Imagine watching your shipments stranded on rail lines with delivery deadlines slipping away, powerless to intervene. For years, this has been the reality for many freight rail customers in the United States. Now, the Surface Transportation Board (STB) is advancing a new reciprocal switching rule to address these systemic service issues, recently extending the comment period deadline from December 6 to December 20 to allow broader stakeholder input.
The Proposed Solution: Reciprocal Switching Explained
The STB, an independent agency authorized by Congress to resolve rail rate disputes and review mergers, proposes allowing shippers experiencing poor service to access alternative rail carriers through reciprocal switching. Under this mechanism, if one railroad fails to meet service standards, shippers could request another carrier to handle their freight, with the original railroad required to transfer shipments at a regulated fee.
While reciprocal switching isn't new—the STB first proposed similar rules in 2016—this iteration introduces significant changes. The current proposal establishes three quantifiable performance metrics that would automatically trigger shippers' access to alternative carriers when service falls below defined thresholds.
Three Performance Standards: Quantifying Rail Service Quality
The STB's framework aims to eliminate subjective assessments by implementing measurable criteria:
- Service Reliability: Measures whether Class I railroads meet their Original Estimated Time of Arrival (OETA) commitments. The proposal suggests requiring 60% of shipments to arrive within 24 hours of OETA in the first year, increasing to 70% thereafter.
- Service Consistency: Tracks deterioration in transit times compared to prior year performance. Relief would trigger if average transit times increase by 20-25% over a 12-week period.
- Inadequate Local Service: Evaluates "industry spot and pull" operations (loading/unloading railcars). Carriers failing to complete 80% of local deliveries within agreed service windows (maximum 12 hours) over 12 weeks would be non-compliant.
Additionally, railroads would be required to provide historical service data to customers within seven days of request—a first-time transparency measure for Class I carriers.
Industry Reactions: Reform vs. Resistance
STB Chairman Martin Oberman noted that despite consolidation from 40 Class I railroads in 1980 to just six today, no shipper has successfully obtained a reciprocal switching order since the 1990s. The new service-based approach marks a significant departure from previous mileage-based proposals.
At the recent RailTrends conference, analyst Tony Hatch characterized the proposal as the "STB Full Employment Act," suggesting it would maintain regulatory focus on service issues while aligning stakeholder interests.
However, Association of American Railroads CEO Ian Jefferies cautioned that "the devil is in the details," questioning whether the metrics properly account for contractual traffic. While supporting service improvements, the industry remains concerned about potential operational disruptions and cost increases.
Potential Impacts and Implementation Challenges
The extended comment period reflects the rule's potential to reshape U.S. rail freight markets. If implemented effectively, it could break regional monopolies, improve service quality, and reduce shipping costs. However, challenges remain in ensuring smooth operations during carrier transitions and balancing competing interests.
As stakeholders continue debating the proposal's finer points, the STB's final decision will determine whether reciprocal switching becomes the catalyst for meaningful reform or creates new complications in an already complex transportation network.