It's a theory to which many economists subscribe, but in practice it often leaves railroads in the position of determining which companies will flourish and which will fail. Many captive shippers also worry they will soon be hit with a round of huge rate increases. The railroad industry as a whole, despite its brightening fortunes, still does not earn enough to cover the cost of the capital it must invest to keep up with its surging traffic. Yet railroads continue to borrow billions to acquire one another, with Wall Street cheering them on. Many captive shippers fear that they will, as Norfolk Southern and CSX increase their grip on the market.
Captive shippers are in one sense lucky.
Deregulation of the railroad industry since 1980 has also led to a severe contraction in the number of cities served by even one railroad. The new supersystems, free from any government interference, have cast off tens of thousands of miles of low-volume lines. According to Joseph Schwieterman of the Chaddick Institute for Metropolitan Development at DePaul University in Illinois, the location of rail lines and access of towns to rail service are affecting patterns of industrial development across the country. No one wants to go back to the bad old days when the Interstate Commerce Commission nearly regulated railroads into oblivion in the 1960s and '70s. But many interested parties are now exploring other ways to reduce the growing monopoly power of railroads.