Fred Frailey Blog

The Interstate 95 conundrum

  • Comments 98

I spent much of this week watching trains on the CSX North End Subdivision, between Richmond, Va., and Rocky Mount, N.C. Usually, you can count on spotting on this heavily trafficked, mostly single-track line the Four Horsemen of the Apocalypse, their names being Hunger, Death, Pestilence, and Unexpected Delays. But they and their black stallions were nowhere to be seen this time. The North End Sub operated like a well cleaned watch, the dispatchers seemingly trained by Peter Josserand (Rights of Trains, 1945), or maybe the fictional Eddy Sand (The Boomer, 1942).

No, what’s different about the North End Sub this trip is local politics. Every front yard — even the water tower in sleepy Stony Creek — seems to spout a sign, NO TOLLS. Virginia’s governor, Bob McDonnell, is proposing to turn Interstate 95, the Maine-to-Florida highway, into a toll road through his state, as is already the case north of Virginia. A similar proposal is being debated in North Carolina.

Two things are immediately apparent. First, the idea is immensely unpopular in Southside Virginia, one of the poorer parts of the state. It’s as of British redcoats had returned. Second, the state has an expensive road to maintain and expand, but not the money to do so. Something has to give, in other words. To put it in concrete terms, Virginia projects the need for $12.1 billion to maintain and enlarge the busy highway over the next quarter century, but can expect only $2.5 billion in funding.

This is the whole interstate highway problem in microcosm. Our interstates are crowded and crumbling, and we lack the money to maintain and expand them.

Of course, Interstate 95 has a competitor from New Jersey to Florida: CSX. The railroad takes no position in the toll proposal, perhaps wisely. Clearly, it’s to the advantage of CSX to block tolls and starve the highway. By the way, that’s the likely outcome. It is politically possible to finance new limited-access highways with tolls. But I can think of few roads (actually, none at all) that were built as freeways and later turned into toll roads.

On the other hand, why isn’t CSX exploiting its crumbling competitor? Driving home to suburban Washington, D.C., traffic in the opposite direction south of the capitol city grinds to a standstill. Trucks seem to occupy half of the space — hundreds, thousands of them.

The answer, unfortunately, is that CSX does a poor job capturing this highway traffic. It does best going wooing trucks that ply I-95 the entire distance to and from Florida, which describes but a fraction of the traffic. It is poorly equipped to market intermediate origins and destinations.

CSX is not alone in this. Railroads as a whole are best in dealing with the J.B. Hunt Transports and Schneider Nationals of the trucking world over the highest-volume, longest-distance routes. But institutionally, they all seem to lack the ability to pick at the smaller origin-destination pairs and to reach out to the smaller truck lines. To put it another way, the huge Class I railroads are no *** good at all retailing. Wholesaling is what they know.

This I do know: It would be tragic for this nation to have the worst of all worlds, that is, crumbling, overcrowded highways and railroads unable or unwilling to taking advantage of that opportunity. There has got to be a better way to go at this. — Fred W. Frailey

  • Agreed. I appreciate that it is harder for the rails to make out on shorter intermodel hauls. But a lifetime of railroad watching has also taught me that the rails have abandoned or turned their backs on a lot of business that was "too hard," from passengers to LCL to produce to livestock. In late years they have seen their capacity fill anyway, which takes the pressure off to innovate in going after higher-hanging fruit.

    It occurs to me that CSX should benefit whatever happens to I-95. Tolls and better repair would make business more expensive for the rubber-tired competition as surely as traffic jams and crumbling concrete.

  • A look at the Florida railroad map today clearly shows that the railroads and the state didn't plan for the future for rail transportation in the Sunshine State..  While the Florida East Coast is a success story, the rest of the state is a mess.  The ACL's famous Perry Cut-Off and their Ocala Division to Tampa are long gone.  With the Port of Tampa continuing to modernize and expand for the future, CSX is doing nothing to prepare for better effecient rail service to the greater Tampa Bay area.  Freight coming from or moving to the West, Midwest and Pacific Northwest, has to be routed a round about way.  Also, CSX has failed to construct a modern high tech yard facility in the Tampa area.  The old ACL Uceta Yard and SAL Yeoman Yard are outdated and in no way prepared to accept the traffic that the Port of Tampa envisions as the 21st Century marches on.  This traffic will no doubt increase when the Panama Canal project is completed.  

