There’s a Good Reason Biden Singled Out Railroads for Criticism
The industry’s own regulator warns that consolidation has “created the potential for monopolistic pricing.”
When President Joe Biden on Jan. 9 issued an executive order to increase competition in the U.S. economy, most of the news coverage focused on what he said about 21st century industries such as the internet and pharmaceuticals. But Biden also had something to say about railroads, which have drawn complaints about monopolistic practices since their birth in the 19th century.
Biden’s order touches on one of the most sensitive issues in freight railroading: reciprocal switching, which is akin to net neutrality for the internet except that instead of electrons it deals with rails, switches, and long trains laden with everything from coal to soybeans. Under reciprocal switching, a railroad can pay a competitor to deliver cars for it to a customer that it has no way of reaching otherwise. Reciprocal switching breaks the monopoly control that a railroad has over its captive customers.