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-Januay 8, 2009

 
 

Supply Chain Graphic of the Week: Is there a Large Premium for "Captive" Rail Shippers?

 
  Rail Shipper Lobbying Group Says Premiums Can Exceed 100%; Only the Carriers' Hairdressers Know for Sure  
 

By SCDigest Editorial Staff

 
 

Is there a high premium for being a "captive" rail shipper, meaning those companies that have only one rail carrier option for moving their freight on rail lines?

The rail industry would say no, but shippers frequently disagree. An industy lobbying organization called Consumers United for Rail Equity (CURE), which represents some 3500 rail shippers across multiple industries, says the rate penalties to captive shippers are very high - more than 100% higher than rates where shippers have at least two rail carrier alternatives.

That's illustrated in the graph below, which was created based on research conducted by Escalation Consultants, Inc. of Gaithersburg, Maryland on the behalf of CURE. It shows their estimate of the delta between "competitive" and "captive" rates by different commodity areas.


Source: Consumers United for Rail Equity, a Rail Shipper Funded Organization

Undoubtedly, the railroads would dispute this data. What's the real story? How much more do captive shippers really pay, if anything? We don't know either, but do agree with this statement from CURE: "Only the railroads know the answer to the question, but they aren’t telling."

Agree or disagree? What is your perspective? Let us know your thoughts at the Feedback button below.

 
 
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