Ruled by Reason Competition in Freight Rail: Unpacking Consolidation, Concentration, and Remedies in a Critical Part of the U.S. Transportation System
In this episode, AAI President Diana Moss sits down with two experts to discuss the state of play in competition in freight rail. Freight rail is a vital part of the U.S. transportation system. It is the second largest mode of transportation in the U.S. and industry sources estimate that freight rail shipments will increase 30% by 2040. Railroads, and the shippers that transport on them, are responsible for the movement of critical commodities and products involving agriculture, energy, automotive, chemical, construction, and forestry. But we don’t hear much in the news about the state of competition in freight rail in the U.S. That’s unfortunate, since the sector has been home to massive consolidation over the last half a century. Since about 1950, there have been over 80 railroad mergers in the U.S. Today, there are only 5 domestic Class I railroads operating in the U.S.—two in the west, two in the east, and one down the middle.
My two guests on this episode are experts in rail competition. We will unpack the state of competition and consolidation in freight rail and what it means for shippers and consumers. We start at the 10,000 foot level, explaining why competition in rail transportation matters and walking through a brief history of U.S. rail consolidation. Next, we do some deeper dives into how railroad mergers diminish competition and who is harmed. We finish with how harmful railroad mergers are remedied by the government and some of the major, current regulatory policy initiatives for addressing competition issues, including reciprocal switching, and others.