Rail industry marks 40 years of transformation under Staggers Act
(Source: Progressive Railroading 10/14/2020)
Today marks the 40th anniversary of the Staggers Rail Act of 1980, which partially deregulated the U.S. freight-rail industry so that railroads could operate in a competitive market place.
Signed by President Jimmy Carter on Oct. 14, 1980, the act and its implementation by the Interstate Commerce Commission — now the Surface Transportation Board (STB) — lifted many restraints on railroads so that they could set their own rates and adjust their services to meet shippers’ needs.
The impact of the Staggers Act on the industry has been substantial, according to the Federal Railroad Administration‘s (FRA) history of the law. Prior to the law’s enactment, economic regulation prevented railroads from any flexibility in their pricing needed to meet competition or address inflation. Regulation also prevented railroads from restructuring their organizations, such as by abandoning redundant and light density lines — a necessity for controlling costs. As a result, nine railroads were bankrupt, the industry had a low return on investment and was unable to raise capital, and faced a steady decline in market share.
As a result of the bipartisan legislation, the industry was transformed into one of the “safest, most efficient and cost-effective transportation networks in the world,” according to the Association of American Railroads (AAR). Today’s 140,000-mile freight-rail network is operated by seven Class Is and hundreds of short lines and regional lines.
An example of “deregulation done right,” the Staggers Act continues to provide economic dividends, according to AAR President Ian Jefferies.
“Since 1980, freight railroads have poured more than $710 billion of their own funds back into their operations,” Jefferies wrote yesterday in a column published by the Wall Street Journal. “Average rail rates are 43 percent lower today than in 1981 when adjusted for inflation. This translates into at least $10 billion in annual savings for U.S. consumers. Safety and service are at historically high levels.”
On its website, the AAR has posted articles describing how freight-rail transportation has evolved under the Staggers Act. The articles can be read here.
AAR also is using the Staggers Act anniversary to reinforce to policymakers the need for “balanced regulation” of the industry. Railroaders are making their case through an online #Staggers40 campaign, the AAR website and select event participation and outreach. Today, they were joined by a bipartisan coalition of more than 1,000 individuals writing to the STB and Congress, affirming in a letter why the regulatory framework established by Staggers “has stood the test of time and remains foundational to the industry and the broader economy’s future success.”