of 1980.
A series of railroad mergers ultimately reduced the number of Class I railroads from 26 in 1981 to just seven in 2001. With only seven Class I railroads, and with just four dominating 90% of the market, railroad rates have surged 76% over the last decade, nearly three times the rate of inflation and by three times as much as truck rates over the same period of time.