The railroads and their freight customers go to battle

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There’s a major business battle brewing in Congress that’s been getting hardly any mainstream press coverage (well, here’s something, but it took me a while to find it). On one side are the nation’s four big railroads, which have been operating at close to capacity and making a lot of money lately. On the other side are their big customers, who think they’re paying way too much to get their freight moved around.

I learned this because Jack Gerard, CEO of the American Chemistry Council, stopped by today. He’s a big player in Consumers United for Rail Equity (CURE), which is lobbying to strip the railroad industry of its exemption from antitrust laws and toughen up the Surface Transportation Board, which regulates railroads. Bills to do just that are making their way through the Senate and House. Also, a recent CURE study (pdf!) claims railroads have overcharged customers with $6.4 billion in bogus fuel surcharges.

Meanwhile, the railroads are trying to get a tax credit to help them expand capacity. Gerard says the customers want more rail capacity too, but won’t lobby for it until they get their own bill passed. “Needless to say, it’s become quite a tense relationship between the railroads and their shippers,” he says.

I have no idea which side is in the right here. But I’m all for well-funded business groups doing battle with each other, because they’re great sources of information that might never come to light otherwise.