    Item: In the 60s Publix Super Market had their own pig ramp in Lakeland served by the Atlantic Coast Line.  After the merger between the ACL and SAL that formed Seaboard Coast Line (remember the boxcar slogan: Service Customers Like?) the railroad started to rip up track and service became so unreliable that Publix purchased their own fleet of trucks and refused to use SCL rail service altogether.  This information comes from friends who lived in the Tampa area during this period and I stand corrected if this is incorrect.

    Also, after the merger, SCL's passenger trains that operated from New York to Tampa were still well patronized and even after Amtrak took over the Silver fleet the trains continued to offer first class service.  The NY-Florida passenger corridor should be a modern success story but despite the fact Tampa Union Station (who celebrated 100 years this year) has been renovated it still lacks the train service that should be provided on the NY-Tampa route, both over the "A" line and "S" line through Georgia, the Carolinas and Virginia.

    You are right Fred, there has got to be a better way to go at this.  CSX and Amtrak can learn a lot from Florida East Coast.  Relaying track and planning to run passenger trains is a sign of a modern efficiently run railroad.  At the moment, CSX and Amtrak can only dream about this, at least in the Sunshine State.

  • What is the Better Way?  Local ramps at Richmond, Rocky Mount, Florence, etc. etc.?  Is there even a remote chance that these ramps would have sufficient volume to support mechanization?   Or would they be circus-style, usable only by TOFC?  Would there be North and South Pig Peddlers, that would serve these small locations, or would CSX intermodal trains operate like their manifests, with frequent stops and lots of block swapping?  Or perhaps the non-trainload pig traffic would be handled in those manifests.

    And would a customer in, say, northern NJ, shipping to a location 50 miles from Rocky Mount, arrange for 2 drays and a rail journey ... or simply call his friendly trucker, and know that the shipment would be delivered overnight?

    Even the highly-touted Crescent Corridor of NS, which will be the savior of the I-85, appears only to focus on end-point to end-point travel, with little mention of any intermediate traffic.  On I-85 or 95, how much traffic is that?  Or is that traffic already on the railroad?

    As much as we say "railroads should Do Retail better", that Better Way has yet to be disclosed.  Or implemented.

  • So as not to repeat myself, and with the gracious allowance of Professor Frailey:

    In a nutshelll both Messers. Moorman and Hamberger were in lockstep when asked why the railroads would host a summit about public and private infrastructure. Simply put, we are all in this together. Without the public framework to go that "last mile" we are sunk.

    Returning back to October of 2010 and another conference in Washington, there were those proposing a National Rail Plan. They brought out that, at that time, about 23% of all intermodal traversing over 500 miles used the railroad. Their goal: 50% The following January in Dallas I posed this proposition to Dean Wise, BNSF VP for Network Strategy. After thinking for a second he declared it was "ambitious but feasible."

    The railroads know the market is out there. NS has harvested some $2.5 billion for the Crescent Corridor. CSX a few years ago proposed making the Northeast - Florida corridor a four track megaline but have not said anything about since. Even so this is not my father's railroad anymore... and I for one don't mind.

  • "And would a customer in, say, northern NJ, shipping to a location 50 miles from Rocky Mount, arrange for 2 drays and a rail journey ... or simply call his friendly trucker, and know that the shipment would be delivered overnight?"

    There is now no reason for the customer to have to arrange the drayage.  The railroad, or a 3rd party using the railroad, can offer door to door service.  Such door to door service, incorporating the drays, will be necessary in order to price theses services profitably.

  • "Agreed. I appreciate that it is harder for the rails to make out on shorter intermodel hauls. But a lifetime of railroad watching has also taught me that the rails have abandoned or turned their backs on a lot of business that was "too hard," from passengers to LCL to produce to livestock. In late years they have seen their capacity fill anyway, which takes the pressure off to innovate in going after higher-hanging fruit."

