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In recent years, railroads have been combining with each other, mergingsintossuper systems, causing heightened concerns about monopoly. As recently as 1995,the top four railroads accounted for under 70 percent of the total ton-miles moved by rails. Next year, after a series of mergers is completed, just four railroads will control well over 90 percent of all the freight moved by major rail carriers.
Supporters of the new super systems argue that these mergers will allow for substantial cost reductions and better coordinated service. Any threat of monopoly, they argue, is removed by fierce competition from trucks. But many shippers complain that for heavy bulk commodities traveling long distances, such as coal, chemicals, and grain, trucking is too costly and the railroads therefore have them by the throat.
The vast consolidation within the rail industry means that most shippers are served by only one rail company. Railroads typically charge such“captive”shippers 20 to 30 percent more than they do when another railroad is competing for the business. Shippers who feel they are being overcharged have the right to appeal to the federal government“s Surface Transportation Board for rate relief, but the process is expensive, time consuming, and will work only in truly extreme cases.
Railroads justify rate discrimination against captive shippers on the grounds that in the long run it reduces everyone“s cost. If railroads charged all customers the same average rate, they argue, shippers who have the
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