'98 Year in Review: Intermodal

With the stormy seas of deregulation rocking ocean lines, and the continuing service problems of Union Pacific delaying freight and pushing shippers closer to revolt, the intermodal industry weathered another tumultuous year.

The fate of freight on the oceans was thrown into turmoil in 1998 when President Clinton signed the Ocean Shipping Reform Act Oct. 14 and drastically altered the ocean shipping landscape. The new law, which takes effect this May, deregulates the ocean sector, doing away with public rate-filing requirements. It allows shippers to negotiate confidential contracts with individual steamship companies instead of having to go through shipping conferences (11-16, p. 1).

With the Federal Maritime Commission still issuing rules for implementing the law, uncertainty remains over its impact. But one thing is clear, the competitive forces it unleashes will alter the relationships between shippers, ocean lines, ports and draymen.

The reforms were a major victory for the National Industrial Transportation League, which had been pushing for ocean deregulation since 1994.

But while shippers cheered their success on the seas, the situation on the rails was far less positive.

The year started with the Union Pacific Railroad still under the sway of service problems from its 1996 merger with Southern Pacific, which crippled its Texas and Gulf Coast operations in 1997 and backlogged freight throughout the West. The beleaguered railroad found itself under a Surface Transportation Board emergency order that forced it to share track rights and allow customer access to competitors Burlington Northern Santa Fe and the Texas Mexican Railway.

The order was supposed to end March 15, but persisting congestion led the STB to extend it until Aug. 2 (3-2, p. 8). However, the board rejected a request by the Texas Railroad Commission that UP be forced to give some of its key railyards and lines in Texas to neutral parties (2-23, p. 28).

All the problems only served to stoke the fire of shippers’ drive for more competition in the railroad industry.

The STB responded with the first comprehensive review of rail regulation since the Staggers Rail Act of 1980 deregulated the industry (4-27, p. 7).

The year ended with the STB issuing two year-end decisions (12-28, p. 3). One made it easier for shippers to use alternatives when faced with rail service problems, and the other rejected a plan to increase rail competition in Texas.

For the full story, see the Jan. 11 print edition of Transport Topics. Subscribe today.