    Blaming the railroads is actually blaming the victims.

    Railroads were effectively prohibited from marketing their services by Federal economic regulation.  They couldn't develop and/or change their services to meet new market needs.  The weren't allowed to price based on market reality. The regulation is now largely gone.  But developing a "Marketing Culture" in a business is not like flipping a light switch.  Once the government strangled the ability to market rail services out of the industry it was, and is, very difficult to redevelop.

    The railroads certainly did not abandon LCL and perishables because they were "Too Hard".  The railroads fought hard to retain this business, only to be blocked at virturally every turn by the regulators. Some time ago (like decades) I wrote a thesis at Northwestern University titled "The Transportation of LTL/LCL Freight by Railroad."  Every really innovative move the railroads made to meet truck competition was blocked or greatly inhibited by the regulators.

    The most significant blockage was the prohibition of intermodal container service.  This service began to develop in the early 1920s, which is about as soon as trucks that could carry a decent load of freight became available.  The containers used were smaller boxes designed for LCL shipments.   The container system reduced the New York Central's cost of moving LCL by 75%.   That's right, what had cost $1.00 in the boxcar system cost only $0.25 in the container system.   In addition to the cost reductions the customers got better service with the containers.

    But, in 1931, the dang government ordered the railroads to increase their container rates to a non competitive level.  (No, the government did not have a good reason for doing this.)  This killed the container services.   Most importantly, this asinine regulatory decision locked the railroads into the inherently inefficient and unreliable loose car system for moving freight.  For 50 years!   The government took away the railroads' ability to market competitively.  Is it any wonder they don't have much of a "Marketing Culture."  They were never allowed to develop such a culture.

    The story with perishables is largely similar.  The regulators strictly controlled rail rates and services.  Motor freight movement of fresh fruits and vegetables was never economically regulated.  It's easy to see why the truckers won that one.  It had nothing to do with the railroads feeling perishables were "Too Hard".  It had everything to do with the regulators prohibiting change.   Again, once the business was lost, due to government regulation,  the expertise for handling the business went away.  It's very hard to reacquire.

    Passengers were a flat out looser.  Not much could really be done.  The livestock business changed with packing houses relocating to the livestock raising areas.  

    I don't know the solution.  No one can simply decree that the railroads become market oreiented entities.  That would be a culture change and it will take quite a while to accomplish.

    Recognizing the issue is a good first step.  What's the next step?  

  • Greyhounds:  Yes, certainly a customer could use a 3rd party retailer, or even the railroad itself, if it were set up to do the work of the retailer.  My question is more to the service elements of such a shipment.  If the product is at all time-sensitive - and most products are, if only to reduce inventory costs - it will most likely move over this short distance all by over-the-road truck.  Very unlikely that a railroad could over door-to-door overnight service on a shipment like this.  The customer is shipping by truck for service reasons, not for cost - the truck rates are generally already higher than rail.

    I would disagree that railroads are not market-oriented.  I di believe, however, that they realize that they cannot be all things to all shippers.  So they market to where they have an advantage, be it cost or service.  They have an obvious advantage with bulk, and have been very creative in getting new oil traffic, for example.  And they can compete well and have been very creative in service- and quality-sensitive traffic, such as automobiles and intermodal.  

    We do not castigate trucks for not competing for long-haul coal traffic.  Perhaps we should do similarly, when considering railroads for traffic that they are not well-equipped to carry.

  • "This is the whole interstate highway problem in microcosm. Our interstates are crowded and crumbling, and we lack the money to maintain and expand them."

    Texas has its solution to this problem well underway.  When demand for use of a major interstate requires expansion, build a coalition of interested and affected parties and come up with something like this:  New toll lanes equipped with the most modern toll-collecting and traffic management systems parallel the old lanes which, as part of the deal and supported by the toll-payers, are rebuilt and remain free of tolls.

    Those who oppose fuel tax increases for expansion are able to use the "already paid for" lanes, while those who value time and comfort more highly use the toll lanes.  Multi-billion dollar projects of this type are in full construction mode.

