STB Rejects RSI Car-Hire Rule Change Petition

Why It Matters

Maintaining the status quo preserves the current arbitration framework while allowing the STB to assess real‑world effects on pricing, investment and competition in the North American boxcar market. The decision signals that any regulatory shift will require clear evidence of market distortion.

Key Takeaways

• STB keeps 1992 car‑hire rule; will monitor market impact
• RSI argues default rates suppress investment and boost TTX dominance
• AAR and TTX claim capacity is ample and no boxcar shortage
• Board directs AAR to review voting structure that blocks reforms
• Default rate methodology now excludes TTX rates, affecting future market share

Pulse Analysis

The 1992 Code of Car‑Hire rule, born from the Interstate Commerce Commission’s shift toward market‑based rates, still governs how railroads negotiate and arbitrate rates for deprescribed boxcars. By establishing a bid‑offer process and default rates, the rule aimed to balance rail carrier interests with shippers’ need for reliable equipment. Over the past two decades, negotiated rates have largely replaced prescribed formulas, but the rule’s default‑rate mechanism remains a flashpoint for stakeholders who argue it influences investment decisions and fleet composition.

RSI’s petition highlighted that the current default rate, set below TTX’s cost‑based rates, incentivizes low negotiated prices, potentially discouraging new boxcar construction and accelerating retirements of non‑TTX equipment. The institute warned that this could expand TTX’s market share from roughly 32% to an estimated 50% within ten years, raising antitrust concerns. AAR and TTX countered with data showing ample capacity, idle cars, and newer high‑capacity models, suggesting that the market is not facing a shortage. Their defense rests on the premise that the rule’s limited use of default rates and recent methodological tweaks—such as a 5% usage threshold and five‑year updates—already address RSI’s complaints.

The STB’s refusal to reopen the case underscores a regulatory preference for stability and data‑driven assessment. By tasking AAR with reviewing the voting structure that allows two carriers to block changes, the Board leaves open a pathway for future reform if concrete evidence of market distortion emerges. Industry participants should monitor upcoming AAR deliberations and any empirical shifts in boxcar utilization, as these will shape the next round of policy discussions and could ultimately redefine competitive dynamics in North American rail freight logistics.