STB forces CSX to drop "unreasonably high" rail rates

DuPont gets the decision in rail rate dispute

By Dave Hannon -- Purchasing, 7/1/2008 6:10:00 AM

Score one for the captive shippers. The Surface Transportation Board issued a decision yesterday ordering railroad provider CSX to reduce the rates it was charging chemicals maker DuPont in six different lanes.

The case considered the level of competition between rail and truck in the six lanes and STB determined that: “Although trucks are used occasionally to move the plastic powder between this origin and destination, the record evidence leads us to conclude that trucking does not provide effective competition for this movement.”

According to the STB, the rate reductions will vary by route, but range from approximately 5-40% of the challenged rates. DuPont will be entitled to reparations and reduced rates totaling up to $1 million per case, or a total of up to $3 million over a five-year period.

“Freight-rail customers can rest assured that the Board will take effective action to strike down unreasonably high rail rates,” STB Chairman Charles D. Nottingham said in a statement.

JPMorgan analyst Thomas Wadewitz told the Associated Press that the ruling leaves the door open for other rate challenges against North American railroads, most notably Union Pacific, which he says has the biggest concentration of captive shippers.

To view the STB’s decision, CLICK HERE.

See also: Shippers, railroads battle over proposed captive shipper law