WASHINGTON - Plastics shippers, heavily dependent on two railroads to move their products, would benefit greatly if Congress modifies the Interstate Commerce Commission to ``foster true competition,'' a Himont USA Inc. executive testified Feb. 22. Suppliers captive to a single railroad currently pay a 15-35 percent premium over those that can choose from competing lines, said Robert Granatelli, manager for North American transportation operations for the Wilmington, Del., firm.
Transportation is 20 percent of the cost of resin and the second-highest cost component of the product, he said.
Granatelli testified on behalf of the Society of the Plastics Industry Inc. before the railroads subcommittee of the House transportation and infrastructure committee. On the committee's docket are a host of proposals to either abolish or severely modify the role of the ICC.
``The SPI urges the subcommittee to review the substantive provisions of the [ICC] Act and to simplify and improve the regulatory environment'' by invoking a system similar to Canada's, Granatelli said.
In Canada, service within about 20 miles of a shipping point ``must be rendered at a prescribed rate,'' he testified, providing a reasonable profit for the railroad. Outside that limit, the shipper ``enjoys access to an alternative rail carrier,'' and competition governs rates.
Granatelli said 60 billion pounds of plastics materials are shipped annually via railroad, with the Southern Pacific and Union Pacific carrying the lion's share from resin makers on the Texas-Louisiana Gulf Coast to points nationwide.
``The industry is captive to the railroads,'' Granatelli testified. ``The overwhelming majority of production is loaded directly into rail cars, the transportation mode around which the industry has grown over 25 years.''