Summary: The environment in which railroads have set their rates has been influenced by ongoing industry consolidation, competitive conditions, and railroads' financial health. As a result of mergers, bankruptcies, and redefinition of what constitutes a major railroad, the number of the nation's largest freight railroads fell from 30 in 1976 to nine in early 1999, with the five largest accounting for 94 percent of the industry's operating revenues. Railroad rates have generally fallen since 1990. However, the decrease has not been uniform, and, in some cases, rail rates have stayed the same as, or are higher than, they were in 1990. This was particularly true on some long distance rail shipments of wheat from northern plains states like Montana and North Dakota to west coast destinations. In general, rail routes facing competition--either from railroads or from trucks and barges--saw greater decreases in rail rates. As the rail industry has consolidated, shippers have complained that service quality has deteriorated. Shippers' complaints have included a lack of railcars where they were needed and inconsistent pickup and delivery of cars. Railroads attribute service problems to such factors as capacity constraints and industry downsizing. Although the federal government and the railroads have taken several steps to address rail service problems, these actions do not address shippers' belief that greater competition is needed to improve services.
