In railroading, it seems, the countries have two systems sharing different versions of the same problem: Carload freight.
Of course, the common-language gulf being what it is, one thing that doesn’t translate across the Atlantic is the name for that problem. When rail entrepreneurs Ed Burkhardt, Ed Ellis and Henry Posner joined visiting members of Britain’s Railway Study Association for dinner and conversation Tuesday at the Union League Club in Chicago, they deferred to the visitors’ terminology and talked of “wagonload” traffic.
Twenty-five representatives of the 800-member group — described on its website as providing “a forum for the exchange of experience, knowledge and opinion on issues relating to all aspects of the railway industry”— are spending the week in Chicago visiting a variety of rail operations. And with experience in the U.S. and abroad, Burkhardt, Ellis and Posner were logical choices to speak with the visitors.
Burkhardt is president and CEO of Rail World, Inc., which includes operations in Poland and the Ukraine. He also is president of Colorado’s San Luis Central Railroad, as well as the former chairman, president and CEO of Wisconsin Central. Posner’s Railroad Development Corporation, in addition to operating the Iowa Interstate, is a partner in or operator of a passenger service in Germany, a freight service in Western Europe, and railroads in Peru in Colombia. And Ellis’ Iowa Pacific Holdings includes a freight operation and two heritage railroads in the United Kingdom, as well as short lines and passenger operations in the U.S.
In any version of English, they agreed, carload traffic is problematic.
Ellis and Burkhardt both noted that carload business is significantly healthier in the U.S. — which is not to suggest they’re satisfied with the state of that business.
“The fact that coal has become the world’s worst commodity to use anywhere,” Ellis said, “is going to have a huge impact on the U.S. freight system. You’re going to see that the freight railroads are going to have to change. They’re going to have to do a better job dealing with smaller commodities, smaller shipments. The only way they’re going to stay in business (is that) they’re going to have to move away from being dominated by coal.”
Burkhardt’s belief is that carload traffic has been hurt by the North American desire to run large freights.
“We like to have 150 wagons on a train,” he said. “That means maybe you run one train a day. And if you miss that, too bad; you lose 24 hours. … There’s a middle ground here. I’d like to see the U.S. railways running 40, 50, 60-wagon trains. They used to do that, and service, frankly, was better.”
Said Ellis, “In the U.S., I would say our wagonload network barely meets the standard. We’re barely able to move the single-car traffic well enough to hit the target, and we certainly don’t hit it in terms of reliability.”
Still, Burkhardt and Posner said single-car traffic in the U.S. is in a far better state than in Europe, where the “open access” model of operations has hamstrung the ability to build a freight rail network and increase rail’s share of the transport market. “Nobody has the economic strength to take on the truckers,” said Burkhardt, The process of bidding for customers under open access means, he said, that rail companies are “killing each other, cutting each other’s throats in competing against the neighbor railway.”
One key difference, Posner said, is that North American railroads have a greater willingness to cooperate.
“I think the European railways are at least afraid to cooperate,” he said, “ because cooperation sounds almost like collusion. And the evolution of a culture of cooperation, which has evolved in North America, takes a generation.
“It’s evolved under the disciplines of private-sector ownership and the desire to compete with trucks. I don’t see that happening in Europe, because, for the most part, wagonload traffic has remained in state hands, and the state railways have been more interested in preventing other people from entering that business than in protecting it themselves. And in some cases, they actually prefer to have it disappear than have an alternative carrier handle it.”
The differences between the U.S. rail system and those in the United Kingdom and Europe are huge: European operations are passenger-centric, are or once were nationalized, and created the open-access system to drive competition — not necessarily with winning results.
Those who drove the open-access model “had no idea what they were doing,” Burkhardt said. “They were a bunch of politicians. They were a bunch of theoretical economists (saying) ‘We need competition.’ Well, we’ll have so much competition the trucks will have all the business.”
The inability to build a cooperative system that can compete with trucks has had a huge cost, Posner said.
“The end result has been the tragic loss of wagonload traffic,” he said, “which, I’m sure if you look at truck accidents, has slaughtered thousands of people. So I think it’s both an economic tragedy of human proportions.”
Still, large as the differences in the systems are, Posner said there are things they can learn from each other: “We’ve learned all the solutions don’t come from the USA. ... It’s all about importing best practices as opposed to exporting anything.”
That 25 of the RSA’s rail professionals elected to spend a week observing Chicago-area operations — many at their own expense — suggests that the search for those best practices is also something the two systems can share.
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