    Where such projects are less feasible, entirely new toll-financed expressways are being built. For example, highly congested I-35 (think export/import Mexico traffic) through the Austin area has now been paralleled by a new 40 mile long toll road about 10 miles to the east.  Again, for those who don't like tolls, I-35 remains available. But time is money....

    I (heart) logistics ... freight and passenger.

  • Those who have been around this industry going back more than 30 years and before passage of the 4R and Staggers Acts also know that intermodal was the first rail freight service to be deregulated.  Railroads didn't exit lines of business because they were "hard," but because they couldn't make a buck providing the service.  Truckers, who still no not pay anywhere near their allocable share of highway construction and maintenance costs through fuel and excise taxes, always have been able to put a cap on rail rates.  Back when Bill Greenwood ran the intermodal business at BN, it was determined that intermodal could be profitable and competitive with a dray of around 250 miles.  BN was the first to figure out that it might make sense to run the train past the destination of some of the trailers and containers, getting long-haul efficiency, and then dray the load back to its destination.  That might be the solution for the norther New Jersey - Rocky Mount conundrum presented here.  Railroading is a volume business.   Operating people like running big, heavy trains from "A" to "B" while marketing people are quite willing to sell carload services when trainload business isn't available.

    Today, truckers have a new set of problems.  Roads are crumbling, drivers are scarce.  If they pay drivers when it will take to get them they will have to raise rates.  Raise truck rates and railroads will no longer have to deal with rate caps, but will be able to charge a rate on which they can profit.  It matters not what rates were in the 1920s; my calendar says we are nearing the end of 2012.  Things change.  Many Class I railroads no longer exist.  With one or two exceptions, their main lines still are in service, just owned by someone else today.  For those who demonstrate a proclivity to see only doom and gloom, I pose the rhetorical question: If things are so bad, why are railroads bumping up against system capacity limits?  When you can sell all your capacity, there are two things that even a dumb railroader can figure: 1) raise rates and make more profit; and 2) increase capacity.  It seems to this observer that (2) is being done and probably that (1) is occurring too.

  • In retrospect it was a mistake for the Interstate Highways not to be toll roads in the first place; there should have at least been tolls to pay for their annual maintenance.

    Before the 1950s Interstate Highway bill, almost all the new limited access highways, parkways, and major bridges had tolls, even if they had received a large share on New Deal funding.

    Politicians on the right and left like giving away free things to voters, today in NY State there is a fight over the tolls on the NYS Thruway. They argue that since the original bonds where paid off in the early 1990s, it should be free.

    I think that this is a foolish idea, it’s like saying that after you have paid off the 30-year mortgage on your house, that you don’t need to but any more money into it, like paint, a new roof, or an extra bedroom. I would have thought that this would be self-evident, but no it apparently it isn’t.

    Most famously in NY State we had a bridge across Lake Champlain that had to undergo an emergency demolition when a routine NYSDOT inspection found out that cracks in the concrete piers that could have cause the deteriorating steel span above to collapse at any time. The DOT men didn’t even get out of the boat before they called the state troopers to close the bridge.

    A temporary all-year ferry was quickly established, and a new bridge was surprisingly built fast, but the loss of that vital link between the Adirondacks and Vermont cost a lot of local residents and businesses dearly. Ironically, they all had cheered when in the 1980s the 25-cent tolls where eliminated, after the original 1930 bonds had been paid off.

    Despite this very recent lesson, state politicians including my local Republicans State Assemblyman are still calling for the tolls to end. With the state budget crises every year, they never explain where the money to maintain the Thruway will come from, just one more thing to add to the general fund.

    466lex is right on with Texas, they are doing a fairly good job building new toll roads; I used Google Maps and Streetview to follow a new one right around Austin. But still, there is an incredible amount of opposition in that state to tolls.

    A very good book on the subject is “Interstate 69: The Unfinished History of the Last Great American Highway” by Matt Dellinger, a writer for The Atlantic, New Yorker, Wall Street Journal, and New York Times. It involves a lot of travel and interviews he personally made of a period of several years.

