A report released by the Soy Transportation Coalition suggests that railroad companies may be overcharging customers for transportation of soybeans, soybean meal and soybean oil.
The report, "Railroad Movement of Soybeans and Soy Products," is the result of a comprehensive study of the role railroads play in the movement of soybeans and products.
According to the report, 42 percent of rail movements of soybeans (9.2 million tons) are transported at rates the U.S. Surface Transportation Board would classify as "potentially excessive," resulting in a potential overcharge to customers of $120 million in 2007.
"Potentially excessive," as referred to in the report, indicates shipments that were charged at 180 percent to more than 300 percent of the railroad's operating cost to ship the beans.
In Minnesota, 30 percent of its rail-transported soybeans are moved at rates that could be categorized as excessive by the Surface Transportation Board, according to the report. In South Dakota, that amount is 41 percent; in North Dakota, it is 64 percent.
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Of North Dakota's 4.6 million tons of soybeans shipped via rail, 1.7 million tons were charged at less than 180 percent of the railroad's cost, 1.2 million tons were charged at 180 percent or more of the railroad's cost, 1.1 million tons at 200 percent or more and 586,000 tons at 300 percent or more of the railroad's costs.
Soybean producer Scott Gauslow of Colfax, N.D., says producers might be surprised at how dependent soybean shippers are on railroad service.
"While North Dakota ranks 11th nationwide in soybean production, more soybeans are transported by rail in North Dakota than any other state," he says. "This is not a problem that just affects those companies that ship soybeans. Ultimately, this impacts farmers since transportation costs are simply passed on to us."
Antitrust update
Meantime, the Railroad Antitrust Enforcement Act has been passed out of the House Judiciary Committee.
The legislation would do away with antitrust exemptions for freight railroad companies and allow shipper-railroad disputes to be heard by U.S. courts rather than being locked under the jurisdiction of the Surface Transportation Board, considered by some to be biased toward the rail companies.
The House committee staff is working with the Energy and Commerce Committee and the Transportation and Infrastructure Committee to produce a report with any modifications to the language of the bill so the bill can move to the House floor.
"The committee staff met Oct. 1 with the railroads one more time to see if there are any legitimate problems that might result in modifications in the reported legislation or in the report language," says Bob Szabo, executive director of Consumers United for Rail Equity, a Washington lobby group in favor of rail reforms. "The railroads came back with some things . . . we can accommodate and a couple of things that are out of the question."
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In the Senate, Sen. John Rockefeller, D-W.Va., still is drafting companion legislation that would, in addition to the reforms in the House bill, overhaul the Surface Transportation Board.
Whether he can introduce his legislation in time for Congress to pass a completed bill this year remains unclear, but Szabo says there is a "high probability" both rail antitrust bills could be "wrapped up in this Congress."
