Freight railroad customers complain about prices, service

— -- In the late 1800s, railroad robber barons enjoyed monopolies in many rural markets before regulation and the trucking industry tempered high freight prices.

Now, businesses contend the nation's major railroads are trying to resurrect that Gilded Age.

Many customers say the nation's big freight railroads are socking them with unreasonable rate increases and providing poor service in areas where they face no rail competitor, hurting the economy and the nation's ability to compete globally. The cost increases typically are passed to consumers, says Curt Grimm, a business professor at the University of Maryland.

The practices especially hurt industries — such as utilities and chemical and grain producers — that depend heavily on rail transport because they ship in huge quantities and own plants or farms in rural areas. Railroads transport about 40% of the nation's cargo.

CSX's Bob Sullivan says 97% of its deliveries to the Spruance plant are on time. He says rate increases partly reflect costs to transport toxic chemicals.

Congress getting involved

Now, Congress is wading into the debate. The Senate Judiciary Committee last week passed a bill that would apply competition laws to railroads, which are largely exempt from antitrust scrutiny. A measure in the House would make it easier for shippers to challenge high rates.

Railroads "have monopoly power … and they charge rates that have nothing to do with costs," says Bob Szabo, head of Consumers United for Rail Equity. Its members include trade groups for the utility, chemical and paper industries.