Next round of rail mergers?

[gabe]

I am just curious as to your opinoins concerning the next round of rail mergers from three different perspectives:

(1) are they good for the rail industry?

I think not. Although there are obvious effiiciency advantages, I think that the existing railroads are already so large that they are virtually unmanageable and subject to bureacratic quagmire. Also, the abandonments that inevitiably follow, diminish what is becoming very needed capacity, and is attempting to "starve railways into prosperity" by turning their backs on smaller to medium size shippers. I also think less railways means less creativity from less individual ways of doing things.

However, I realize there are many more knoweldgeable than I on here, and would be curious for your opinion.

(2) what do you think as a rail fan?

The advantage is we get a new paint scheme to view. But other than that, I believe it takes away from the variety of rail fanning. The more different railways, the more different approaches toward motive power, rail fan excursions and the like--to say nothing of abandonments.

Once again, I realize there is more than one approach and would appreciate your thoughts.

(3) as a customer?

I think large customers might actually benefit as larger railways would be more tailored to them. But I believe the small--and even medium size--customers would inevitably suffer and lead to more highway congestion and truckers exercising their God-given right to pass a line of 10 trucks at 0.1 mile per hour faster and back up interstate traffic for ten miles.

I would like you hear your thoughts.

Gabe

P.S. I think all of these problems could be mitigated by encouraging regional spinoffs from the mergers.

[Randy Stahl]

There good for the major shareholders period!!!!!!
Randy

[tree68]

QUOTE: (2) what do you think as a rail fan?

The advantage is we get a new paint scheme to view.

Like Armour Yellow? Every road that has been merged into UP has turned yellow and gray. CSX+CR=CSX NS+CR=NS. The day of the co-equal merger generating a new image (ie, BN) is pretty much gone.

[Big_Boy_4005]

I think we are running out of options for mergers in the rail industry. The last logical move is for east to meet west. Do that move twice and the next move is a national railroad. Does anyone really want that?

[slotracer]

A couple points as a former SP/UP manager and now as a major rail shipper......

My observation working at UP is that the rail systems of today are barely managable. I knew many peole in UP service design and geetting teh system to run smoothly is a tremendous effort. It has been cut to the bone so far at tehis point there is little if any capacity to take up extra slack when the systems hiccups. The economic recovery combined with the UP reaping the reduced labor costs from the last wave of retirements has put them in a terrible hole. Complex systems are quickly thrown out of whack when a local switch job say in Houston gets changed, within 2 weeks, say St Louis is hosed and spreads, then it takes months to reverse it. I see it all of the time, not always to the scale of problems UP has now or the late 90's meltdown, but the system is so complex and in many places frail due to lean sizing it to death that it takes so litle to create big problems for us shippers.

For railfans.....it means less variety, but at thsi point, in my frame of view that is largely moot. The character and varierty of the american railroad landscape is so diminished already that it is hardly as inspiring as it once was to even bother with. This is whyI hung my camera up long ago, no interest in todays limited variety plain vanilla railroading.

As for shippers, I can defintley tell you they hate larger systems and the ones I talk too long for the days of competition. Something like 80% of shippers are captive and unless they are smart, get scr*wed on rates. Shippers don't like railroads as the railroads can dictate policy, in many cases price, provide the service they feel like sometimes and frequently problem resloutiuon is as effective as a screen door in a submarine. Those of us in competitive markets are lucky to see profit margisn even approaching intermodal profit ratios as our highest performing product lines, yet railroads whine about revenue inadequacy. Railroads accurately figure cost be it a manifest move, unit train or intermodal, then figure return from there. To them selling a product for $1.40 that costs $1 is a low margin deal (Intermodal is another story) and chemical traffic makes 2-3 bucks for every dollar of cost. We are tired of railroads crying poor mouth, tehn releasing public statements of record earnings just weeks later. Mark, I have seen the costing tools and philosophies and I see the rates and contributions made on cars, I know this dead on.
The problem is not that we shippers want to beat up on railroads like we are all one big WALMART, we expect them to remain profitable and we try to extract the lowest price possible, that is the nature of American business. The problem is the railroads are extremely difficult and arrogant to do business with (Some are better than others). They try to ram prices in on you where-ever possible and then nickel and dime you for extra charges at every opportunity, many demurrage charges are in error or problems they caused and they expect you to pay a premium for poor service.

I can tell you the shipping community loathes another round of mergers and many of us are looking at any way possible to ship by any alternative means to be prepared if it does come to fruition.

It does however provide a level of job security for folks like me that understand how to deal with railroads in the arena of freight logistics and I do appreciate that !