Editor's Focus

The big news in the area of scrap transportation these days is the upcoming acquisition of Conrail shares and routes by two other eastern railroads, CSX and Norfolk Southern. The two railroads claim this move will result in greater flexibility, better access to equipment and – most importantly to shippers of scrap metal – increased competition.

While the addition of Norfolk Southern to the deal certainly increases competition – had CSX been allowed to purchase Conrail stocks on its own, this would have further added to the monopolistic feel of certain eastern routes – scrap industry observers do not seem at all convinced that the deal will increase overall competition.

In fact, it’s possible that it could decrease competition, if a scrap yard or steel mill previously served by two carriers is only served by one in the course of the new arrangement. The exact setup will not be known until the two railroads file with the Surface Transportation Board next month, but the Institute of Scrap Recycling Industries recommends that scrap processors pay attention to the new plan and protest if this happens in their region.

Even more detrimental to competition would be the scenario many have suggested as the logical turn of events – the continued merging of the remaining Class 1 railroads until all that remains are two huge transcontinental carriers. If this were to happen, the existing regulatory structure would surely have to be revised to ensure that there would be some type of competition. Otherwise it would be as if the railroad monopolies of the 19th century had returned after all these years, and scrap shippers would likely face few choices and high rates.

Increasing amounts of scrap are already being shipped by truck, where feasible, as well as by barge, especially for some of the newer minimills. But this may not help the situation, as some railroads are diversifying into other types of shipping. CSX, for example, bills itself as "an international transportation company offering a variety of rail, container-shipping, intermodal, trucking, barge and contract logistics management services," and Norfolk Southern also owns North American Van Lines Inc.

To keep shipping costs at a reasonable level, scrap processors should keep an eye on what’s happening in the transportation area and work against allowing a few large companies to gain control over the shipping market.

This month, for the first time, we at Recycling Today are pleased to publish a comprehensive list of wire chopping operations in the United States, along with an update on issues faced by these operations and markets for the materials they handle. As always, we welcome your comments and suggestions.