WASHINGTON, DC – Government watchdog Accountable.US released a new analysis today finding nearly all seven Class I railroads enjoyed high profits amid the supply chain crisis while cutting costs, increasing shareholder handouts, and disclosing at least $9.37 million on lobbying related to competition, mergers, and Biden’s July 2021 executive order against the industry’s “aggressive pricing.” The report comes in advance of this week’s House Financial Services Committee hearing on ‘Corporate Profiteering, Supply Chain Bottlenecks’, as well as the Labor Department’s release of its CPI report on inflation.
While the industry continues to blame the pandemic for its profiteering, the report highlights how the railroads collected a record $1.18 billion in fees for freight stuck in supply chain bottlenecks during the first nine months of 2021. Since 2010, the industry has spent $46 billion more on stock buybacks and dividends than investments in maintenance and equipment, which would have increased the rail system’s resilience against the kind of supply chain shocks that are currently straining consumers’ wallets and access to everyday necessities.
Like so many other wealthy industries, the big railroad companies have used the pandemic as cover to sock businesses with excessive fees that get passed onto everyday consumers. For years the railroad industry gutted investments in maintenance and equipment so they could further enrich a small group of investors. And now that the chickens have come home to roost in the form of supply chain bottlenecks, the industry is refusing to take any responsibility – opting instead to impose record fees and continue rewarding shareholders. This is runaway corporate greed, and until Congress pulls the brakes, consumers will continue to pay the price.”
Kyle Herrig, president of Accountable.US.
For months, Accountable.US has been documenting how major companies across several industries are using the pandemic as an excuse to increase their wealth and line their shareholders’ pockets. Accountable.US recently released a report outlining how the trucking industry is blaming a self-inflicted driver shortage for supply chain woes while simultaneously profiteering off the inflation crisis and lobbying against pro-worker legislation. See more of Accountable.US’ research exposing corporate greed here.
KEY FINDINGS FROM THE REPORT:
- BNSF—Which Raised Its Freight Rates And Cut Its Operating Ratio In Q3 2021—Saw Its Net Income Jump By Double Digits As It Spent $80,000 Lobbying On “Rail Competition Issues” In 2021 While Its Parent Company Spent $12.6 Billion On Stock Buybacks In The First Six Months Of 2021.
- Union Pacific—Whose Increased Fees “More Than Offset” Lower Freight Volume And Which Touted “Records” For Cutting Operating Ratio In 2021—Had Its “‘Most Profitable Year Ever‘” In 2021 Due In Part To Price Increases, Spent Over $10 Billion On Shareholder Handouts, And Nearly $3.8 Million Lobbying On Competition issues That Year, Including Biden’s Executive Order.
- Canadian National—Which Touted Gains From Demurrage Fees And A Record Low For Its Operating Ratio In Q4 2021—Increased Its Net Income By 37%, Boosted Its Stock Buybacks By 317%, And Spent Over $1 Million While Lobbying On Merger Issues In 2021.
- CSX—Which Credited Higher Fees For Its Profits And Cut Its Operating Ratio In 2021—Saw A 37% Jump In Net Earnings, Increased Stock Buybacks By 233%, And Spent Over $2.3 Million While Lobbying On “Rail Economic Regulation” And Biden’s Executive Order.
- Norfolk Southern—Which Increased Freight Rates While Touting An “All-Time Record” Low For Its Operating Ratio In 2021—Saw Net Income Surge 27%, Increased Stock Buybacks By 143%, And Spent $1.8 Million While Lobbying On Antitrust Issues In 2021.
- Canadian Pacific Railway—Which Has Been Subject To A Federal Inquiry Into Demurrage Fees And Is Trying To Acquire Another Class I Railway For $25 Billion—Saw Net Income Climb 17% To About $2.2 Billion While Spending $270,000 While Lobbying On Merger Issues In 2021.
- Kansas City Southern—Which Has Claimed That Demurrage Fees Are “‘Not A Revenue Source That We Seek To Increase‘” While Subject To A Federal Inquiry About Fees—Saw Q4 2021 Net Income Jump 258%, Spent $188 Million On Shareholder Dividends In FY 2021, And Spent $120,000 While Lobbying On Mergers In 2021.