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Railroading in 2020
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[quote]QUOTE: <i>Originally posted by oltmannd</i> <br /><br />Let's assume the trends over the past 20 years or so hold and Intemodal grows at 5-7% a year while the rest of the RR traffic base grows at 1-2% a year. <br /> <br />By 2020, the majority of rail traffic will be likely be intermodal. <br /> <br />Since intermodal traffic is highway competitive, it may be allowable to have a RR "monopoly" in a geographic area. For example, it may be allowable for CSX and NS to merger their intermodal operations without causing any public harm. <br /> <br />So, in 2020, why not allow parallel mergers such as NS & CSX or UP & BNSF provided the RRs agree to regulation of their bulk commoditiy rates? The operational efficiencies and improved capacity from optimized/directional traffic flows might outweight any reduction in bulk commodity profitablility. <br /> <br />What do you think? <br />[/quote] <br /> <br />Possibly, but will the government and the bulk commodity shippers want to risk the possibility of more captive shippers and entire regions being captive to one railroad? I doubt it. We already have two bills seeking competitive access and re-regulation in the Congress including those seeking to remove the railroads anti-trust exemption. Mergers are going to be increasingly difficult to justify on any grounds. Plus, there is a pretty faitr grounswell hitting the Congress just now of stateas and communities becoming angered at what they see as Class 1 railroads spinning off lines which become short lines and immediately seek scarce public funds for rehabilitation. More communities want the Class 1s to pay some of this cost. The ultimate result may be legislation or STB Regulations affecting the spin off process or even a re-examination of the Staggers Act. <br /> <br />LC
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