Railroad Competitiveness:

Federal Laws and Policies Affect Railroad Competitiveness

RCED-92-16: Published: Nov 5, 1991. Publicly Released: Dec 9, 1991.

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Pursuant to a congressional request, GAO reviewed the principal factors affecting the railroad industry's ability to compete with other transportation modes for intercity freight, focusing on how federal laws: (1) affect railroad labor costs; and (2) influence the railroads' competitive position.

GAO found that: (1) reduced federal regulation has given railroads greater freedom to competitively price their services, but as the railroads have become more competitive, so have their competitors in the trucking and barge industries; (2) the Railroad Retirement Act of 1937, the Federal Employers' Liability Act, and the Railway Labor Act of 1926, which govern railroad employee benefits and labor relations, have resulted in higher overall labor costs; (3) if railroads could reduce their labor costs, they would be in a better position to competitively price their services and compete for intercity freight; (4) publicly financed interstate highways and waterways give the trucking and barge industries a competitive price advantage over railroads, since freight railroads maintain their own rights of way with minimal federal assistance, while trucks and barges use rights of way that the public helps to fund; and (5) rail rates could become increasingly attractive compared with truck or barge rates, if all modes operated under the same labor laws and were equally responsible for their rights of way.

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