Rail Merger Benefits Yet To Materialize

Published online: Mar 13, 2000
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Major rail mergers have reduced competition, and the promised benefits of such mergers have yet to materialize for many agricultural shippers, Farm Bureau recently told the Surface Transportation Board.

"We may have already allowed railroads to concentrate to such an extent that providing agricultural shippers with meaningfully competitive shipping options may no longer be possible," said Eric Aasmundstad, president of the North Dakota Farm Bureau.

"We may already have reached the critical point where most agricultural shippers will no longer be able to obtain competitive shipping options," he said. "Future mergers will only make this worse. Too much rail consolidation is not a positive development. We are already past that point now, and new proposed mergers raise real concerns."

Aasmundstad emphasized that transportation is a critical link to farm markets for agriculture and, as a general rule, agricultural shippers are less able than mining and utility companies to command the market power necessary to negotiate with a railroad company.

"We are often forced to deal with poor service, such as trains that are not delivered to the loading point in a timely manner, that may not be picked up for days or weeks, and miss connections to our customers," Aasmundstad said. "Farmers and agricultural shippers must also absorb extremely high freight rates that railroad companies can demand due to their monopoly market power."