LEGACY Insights: White House Executive Order Elicits Mixed Responses from Rail Industry Experts

White House Executive Order

On July 9, the White House issued an Executive Order (EO) addressing corporate consolidation in an effort to strengthen competition across multiple markets, agriculture, healthcare, shipping, and transportation.

In particular, the EO called upon the Surface Transportation Board (STB) - an independent federal agency responsible for the economic regulation of freight rail - to “further competition in the rail industry and to provide accessible remedies for shippers.”

The EO has been subject to criticism from various groups, including the Association of American Railroads (AAR).

In a July 9 statement, AAR president and CEO Ian Jefferies asserted that:

“Competition is alive and well in the rapidly changing freight transportation market, with nearly three-quarters of all U.S. freight shipments moving by a mode of transportation beside rail.”

Jefferies also argued that the EO would actively hinder the freight rail industry’s economic recovery from the ongoing COVID-19 pandemic, claiming that the STB mandating forced switching would “put railroads at a severe disadvantage to freight transportation providers that depend upon tax-payer funded infrastructure.”

Some supply chain experts even see the EO as an opportunity.

In an article for Supply Chain 24/7, Peter Moore, adjunct professor at Georgia College, proposed the nationalization of railroads, citing the fact that the now-defunct Interstate Commerce Commission was able to open competition in the trucking and airline industries in the 1980s by granting 48 state authorities.

According to Moore’s reasoning, nationalizing railroads - and, as a result, introducing regulation such as open reciprocal shipping - could be the key to increasing competition and creating more favorable terms for shippers.

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