US rail agency to act on carrier switching plan

Market: Agriculture, Biofuels, Chemicals, Coal, Coking coal, Crude oil, Fertilizers, Metals, Oil products, Petrochemicals, Petroleum coke
11/07/23

US railroad regulators are expected to finally say next month whether they will allow some rail customers to use alternate carriers due to poor service from their current carrier.

The US Surface Transportation Board (STB) has been evaluating a proposals to allow captive shippers to use alternate railroads in certain circumstances. The July 2016 proposal would allow switching when it is either "practicable and in the public interest" or needed to provide competitive rail service. A ruling will come in August, according to a 1 July report to Congress on pending regulatory proceedings.

Under the proposal, STB would need to consider a variety of factors before allowing for an alternative carrier, including the efficiency of the proposed new route, if the arrangement would allow access to new markets, the amount of traffic that would be moved and the impact on capital investment, quality of service and employees.

Shippers would not need to demonstrate there has been anticompetitive conduct, as required by existing regulations.

Reciprocal switching has been under discussion at STB in various forms since 2011 when the subject was brought before the board by prominent shipper group the National Industrial Transportation League.

STB was expected to act on the proposal in August 2022 but later delayed action, saying it needed to focus on the rail service crisis and the merger of Canadian Pacific and Kansas City Southern.

But STB chairman Martin Oberman last month told Argus that issuing a decision was a priority for him.

Under reciprocal switching, a shipper's original railroad hauls freight to an interchange point, where it switches the railcars to an alternate carrier. The alternate railroad pays the original railroad a switching fee for that action.

That fee is incorporated into the alternate railroad's total rate for the shipper, allowing it to offer a single-line transportation rate to compete with the original carrier's single-line rate.

Shippers have been eager for STB to approve reciprocal switching, hoping it would lead to cheaper transportation rates and better service.

But railroads say allowing switching would increase transportation times and drive congestion across the rail network. For example, handoffs between logistics companies — a key vulnerability of the supply chain — would be disrupted by increased switching, Union Pacific (UP) executive vice president of operations Eric Gehringer said during a March 2022 hearing on the proposal.

STB is also expected to act in September on proposed changes to its emergency service rules that were intended to speed its response to shipper problems. The April 2022 proposal was issued as the rail agency was focusing on last year's service crisis, but work was delayed.

By Abby Caplan

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Opec+ eight agree accelerated hike for June: Update

London, 3 May (Argus) — A core group of eight Opec+ members has agreed to accelerate, for a second consecutive month, their plan to unwind some of their production cuts, the Opec secretariat said Saturday. As it did for May, the group will again raise its collective output target by 411,000 b/d in June, three times as much as it had planned in its original roadmap to gradually unwind 2.2mn b/d of crude production cuts by the middle of next year. The original plan envisaged a slow and steady unwind over 18 months from April, with monthly increments of about 137,000 b/d. But today's decision means that the eight — Saudi Arabia, Russia, the UAE, Kuwait, Iraq, Algeria, Oman and Kazakhstan — will have unwound almost half of the 2.2mn b/d cut in the space of just three months. The decision to maintain this accelerated pace into June is somewhat surprising, given the weakness in oil prices and the outlook for the global economy. The eight's decision last month to deliver a three-in-one hike in May was seen as a key reason for the recent slide in oil prices, alongside US President Donald Trump's tariff policies. Front month Ice Brent futures have fallen by about $13/bl since early April to stand at just over $61/bl. But the eight today pointed to "current healthy market fundamentals, as reflected in the low oil inventories" as a key factor in its latest decision. It reiterated, as it has in the past, that the gradual monthly increases "may be paused or reversed subject to evolving market conditions." As was the case for May, delegates said that the main driver for the June hike was again a desire to send a message to those countries that have persistently breached their production targets since the start of last year — most notably Kazakhstan and Iraq, which each have significant overproduction to compensate for through the middle of next year. "This measure will provide an opportunity for the participating countries to accelerate their compensation," the secretariat said. This group of eight is due to next meet on 1 June to review market conditions and decide on July production levels. By Nader Itayim, Aydin Calik and Bachar Halabi Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Opec+ eight to agree another accelerated hike for June

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London, 3 May (Argus) — A core group of eight Opec+ members look set to today to accelerate, for a second consecutive month, their plan to unwind some of their production cuts, four delegates told Argus . As it did for May, the group would again raise its collective output target by 411,000 b/d in June, three times as much as it had planned in its original roadmap to gradually unwind 2.2mn b/d of crude production cuts by the middle of next year. The original plan envisaged a slow and steady unwind over 18 months from April, with monthly increments of about 137,000 b/d. But today's decision would mean that the eight — Saudi Arabia, Russia, the UAE, Kuwait, Iraq, Algeria, Oman and Kazakhstan — will have unwound almost half of the 2.2mn b/d cut in the space of just three months. The decision to maintain this accelerated pace into June would be somewhat surprising, particularly given the weakness in oil prices and the outlook for the global economy. The eight's decision last month to deliver a three-in-one hike in May was seen as a key reason for the recent slide in oil prices, alongside US President Donald Trump's tariff policies. Front month Ice Brent futures have fallen by about $13/bl since early April to stand at just over $61/bl. While Opec+ has said that it is acting to support an expected rise in summer demand, the decision to speed up the output increases once again appears to be driven by a desire to send a message to countries that have persistently breached their production targets — most notably Kazakhstan and Iraq. By Aydin Calik, Bachar Halabi and Nader Itayim Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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