FULL OF SCRAP Fewer and fewer options for shippers tied to the tracks

Apr 01, 2008 | 11:18 AM |

Railing at the railroads by scrapyard managers is fairly common, dependent as they are on those carriers for shipments to steel mills and ports.

How to secure better service and lower rates isn't always self-evident, as the Institute of Scrap Recycling Industries (ISRI) has discovered. When ISRI last wrestled with the matter, putting out a policy statement at a 2007 board meeting, it endorsed certain approaches but refrained from backing specific bills in Congress.

"We know what the problems are. We don't necessarily know what the magic bullet is," William Johnson, ISRI's director of political affairs, said recently. "The worst thing to do is to cause the railroads more problems trying to fix something."

ISRI's wish list More rail cars, getting them scheduled and routed more efficiently, increased infrastructure spending and "removing the anti-competitive protections afforded to the railroads."

A significant piece of the picture is that intermodal containers have become the focus of the rail industry. That means less attention is paid to gondola cars used to move steel scrap, and such shippers can't threaten to go elsewhere with their business.

As the North American Alliance of Automobile Manufacturers put it "Intermodal has the most competitive alternatives for transportation services, which creates a healthy commercial pricing environment for global shippers." But for customers needing specialized rail cars, the automakers said, "commercial rates may be leveraged due to the captivity of those customers, to subsidize the capital investment in more competitive 'franchises' on the railroad."....

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