    The I-69 is an interstate that proponents want to build from Indiana to Texas, thru Memphis. It has faced massive opposition, from local land owners all over to radical green groups that rose up against Gov. Mitch Daniels and the Tea Party anti-NAFTA groups that rose up against Gov. Rick Perry. The biggest obstacle was of course money.

    I think that Trains other eminent columnist Don Phillips is correct that the inability to fully finance our highway system is a big boom to Amtrak and the freight railroads.

  • State or federal transportation officials never responsibly analyzed the future costs of maintaining the highway system that has been built since the early 1950s.  It was built because politicians were rewarded politically for building roads.  That is what is now coming unglued.  The disaster for the truckers has been building for a long time.

    As for Fred's lament that the big railroads ignore the intermediate markets, I sympathize.  Collectively they offer a lot of volume, but the obstacles are formidable, as the eastern railroads recognized in the late 1970s when they abandoned hundreds of smaller ramps.  They include low probability of finding a backhaul; relative difficulty in providing both a car and a trailer or container and chassis at the same time and place; and inefficient terminal ops due to low volume, which is often insufficient to support the mechanization (packs or cranes) that would increase efficiency.  

    Consider for a moment a standard triangulation strategy for finding backhaul.  Eastbound box arrives with load for somewhere in the NY metro area.  The possibilities are as unlimited as the consumer market itself.  The westbound side is more limited.  Swing down to Metuchen, maybe, or someplace north of Phila to find a westbound load, then truck back to Kearny or Croxton, where the MTY car waits.  Now how are you supposed to duplicate that with a low-volume terminal in the middle of mid-America?  What are the odds that you can hold that car at the terminal and expect to find a return load by ranging out over the highway to Kannapolis or wherever?

    I met Bill Greenwood on several occasions.  He was a nice, mild mannered guy, but I regarded him and his hub-center approach as the antithesis of what I wanted to see.  At least some of the NYC's, PC's, and CR's intermodal trains served Selkirk, Syracuse, Rochester, and Buffalo, providing basic intermodal service to markets that otherwise would have been forced (as they later were) to truck to fewer hubs.  To me it seemed a triumph of scheduling and operating management.  To those who followed Greenwood it was a waste of money.  I'm still not sure.  It's an open question, and if you watch closely in NS and CSX territory you can see the give-and-take.  But clearly the consensus view is the one the BN pioneered.

    Since the 1990s, Class I railroads increasingly have avoided schedules with setoffs and pickups for straight-through runs.  Again, the NYC and other eastern railroads excelled at this but an objective assessment might conclude that this demonstration of their operating prowess gained them little in the end.  The people who now are planning these things have pretty clearly opted for less complexity, dumbing-down the objectives where necessary.  And that's what major customers like Schneider and Hunt were saying they wanted--reliability.

  • I should also note, Fred, that you link Schneider and Hunt with with "the highest-volume, longest-distance routes."  You imply, conversely, that smaller trucking companies serve the smaller communities.  I don't think this is true.  In their core trucking business Schneider and Hunt serve any point where they can make a buck, and the smaller trucking companies competing with them (few as they are) do not have some sort of special affinity for (or advantage in) smaller cities or markets.  It is only in their intermodal business (shaped by railroads' service offerings) that Schneider, Hunt, Swift, and other big users emphasize the big markets.  Even there, you find such outliers as Schneider's service to Marion, OH, which of course is a jumping-off point to a variety of markets.

  • Certainly, Fred, tolls are unpopular.  With free interstates we have almost all of the people paying for something that a relatively few people use.  And those who live along the interstates believe they are entitled to have someone else pay most of the cost.  That is why roads are so popular; they are the closest thing to something for nothing that we have.  And, as you point out, roads that begin as free have never been subject to tolls.  A big part of that reason is that it is very difficult to add tolls to an existing road because of all those toll houses you have to build.  But today is a new day.  We have EZ pass.  We now can put tolls on any road we want.  I don't know whether we will or not.  We are Americans and we have our sense of entitlement to almost free roads.  Except, as you also point out, it isn't working any more.  Road users may actually have to pay for the roads they use, just like railroads always have.  What is the world coming to?

