(Reuters circulated the following article on February 23.)
CHICAGO -- The major U.S. railroads face a serious battle in the current U.S. Congress over upcoming legislation that would govern how they set their prices and how they are regulated, the top executive at No. 4 railroad Norfolk Southern Corp said on Monday.
I am not sure that cooler heads will prevail, Chief Executive Wick Moorman said at the Reuters Manufacturing Summit in Chicago. Some people are going to line up against us.
Legislation was introduced into the U.S. House of Representatives and Senate in January that would govern how railroads set their prices.
Some customer groups claim railroads enjoy monopoly pricing power that needs to be reined in, citing persistently robust profits during the U.S. economic downturn as proof of unfair pricing.
Those same customer groups have tried unsuccessfully in previous years to introduce similar legislation, but say that key members in this Democratic-controlled Congress are more sympathetic.
Moorman said he was confident the railroads argument -- that they should set their own prices in order to prosper and invest in necessary expansion -- would be heard in Congress regardless of its composition.
I am optimistic that a lot of Democrats understand torpedoing the railroad industry is not a good idea, he said.
Moorman also said he was concerned over a ruling last week by the Surface Transportation Board (STB), which regulates prices in the rail industry, against No. 2 railroad Burlington Northern Santa Fe Corp.
The STB had originally ruled in BNSFs favor in 2007 in a complaint brought by two electric utilities near the Powder River Basin in Wyoming. Last week it changed that decision using new rules and said BNSF had charged unlawfully high rates. The railroad must reimburse the utilities $100 million and reduce rates by $245 million over the next 15 years.
In some sense we appear to under attack from two directions, Moorman said. It remains to be seen if this (ruling) is a dangerous precedent.
Norfolk Southerns CEO also said he was very, very disappointed by the amount of money allocated for infrastructure investments in the economic stimulus package recently approved by Congress.
That is to me the single great investment that this country needs to make and should be making for the long-term prosperity of the country, he said. In comparison to the size of the package, I just thought it was woefully inadequate.
Last week the Association of American Railroads said that U.S. railroad freight volumes for the year so far were down 16.1 percent from the same period in 2008.
Moorman said Norfolk Southerns own freight volumes were down a little more than the rest of the industry and that there were few signs of an economic recovery on the horizon.
We did fairly well last year up through October ... and then just like everyone else in this economy, someone turned the lights out some time in November and we saw a decline like nothing we have ever seen in terms of its precipitousness, he said. We dont see it (the economy) getting worse but on the other hand we dont see anything that presages any kind of recovery, he said.