  • Have you ever seen a bar chart showing the distribution of containerizeable freight tons shipped nationally each year by mileage block?  "Containerizeable" means freight able to be shipped in a dry van trailer or container.  "Mileage block" means length of haul in highway (not rail) miles--1 to 100 miles, 101 to 200 miles, on out to 3,000 miles.  The vertical axis of the chart measures tons; the mileage blocks are arrayed left to right on the horizontal axis.  IIRC, such a chart appeared in the 1976 National Intermodal Network Feasibility Study written by Reebie Associates for the FRA.  It ought to be required in any logistics course.  Doing so would save young idealists a lot time dreaming about diverting to rail all those trucks they see backed up on the highway.

    Basically, what it shows is very high volumes at the shortest lengths of haul declining steeply as the mileage increases.  If the railroads could compete for moves of 100 miles, they would be swamped beyond belief.  By 500 miles volume already has declined sharply, and more so by 1,000 miles.  Because of the way our nation is laid out, there is a slight bump at about 800 to 1,000 miles (Chicago to the East Coast, Atlanta, New Oleans, and Texas), 2,000-2,200 miles (West Coast to Chicago), and 3,000 miles (transcon).  But the volume available at 3,000 miles is a mere pittance compared to under 500 miles.

    Not all segments of the Interstate Highway System exhibit the same distribution by length of haul.  NY and Philadelphia, for instance, are two big markets located less than a hundred miles apart.  Other segments of the system are plainly dominated by longer-haul moves.  When you sit in traffic on an Interstate highway anywhere near the Northeast Corridor, just remember that it's a good bet that a high proportion of the trucks you see are moving distances too short to be even remotely competitive for rail intermodal.

    Highway congestion is largely an example of Garrett Hardin's "tragedy of the commons."  Demand is rationed only by congestion.  We as a society build more highways which are then filled up as automobiles and truckers take advantage of the new capacity.  At least this is true where the demand exists.  I have read (but haven't seen any documentation) that the railroads have already largely cleaned up in long-haul markets like Chicago-LA and that the western highways are visibly less busy with trucks than they used to be.  The length-of-haul competitive tipping point is where the action is.  Intermodalists will disagree about where it falls.  It depends on their assumptions about technology (stack vs. trailer vs. RoadRailer) and the specifics of each corridor, especially the railroad's circuity vs. highway mileage.  If railroads could consistently compete under 1,000 miles, they would have all the volume they could handle.  But many highways would still be crowded with shorter-haul movements.

    Sorry for the multiple posts.  It's a big subject.

  • Very interesting, Old Head; thanks.  Just an additional thought or two.  The Denver Post surveyed readers this week, asking if they would pay higher taxes to provide the funding for expansion of capacity of I-70, which crosses the Rockes and transits the Eisenhower tunnel under them.  To no one's surprise, Post readers are adamantly opposed to paying more taxes and by a huge margin.  This is an unscientific poll, but there no doubt is considerable validity in the results.

    There is an argument for allowing the highway system to deteriorate.  Truckers will be hit by the double whammy of diminished capacity and higher costs.  Railroads, meanwhile, provide their own infrastructure and pay for it ou tof their owners' capital.  Railroads will do just fine moving intermodal volume.  NYC, PC, and CRR had the problem of getting into and out of markets seemingly on a managerial whim.  That uncertainty did not help its intermodal business.  But it still was a profitable, sizeable business.  Just as truckers will not offer service where they cannot make a buck, neither should railroads.  Some years ago, before Conrail was broken up, it had some 19 inermodal terminals where contract terminal operators handled CRR's business.  Changing economics also change the average length of haul at which railroads can compete profitably witgh trucks.  Remember, NS and CSX did not have nearly the double-stack cleared routes that UP and BNSF do.  The Heartland Corridor, Crescent Corridor, National Gateway and other capital projects are intended to open the eastern carriers to double-stack operations that they couldn't begin to consider until recently.  Just because something was valid in the 70s does not mean that it still is valid today.  More often than not, it is not.

The Interstate 95 conundrum